Introduction to business descriptions

A business description introduces your brand and gives prospective investors, loan officers and other interested parties an overview of the company’s objectives and resources. The description’s length depends on your business’s size and scope. If your company has one product, you might summarize your activities in one or two paragraphs. A business owner with multiple products or services might need to write several pages.

An engaging business description highlights what makes your business unique and memorable. It also showcases your mission, offerings and brand identity. Think of a business description as a marketing document. You won’t show it to customers, but you might share it with prospective investors, bankers, professional advisers or suppliers. It should highlight your company’s strengths and make the reader want to learn more.

Once you create a business description, it’s helpful to update it as your business evolves. Market conditions are always changing, so you might need to adjust your target market, add new members to your executive team or use additional marketing channels. Updating your business description regularly ensures that you always have an accurate document available for investors, loan officers and other interested parties to review.

Writing a business description: 3 steps to prepare

Before you write your business description, it’s helpful to identify what makes your business unique. For example, you might have a manufacturing process that makes your products more durable than those sold by your competitors. These key differentiators can help your business meet the needs of its target audience.

Once you have a clear understanding of your key differentiators, you can perform a market analysis, develop a mission statement and practice writing in your brand voice.

1. Perform a basic market analysis

Every business plan contains a market analysis that’s separate from the business description. However, it’s helpful to do a basic market analysis before you start writing, as it can help you write more persuasively about your company.

A market analysis contains information about your industry, your target audience and your competitors. For example, a business owner starting a recording label would research the music industry, identify competing labels and gather information about consumers’ music preferences. Consider using trade magazines, peer-reviewed research studies and other credible sources to make your analysis as accurate as possible.

You can also gain valuable insights by conducting focus groups, surveying members of your target audience or reviewing business descriptions from similar companies.

2. Develop a mission statement

A mission statement communicates what you do and why you do it. It can also help you make business decisions in line with your company’s values. An effective mission statement has these characteristics:

• Specific to your company and its purpose
• Easy to understand
• Aligned with your vision
• Concise

When you write your mission statement, it’s helpful to answer these four questions:

• Who are we? Use your company’s full name rather than vague pronouns.
• What do we do? Describe your primary offerings or desired outcomes.
• Why do we do it? Explain why you started your company or why you chose a specific market.
• Who do we serve? Define your target audience.

3. Practice writing in your brand voice

A business description is more than just an introduction to your company. It’s part of a document that can help you secure funding or partner with experts in your industry. To make your business description as effective as possible, choose a brand voice that matches your mission, goals and target audience.

For example, if you operate a healthcare business, you might want to use a formal tone that reflects the seriousness of caring for sick patients. If you run an amusement park or an arcade, however, a friendly, informal tone is probably a better fit. Once you choose a brand voice, use it consistently. Your brand voice should come across in promotional emails, advertisements, brochures and other materials.

Components of an effective business description

An effective business description is unique to your company. It incorporates market research, but it contains specific details about your target audience and the problem you’re solving. Consider using a business description example for inspiration on how to organize this section of your business plan.

Your business description should include the following components.

1. Business information

Include basic details about your company:

• Business name
• Location
• Products or services offered
• Target market
• Industry
• History

Your company history provides important context for readers, as it explains why you’re uniquely qualified to operate your business. For example, if someone who has been an Executive Chef for 20 years decides to start their own restaurant, mentioning that experience can give readers more confidence in their abilities. Describing your industry can also help you attract investors or advisers with relevant experience. 

2. Describe your target market

Your target market consists of the people most likely to have an interest in your products or services. When describing these people, use as many specific details as possible. Consider incorporating the following data into your business description:

• Age range
• Location
• Values
• Attitudes
• Relationship status
• Income
• Spending habits

If you intend to serve customers in a specific city or state, it’s helpful to identify the preferences of local community members. For example, if you’re opening a restaurant in a neighborhood with a high concentration of adults over the age of 65, you might want to offer classic diner items or familiar comfort foods. 

Explain how you plan to connect with audience members and convince them to embrace your brand identity.

3. Craft a problem statement

A problem statement is a short description of an issue you hope to address with your products or services. For example, if you plan to start a home health service, you might discuss how difficult it is for seniors to find reliable, affordable in-home care. The problem statement should also explain how you’ll use your expertise and resources to address the issue.

4. Describe your industry’s current and future state

Your business description should also provide context about your industry. Changes in operations, production and technology can present both challenges and opportunities for your company. It might be helpful to use SWOT analysis or PESTLE analysis to create a detailed industry description.

SWOT analysis helps business owners identify their internal strengths and weaknesses, as well as external opportunities and threats. For instance, rising gasoline prices might be an opportunity for a dealership specializing in electric vehicles. PESTLE analysis focuses solely on external factors. Here’s what you should consider:

• Political: Taxes, political stability, global trade agreements, government policy, industry regulations and trade restrictions
• Economic: Inflation, interest rates, exchange rates, labor costs, average costs of living and consumer spending habits
• Social: Buying trends, population demographics and changing consumer attitudes
• Technology: Robotics, artificial intelligence, cybersecurity, automation and costs associated with technological advancement
• Legal: Labor laws and safety regulations
• Environmental: Sustainability mandates, environmental regulations, supply chain management and ethical sourcing guidelines

Identify your competitive advantage while considering these industry trends, explaining what sets your business apart and how it positions you for success. 

5. Explain plans for manufacturing, distribution and service delivery

Describe how you’ll manufacture your products and distribute them to your target market. If you already have a relationship with a prominent retailer or distributor, consider naming them in your business description. It’s also helpful to describe how company leaders will ensure effective service delivery and maintain high standards.

6. Provide details on anticipated financial performance

In this section of the business description, it’s helpful to outline your pricing strategy and explain how it will help you generate a profit. The business description typically includes a summary of the financial statements found elsewhere in the plan, so consider discussing your anticipated revenue, expenses and profit margin. 

Describing your company structure and business model

Choosing the right structure can help build a successful business. Your business structure defines your organizational framework and affects how you run your business. Common structures include sole proprietorship, partnership, limited liability company (LLC) and corporation. Consider working with an accountant and a legal professional to determine which structure is right for your business. Once you choose a structure, include it in your business description.

Your business model is different from your business structure, as it describes how your firm generates revenue, manages costs and delivers value. For example, a tech industry start-up might adopt a subscription-based model, while a small business in the fashion industry could prioritize retail sales. Identifying your target market, the competitive landscape and your unique selling points can help you develop an effective business model.

A well-written business description should reflect your chosen structure and model and provide a clear, concise overview of how your company operates. This includes highlighting your management team, outlining your marketing strategy and presenting your value proposition to your target audience. A value proposition is a short statement that explains why a member of your target audience should buy from you.

Aligning your mission statement, executive summary and business description with your business structure and model can help showcase your competitive advantages and position your company for growth.

Best practices for writing business descriptions

Consider applying these tips as you draft your business description:

• Start with an elevator pitch: The first paragraph of your business description should summarize your core concept. Think of it as an “elevator pitch” in which you only have a sentence or a few sentences to convey what’s exciting about your vision.
• Focus on high-level information: Some of the information in your company description will also appear in other areas of your business plan. Use the business description to provide a high-level overview. You can provide more details later.
• Communicate your passion: A business description should entice the reader to review the rest of your business plan. It’s helpful to convey your passion for the company and what it will accomplish.
• Check for length: The right length for a business description depends on the complexity of your concept. For example, a company with five products is likely to have a longer business description than a company with just one product. After drafting your description, determine if you can remove any details without changing its meaning.
• Have it proofread: Have someone check your final draft for flow, syntax, grammar and spelling. A polished document reflects well on your professionalism.