How to describe your product and service in a business plan like a pro
You’d think that this part of a business plan does exactly what it says on the tin–describe your product & service offering–right?
And yes, you are partially right.
But there’s a very specific way in which this description should be written to make sure that your business has the best chance of succeeding – in real life and under the eagle eye of a potential backer (if you’re preparing a business plan for external financing purposes).
Keep reading to find out the secret sauce to writing a winning product and service description:
This business plan section is also known as:
So, what should a good product/service overview contain?
Here are some items to consider including into this section:
The range of products and/or services that a business offers to potential and current customers.
2. Features and benefits (value proposition):
Explain what the product/service does and how it works.
3. Problem and solution (value proposition cont.):
The problem(s) the product or service solves. Every business needs to solve a problem that its customers face. Explain what the problem is and how the product or service solves it.
If the company is doing something new and different, explain why the world needs the innovation.
5. Proprietary advantages:
Any proprietary features that contribute to a competitive advantage. This could include: intellectual property (e.g., copyright, trademark, patent filings, trade secret), exclusive agreements with suppliers or vendors, exclusive licenses (e.g., for a product, service or technology), company’s own research and development activities.
6. Development stage:
Current stage of development of the product / service (e.g., idea, development, testing, prototype, already on the market).
7. Product life-cycle:
Estimate the life span of the product or service.
Specify whether the product or service under consideration is a short-lived fad or has a long-term potential.
Mention plans for changes and new additions to the current portfolio of products / services.
Describe any plans to move into new markets in the future (e.g., serving different types or sizes of customers, industries, geographic areas).
Make your best guess at when the business will be ready to address these markets and what it needs to do first to be ready.
If applicable, explain any risks or limitations associated with the product (e.g., liability issues like guarantees or returns), along with any legal advice received regarding these issues.
10. Visual aids:
Use photos, images, diagrams and other graphics to help the reader visualize and learn about the products / services.
If the business is tackling several distinct problems through different products / services, describe the solutions individually.
However, for a large line of products / services, there is no need to list each one, just identifying the general categories will suffice.
This part of a business plan can be very short, just a couple of paragraphs, or it can spread over multiple pages, depending on how many products/services you offer and how much explanation they require.
If your products or services are particularly complex, technical, innovative, or proprietary, you will want to provide more information and spend considerable time describing them.
This is especially true if you are seeking funding for a new product or service, particularly one that is not immediately understandable to the business plan readers, and if potential funders are likely to be motivated by the specifics.
In any case, when describing a product or service, provide just enough information to paint a clear picture of what it is and does. A brief explanation of what you will be making, selling or doing is appropriate here.
Excessive detail makes this section cumbersome for a reader to wade through. Reserve detailed descriptions (e.g., production processes) for the Appendix.
In any case, it is a good idea to first summarize the value proposition of each product or service into a one short sentence, and only then continue with a more detailed description of the product or service.
If any images or graphics are available that would contribute to the understanding of the product or service, the writers of a business plan should use them.
Otherwise, include any product or service details, such as technical specifications, drawings, photos, patent documents and other support information, in the Appendix section of the business plan document.
Don’t just list the features of the product / service.
Instead, describe the specific benefits it will offer to customers – from their perspective.
Make it clear what your customers will gain through buying your product or service. Include information about the specific benefits of your product or service – from your customers’ perspective.
Features are not the same thing as benefits. And you need to understand both.
Confused? Let’s clarify:
|Difference: Features v. Benefits||Features||Benefits|
|What is it?||Descriptive, factual, and often technical, aspects of a product or service, describing what something is and does.||The positive impact of what consumers can accomplish with the product or service to solve a problem and improve their lives.|
|Why is it important?||Give customer facts to rationalize a purchase||Give customers a reason to buy|
|Example: iPhone camera||Technical specifications for lens aperture, optical zoom, image stabilization, etc.||Users can capture beautiful photos and video in any location or setting|
|Questions in customer’s mind||What does it do?||So what?|
|How does it work?||Why should I care?|
|What are the specs?||What can it do for me?|
If at all possible, present the information in the Problem >> Solution format.
Start by describing the key problem that your customers have, immediately followed by the solution with which you will address this need for your target market.
|Step||Action||Question to Answer|
|1. Problem||List your customers' top 1-3 problems, capturing their central frustration.||What is the crucial problem faced by your consumers?|
|2. Solution||Each problem should be matched by a solution.||What are you going to do to solve the problems of your customers?|
You should also comment on your ability to meet consumers’ key problems or unmet needs in a way that brings your product or service advantages over the competition.
Explain why your customers need your particular restaurant. Do you offer lower prices? More convenient hours? A better location? A different concept, such as a vegan ice-cream pop up store? A specialty that is not otherwise available in your area, such as a Peruvian ceviche or Hungarian goulash?
What is it about the existing solutions that is subpar? Maybe you are improving on a mediocre product category, such as creating better medical uniforms for healthcare workers (e.g., more flattering cut, trendy designs, sustainable materials). Or perhaps your new blockchain solution has the potential to entirely eliminate the middle-men in an entire industry.
Although the subject of competitive advantage regarding the business as a whole will be fully explored in the Market and Competitor Analysis part of a business plan, it is advisable to touch on it here also – in the context of the company’s products and service.
Speaking of which, when you are doing market research and analysis for your business plan, remember to validate the problem and solution your product or service is addressing.
There is a plethora of minor issues out there that people are perfectly fine with just tolerating. To build a solid business, though, you need a problem that a sufficient number of people are motivated to solve. That is, that they recognize it as a problem that’s worth paying you to solve. Even if they didn’t realize it was solvable until they were presented with your solution.
So, how do you get evidence that prospects are willing to pay for your solution?
Describe what you’ve done so far to confirm that the problem you are focused on is a real problem for your customers.
For an established business, this is probably just a matter of recapping your success in the marketplace. Your customers have already voted with their wallets.
For a startup, it is important to survey and have conversations with as many potential customers as possible about where they are having problems, how they solve them today, and validate that they are interested enough in addressing those problems to pay for a good solution.
Describe how you have tested your ideas with existing or potential customers to confirm that there is a good market for the products or services you plan to offer. Summarize the positive customer feedback or market traction that you have achieved with your solution so far.
For an established business, the answers probably lie in your paying customer base – their existence itself, combined with their repeat business, word-of-mouth referrals, follow-up customer surveys, and other indicators of customer satisfaction.
For a new business, you can start validating your solution immediately by trying it out with potential customers, even informally or at no charge, to get their opinion. If your product or service does not exist yet, talk to prospects about what you plan to offer and measure their feedback.
In summary, this section should answer the million dollar question:
What makes you think that people will buy, be satisfied with, and recommend your products or services?
Products and services are items that businesses offer for sale to a market. While services are intangible, meaning that they do not exist in a physical form, products are of tangible nature, in other words – you can touch them.
Product line is a group of related products that are all produced or sold by one entity and typically marketed under one brand name.
Service line is a group of related services that are all produced or sold by one entity and typically marketed under one brand name.
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