The purpose of the Products and Services Description is to let readers of your business plan understand what it is you sell. For those who are unfamiliar with your industry, the products and services section will educate them. The more your readers understand what you sell, the more prepared they are to make decisions about your company.
You may feel as though you have a lot to cover in this chapter and you do not know where to start. However, if you think about all the questions your reader might ask about your products and services, answer them one by one and then organize the information in a logical fashion.
The nice thing about writing the Products and Services chapter is that this is the subject you probably know the best: what you make or do, why, how and how much you charge. While you may need to do some research about your competitors, you should be doing this research anyway in order to determine how you can come out on top.
What to Keep in Mind when Writing the Products and Services Description
Assume your reader knows nothing about your industry. Your reader is probably not as familiar with your type of business as you are, so give them the information they need to understand what you do. Don’t use jargon that will confuse them. If you must use jargon, be sure to define unfamiliar words.
How to Structure the Products and Services Section of a Business Plan
Sketch out a plan to organize your information before you begin writing. Some people make the mistake of sitting down to write without a plan, and they end up with a meandering, disorganized list of facts and interesting tidbits of information all run together. This jumble of information makes it difficult for the reader to put together a clear picture of your business in their head.
Describing Your Company’s Product
As the name suggests, this section of Products and Services Description explains all the products you sell. Describe the products in detail here, including what makes yours different from everyone else’s. What makes your product unique and special?
Describing Your Company’s Services
If yours is a service company, here is where you will describe what you do for your customers. Just like with Product Offerings, be sure to explain how your services are different from, and better than, other companies just like yours.
Describing Your Pricing and Revenue Strategy
Once you’ve familiarized your reader with the products and services you offer, you can discuss your pricing. Talk about what goes into your decision of how to set your prices and how you will be making a profit. This includes a breakdown of your Costs of Goods (COG) or Costs of Service (COS), which is a detailed breakdown of exactly how much it costs to you to manufacture or purchase the products you sell. Be sure to think of contingency plans in the event something beyond your control brings about changes that could affect your profitability, things like shifts in market conditions, changes to laws or availability of supplies.
After you’ve detailed your costs, describe your markup strategy. How much, usually described as a percentage, above the cost you paid for the product will you charge your customers?
Unless you’re selling a completely unique product, you probably have some competition. Use this section to show your reader what makes your product different than the other ones on the market and why consumers are likely to pick you. Do you use a different method to produce your product? Include a survey of what your competitors charge for similar items, along with a discussion that explains your pricing strategy.
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