How to Write a Business Plan: Company Description
The next section should be your company description. The objective of this section is to introduce the reader to your business concept. In the company description describe what your business will do and how your business will do it. Further, make sure to discuss the problem that you wish to solve. Some important concepts to cover this section are:
- Problem that your company will solve.
- How your company will solve this problem.
- Benefits to the customer after the problem was solved.
- Competitive advantages related to your business.
- Location of your business.
- Justification for each bullet point above. In other words, do not just tell the reader where your business will be located. Also list the reasons why your business will be located in this area. Make sure to highlight the benefits and rationale for each one of your decisions.
When this section is properly written, the reader will have a clear understanding as to what your business will do, what problem your business is solving, and how your business will compete in the marketplace.
How to Write a Business Plan: Company Description... Step by Step
In the video below, I walk through the different steps needed to complete the company description section of a business plan.
What is the Company Description for a Business Plan?
The company description of your business plan should inform the reader as to what your company does, the problem your company solves, will your company will be located and how your business will operate. From this information, the reader should get a good indication as to why and how your business will operate.
Why is the Company Description important?
The company description section is important because this is the first opportunity the reader will have to fully understand why your company is important and should be in business. In addition, the section also offers the writer an opportunity to differentiate their firm from other competitors in the market. Without distinction, business owners may have a hard time justifying the need for their business.
What needs to be in the Company Description?
The section is one of the longer sections of a business plan. The company description should include a discussion as to what your company will do. This helps the reader understand how your firm will solve customer problems. Further, the section needs to differentiate your business from that of competitors. This will indicate that thought and creativity will be interwoven into your firm.
The final two components that should be in every business plan’s company description is the business model and competitive advantages for the company. The business model will describe how the company will operate in the industry. As for the competitive advantages, this will inform the reader as to how your company will operate better than your competitors.
When to write the Company Description?
The company description should be written after the executive summary. Keep in mind, a succinct discussion about your company description should also be inserted into the executive summary. The reason this section the second is because your company needs to be introduced to the reader as soon as possible. From this, the company description is almost always right after the executive summary.
How to write the Company Description?
When I write my company descriptions, I always start off with an “Our Company” section. This section identifies the type of company. For example, we are company be a limited liability corporation? Sole proprietorship?
When is this is identified, I then give a brief description as to the problem that the company is attempting to solve. To illustrate, if I am writing a business plan for lawn care company, that I would briefly discuss the difficulties that people have in maintaining a well-manicured lawn.
Finally, I give a brief discussion as to how the company will operate, products or services offered, and unique traits about the company.
Company Description: Business Model
The second segment under company description is usually the business model. The business model tells the reader how the company will conduct business. Popular discussions in this section may include the importance of treating employees well or specific actions the company will take to solve their unique problems. To illustrate, if a company, again, is a lawn care business, I would describe how the firm intends to treat their employees better than that of their competitors. Next, I would outline the benefits of this business model. For instance, a benefit for treating their employees better would be lower turnover. This would in turn reduce the learning curve for the company and morale.
Company Description and Location
Following the business model, I often discussed the location that the company will conduct business. This information may or may not be important to your business. If your company will be a restaurant, then location is a critical component for discussion. In contrast, if your firm will be a business writing organization, such as myself, then location really does not matter, because I do this right from the comfort of my own home.
If location does matter, then explain why it matters. Will your firm be near office complexes or hospitals? In the case of a lawn care organization, will you be centrally located to a multitude of residential communities? Make sure to identify and discuss any and all reasons as to why you chose this location.
Company Description and Competitive Advantages
The competitive advantages section is a little tricky to write. Companies want to describe how they are going to better compete in the marketplace as compared to competitors. However, firms do not want to offer too much details because it is always possible that the reader may take your information to start a business of their own use in your thoughts and ideas about competitive advantages. Even worse, they may pass along this information to your competitors. Because of these challenges, make sure to have your competitive advantages stated as general as possible but not so general that they are pointless to include in this section.
A good example for competitive advantages would be that a company, again, lawn care, offers mulching and fertilizing services, in addition to lawn care. After this is stated, then discuss that competitors in the area do not include such services. Finally, explain the benefits that your additional products or services may offer your customers.
If the section is written correctly, then readers should get excited about why your business will be successful in the industry.
Company Description and Mission Statement
The mission statement is a must for all business plans and most definitely need to be in the company description. A mission statement should outline what a company will and will not do in their business operations. Example this would be that as a business plan writer, our company will excel at providing world-class business plans at reasonable prices. From the short example, the reader can easily identify that we do business plans but we do not do other types of writing.
Company Description and Vision Statement
The vision statement should describe where your company will be in five years. Make sure to include different locations that may be open, number of employees, additional services that may be offered and other aspects that will help paint a picture as to what your company will look like in the future. In my opinion, make sure to stay away from providing revenue projections. When discussing revenue projections at this point in time, gives the feeling that the company owner or writer is more interested in profits as compared to solving the customer’s problem. The cardinal role is take care of the customer and the customer will always take care of your company.
Company Description and Value Statement
This portion of the company description is often left out. Unfortunately, when a business overlooks the values in the firm, then the reader may question their ethical approach to business. Do not let the perception of poor ethics into your business plan. This section could be as simple as identifying for key phrases that describe your value position. However, this section may be as complicated as several paragraphs outlining how ethics will be a critical component of your daily operations.