How to Describe Your Business
When writing a business plan, an important task is to
clearly describe your business and exactly what it will
involve. This can be will be crucial to writing your business
plan. Experience tells that you need a written document
-- even if you're sure you know exactly what your business
will do. To write a complete description of your business,
follow these simple suggestions.
Legal Entity and Ownership
Describe the ownership and legal establishment of the
company. This means to specify whether your company is
a corporation, partnership, sole proprietorship, or some
other kind of legal entity, such as a limited liability
partnership. You should also explain who owns the company,
and, if there is more than one owner, in what proportion.
If your business is a corporation, specify whether it
is a C (the more standard type) or an S (more suitable
for small business without many different owners) corporation.
Also, specify if it is privately owned or publicly traded.
Many smaller businesses, especially service businesses,
are sole proprietor businesses. Some are legal partnerships.
Professional service businesses, such as accounting or
legal or consulting firms, may be partnerships, although
that kind of establishment is less common these days.
Identify Your Type of Business
Find the business category listed below that most closely
matches your business. You'll use the description that
follows as a reference when you describe your own business.
- Retail. Retail businesses buy merchandise from
a variety of wholesalers and sell it directly to consumers.
Supermarkets, mail-order catalog merchants, computer
stores, dress shops, department stores, and convenience
marts are retailers.
- Wholesale. Wholesalers buy merchandise from
manufacturers or brokers and resell the goods to retailers.
- Service. People with a particular skill sell
it to consumers or to other businesses, depending on
the skill.
- Manufacturing. Manufacturers assemble components
or process raw materials into products for consumers
or other businesses.
- Project development. Developers create and
finish a salable commodity by assembling resources for
a one-time project.
Write a Problem Statement
Successful businesses share a common attribute: They
do something useful for their customers. One way to determine
what is useful for your customers is to identify and describe
the problem that your business will solve. For example,
a window washing service solves customers' problems of
wanting clean windows but lacking either the time or physical
ability to clean windows themselves. If you accurately
understand your customers' problems and needs, your business
will have a better chance of success.
Describe Your Business Operations
Next, describe how your business will solve your customers'
problem. Take your time and do a thorough job. It's very
likely that the first time you attempt this task, questions
will occur to you that you didn't consider previously.
If so, figure out a good answer and rewrite your description.
The important thing is not how long it takes to do this,
but that you end up with a realistic, well-thought-out
business description. After all, it's cheaper to answer
questions and solve problems on paper than it is with
real money.
Your business description should explain exactly what
you will provide for the customer as well as what you'll
exclude. Each of the choices you make in your business
description will affect the amount of money you'll need
to start or expand and how much sales revenue you can
expect.
Consider the following questions when writing your business
description. These questions apply to most small businesses.
Feel free to skip any questions that don't pertain to
you.
- What problem do I solve for my customers? (You answered
this question in detail above.)
- Who is my typical (target) customer?
- How will I communicate with my target customer?
- What products and/or services will I provide? Are
there any products or services my customers may expect
me to provide that I don't plan to provide?
- Where will my business be located?
- Where will I buy the products I need?
- What hours will I operate?
- Who will work for me, and how will they be paid?
- Who will handle critical tasks such as selling, ordering,
bookkeeping, marketing, and shipping?
- How will I advertise and promote my business?
- What are the competition's strengths and weaknesses?
- How am I different from the competition as seen through
the eyes of my customers? (Make sure that you answer
this question from a customer's perspective and not
from an owner's point of view.)
