Product/Service Description

In BizPlanIt's monthly business plan newsletter, we've cover subjects ranging from the executive summary to the exit strategy. In this issue we'll discuss the Product/Service section of a business plan, and provide insight on what to include in the section, how to organize it and tips for effective writing.

Whether you are writing a business plan to raise capital or for internal planning purposes, you'll need to include a clear and concise description of your company's products and services. One of the simplest, but most important pieces of advice we can provide is to assume that your reader "knows nothing" about your product, your service, or the needs that exist within your target market. Then, provide just enough information so that readers can understand what your product/service is, how it is delivered, why someone would need or want it, and the specific benefits of its use. When we suggest that you assume your reader "knows nothing" about your product/service, we aren't implying that you should bore people with tiny details or talk down to them - just don't make the assumption that your reader knows what you know about your product/service.

More often than not, business plan writers (and start-ups in general) make assumptions about the reasons that customers or clients would want to purchase their product/service. These assumptions may be grounded in solid research or simply pulled from thin air to justify the potential of a new product or service. Either way, it is import to explain what your product/service is, but it's often more important to explain WHY someone would be interested in buying it. The WHY can be considered the benefit that your customer receives by using your product/service, and it's often far more important in their buying decision than the details - or features of your product/service.

Ok, so how do you lay out the product/service section? Here are a few tips to get you started and moving in the right direction quickly:

• Limit the section to no more than 1 to 3 pages
• Explain the features and (more importantly) the benefits of your product/service
• Use words and phrases that a non-specialist can understand
• Place photographs, drawings, and brochures in the appendix of your plan
• Consider breaking this section into 3 sub-sections: (1) Description of Products/Services, (2) Product/Service Features, (3) Product/Service Benefits

Let's take a closer look at the information you can include in each of these sub-sections:

Description of Products & Services
Begin by describing the primary nature of your business and the products and services you provide. Be as specific and succinct as possible with your description, and avoid inundating the reader with unnecessary details. If your product/service list is extensive, you might want to consider presenting the categories of your products/services rather than listing them one by one.

In this section, simply explain "what" your product/service is and what it does, in such a way that even a child could understand and explain what you sell. Discuss the stage of development of your product/service, such as idea, prototype, operational, etc. If you are still in the development stage explain your plans and timetable for completion. And if your product or service can be legally protected with a patent, copyright or trademark, explain where you are in the process, and the pros and cons associated with your decision to protect, or not protect, your products and services.

Product & Service Features
This section should address the major features of your products/services. By features we mean, what your product/service does, how it does it, how it's delivered, etc. If your product or service appeals to more than one group, explain which features meet the needs of each group and why. Include information about the tangible, functional and distinctive features of your product or service. Here are some features to consider expanding on in this section:

• Size
• Weight
• Color
• Packaging
• Price
• Design
• Quality
• Capabilities
• Training
• Delivery
• Credit
• Luxury or necessity

Product & Service Benefits
Now that you've told your reader what you sell, it's critical to address a more important issue - Why people will actually pay for your product or service! This goes beyond features, and goes right to the heart of why a customer will part with their money to purchase what you're selling. Explain why you're better, faster, cheaper or more effective than others in the market. Identify the important benefits and advantages of your product/service in the "eyes of your paying customers", not in your eyes. Traditionally, business plan writers place too much emphasis on features, and not enough emphasis on the benefits and advantages. Keep in mind that buying decisions are based on perceived benefits, not on details and features of your product or service.

As far as your business plan is concerned, the feature versus benefits issue comes down to this - have you demonstrated that your product/service fills a need or solves a problem in the marketplace? If you can explain the differences of your product/service, the benefits to your customers, and that a credible market exists that needs what you offer, than you're on the right track. And remember, if your customer doesn't think your differences, benefits, and advantages are important, than essentially - they're not.

One of the best ways to determine and present the benefits of your product/service is to simply run some tests. If it's a product, have you tested it? Have others tried it? What do they say about it? What would they pay for it? Why do they want your product? If it's a service, what do potential customers say about it? Who have you asked? Why do they like your service rather than your competitors? How does your service make them fell? Survey, test, and document the reasons that customers will purchase your product/service and include this information in your business plan.

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