The is the fourth article in a series of posts focused on deconstructing the essential elements of creating an effective Business Plan.
Business Planning Articles
Products & Services Best Practices
The third component of the business plan is to describe and/or demonstrate the product or service your company produces.
This part of your business plan should be thorough, between 2-6 pages in length.
The purpose of the product/service section of your plan is to explain in detail what your business provides to customers and why your solution is unique and desirable.
Product Oriented Businesses:
If your business develops and sells a product, describe every product in detail. If you create and sell more than one product, list them in a product mix according to the most economically important or significant product for your business’s bottom line to the least.
If you cannot realistically list each product your business makes, break down your products into logical categories, and describe each category in detail.
Include key product features including; ease of use, functionality, durability, longevity, efficiency etc… that differentiate your solution from competitors. And, describe how your product is legally protected with patent, copyright and/or trademark protection.
Service Oriented Businesses:
If your business provides a service, specifically describe each type of service your business offers. Include explanations of which service features are the most important to customers, and describe the legal protections your service has obtained, such as patents, copyrights and/or trademarks.
To provide substantial detail that can be clearly understand and that is more powerful than textual descriptions, entrepreneurs should include as many relevant technical specifications as possible including; drawings, photos, data points, and brochures.
Drawings can include sketches, wireframes or blueprints of your product, or outlines/schematics of your service. The more detailed and professional the drawings look, the more impactful they will be to the viewer. Brief descriptions should accompany any drawings to explain the visual and highlight important features.
Images of your finished product. These can include raw images of the product and/or the product/service being used by customers in specific circumstances. Be sure to include captions that describe what is happening in each picture.
Data points include any important metrics about your product or service such as; it’s price, fee or leasing structure, dimensional specifications, a description of how the product works, the power consumption of the product, or whatever necessary inputs are required to produce an output. For instance; with 1 gallon of fossil fuel our ____ automobile yields 26 miles.
Any marketing material or brochure is a good asset to include in your business plan, however it should not be used as the only element of your Product/Service Section. Always use brochures as supplementary material and placed it in the appendixes of your business plan.
The last component entrepreneurs should consider for the Product/Service section of their business plan is to provide an evaluation of the relevant risks associated with heir solution.
Any and all risks associated with your business’s product or service should be provided in the Product/Service Section. Risk may include; product liability, professional liability, ease of duplication in the marketplace, and any potential liabilities your customers must assume to make use or or benefit your solution.
It is important to include and detail all the relevant risks to avoid any future misunderstanding about your business among interested investors. The last thing any small business needs is an investment deal to collapse because investors discover that the risk involved in a proposed solution was understated.
Misrepresenting the risks involved with a solution reflects very poorly on a company and it’s leadership. Doing so could damage a startup’s ability to secure any investment deal.
After stating the risks involved with your business, state how your company will position itself and implement processes to mitigate the existing risks over the long term.
The Product/Service section of your business plan is meant to show off what your solution achieves to potentially interested investors.
Therefore, it is important to make this section of your business plan visually stand out as much as possible. Wherever possible, entrepreneurs should use rich visuals to clearly demonstrate the value of their solution’s competitive advantage.
Employ the help of individuals with a good sense for marketing and visual design to help provide clarity and structure to your Product/Service section.
A poor product and service section that fails to clearly describe a business solution will not motivate or inspire investors, and severely damage the likelihood of any deal being achieved.
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