What is a business description?
The business description is an aspect of your business plan that combines the key details of your company, such as what it does and what makes it unique. It provides interested parties with an overview of your business idea’s scope and can span from just a few paragraphs to several pages in length, depending on the plan’s complexity. If your business plan is relatively simple, you can keep it short by detailing the industry and product in a paragraph each and then using three to four paragraphs to describe your business and its components for success. A longer business description may be necessary in some cases but you should always strive to communicate all of the required information as succinctly as possible
Though primarily used when first starting a business, it should be regularly maintained and updated as your business grows. This information is used for many reasons but is especially useful to potential investors and lenders so that they can understand your concept, the benefits it will provide your customers and how your brand will be placed in the market.
How to create an effective business description
Every business plan and description is different based on the industry and type of company that it has been created for. Here are some basic steps to help you create an effective business description to meet your company’s needs:
1. Research the industry and competition
In order to create an effective business and business description, conduct research into the industry you are entering and the top competitors in that market. You can find this information from a wide range of credible sources, such as news sources, trade magazines, published studies or by speaking with industry veterans. Additionally, interviewing or surveying your target market can give you valuable insight into creating your business description.
2. Describe the industry’s current and future state
Discuss the developments or trends that will affect the industry you are entering and your business as it grows. These developments can be in areas such as operations, production and technology and could have both positive and negative repercussions for your business. Include all possible impacts in your business description.
3. Provide your business’s basic information
Include the basics of your business, such as the origin, name, location, business structure, management, number of employees and hours of operation. It can also be helpful to categorize your business in a specific industry to provide context for the reader. Possible categories are project development, manufacturing, service, wholesale or retail.
4. Craft a problem statement
A problem statement is used to identify a common problem that your target audience faces and how your business will solve it using the services or products that you will offer. Detail the services and products that your company will provide, as well as the benefits and features that will set your brand apart from the competition.
5. Identify your target market
Describe your target audience, including their age range, geographical location, values, relationship status, income level, attitudes and spending habits. Then, explain the types of information that will resonate with your market and the modes that should be used to make sure that they see it.
6. Explain plans for manufacturing and distribution
Detail how and who will manufacture and distribute the products and services that your company will provide. If you already have a team in mind, provide a list of the employees, suppliers and vendors that you will use to facilitate the process.
7. Detail how the business will be profitable
Explain how your business will make a profit and what indicators you will use to measure your company’s success.
Best practices for effective business descriptions
Here are a few tips that will help you write an effective business description:
- Begin with an elevator pitch: The first paragraph of your business description should communicate all of your vital information. It can be helpful to view it as an elevator pitch in which you only have a few sentences to express your company’s key characteristics.
- Use only high-level information: Some of the information that you include in your company description will also appear in other areas of your business plan. Focus on providing just a high-level overview of these parts, leaving the specific details for another section.
- Communicate your passion: A business description is supposed to encourage the reader to review the rest of your business plan. To do this, make sure the tone used in your description properly communicates your passion for the company and what it will accomplish.
- Check for length: Though the actual length can vary depending on how complicated the business plan is, b usiness descriptions should remain clear and concise. After you have drafted your company description, go back through to edit out any redundant or unnecessary information.
- Have it proofread: Consider someone who is seeing the description for the very first time review your final draft to check for flow, syntax, grammatical errors and typos. A business description free of these issues, though small, could positively affect how the reader interprets the information.
Business description FAQs
Here are some answers to frequently asked questions regarding business descriptions:
What should you include in a business description?
When creating a business description, the information provided can vary depending on the type of business. However, these are some of the elements that are commonly incorporated:
- Company name
- Type of business structure
- Company origin story
- Mission statement
- Offered services/products and target audience
- Short-term objectives
- Vision statement