The Product and Services section of your business plan is the engine room of your plan. This is where you will describe in detail the problem that you’re solving, your solution, and how your product or service fits into the existing competitive landscape.
You’ll also use this section of your business plan to demonstrate what sets your solution apart from others, and how you plan to expand your offerings in the future.
Since your reader may not be familiar with your product/service, make sure to explain and describe it carefully. Begin to sell your idea by generating some excitement about it.
Be honest about capabilities. When potential investors have finished learning about your product or service, they should be enthusiastic about reading the marketing and financial details of your business.
Consider this, every business has something to sell, and the product and services section of your business plan is where you tell your story about what you’re selling.
This is clearly a very important section because business is about providing people with something they need.
Note, it is always a good idea to think about customer needs and customer benefits as you define your product offerings, and not thinking of your side of the equation–how much the product or service costs, and how you deliver it to the customer?
Try to describe the benefits of your goods and services from a customers’ perspective while you answer the following questions;
What exactly is your product or service?
What marketplace needs does your product address?
Who will purchase it?
How will your product or service benefit the customer? What are its features?
How does your product work or how is the service used?
Which after-sales services are provided? (e.g. delivery, warranty, support, follow-up, or refund policy)
What proprietary rights do you have to the product/service? Patents, copyrights, trade secrets, non-compete agreements? Other proprietary knowledge or skills?
What is your pricing strategy?
What are the sales price, cost, and profit margin for each product line?
Which products/services are in demand?
What are your current sales?
What are the boundaries of your business?
Are there other vendors involved and if so who and where do they fit?
What is included in the product’s bill of materials? (Major components only)
Are there any current/potential component supply problems?
In your plan, it’s important to be able to build a convincing case for the product or service upon which your business will be built. The product description section is where you do that. In this section, describe your product in terms of several characteristics, including cost, features, benefits, distribution, target market, competition, and production concerns.
The Major subsections of your product/service line include;
Begin by stating your company name and the product or service you provide. This is where you state your customer problem and the solution you are proffering. List all products/services in order of highest to lowest sales or importance of product line.
For each product/service, describe the main features and benefits.
State at what stage of growth your product/service is in and when you initially developed your product/service. When possible, provide a historical summary of product developments, introductions, and improvements up to the time of the business plan in a table.
For some products and services, you might want to describe use cases. These use cases describe how a customer will interact with your solution and how your solution makes the customer’s life better.
Your Unique Features of Product & Service
In this section, you will show how your product and/or service is unique. Explain the unique value-added characteristics of your product line or service and how these value-added characteristics will, in turn, give your business a competitive advantage.
Explain how the competition may provide a similar product/service but provide the reasons why your business is able to differentiate itself in the market. Point out your lead product/service and demonstrate how it addresses customer needs and benefits.
After stating the problem and solution your business is solving with a careful description, you should describe your competitive strategy and competition. What are the alternative ways your customers are getting their needs or problem solved without you? And what are your competitive advantages over the competition?
It is important to list out all your competition and rate them based on their services and compare it to your business solution. Also, aside from your direct competition who are your indirect competitions?
Most times in business, your Competition may not always come from direct competitors who offer a similar solution to your offering. Often times, consumers solve their problem with an entirely different kind of solution.
Knowing this will help in giving your business the most needed benchmark for success in the marketplace. You can build a simple competitor matrix by listing your competitors down the left side of a grid and then adding columns for each feature.
Then use checkmarks to indicate if competitors have a particular feature or not. The most important feature of this section is how your business is different in the marketplace and what will make potential customers to choose you.
Also, investors before investing their money will want to know what your competitive advantage and how you intend to differentiate yourself from the pack.
Research and Development
This section requires that you Outline any research and development activities that you are involved in or are planning, past accomplishment, innovations etc.,
What results of future research and development activities do you expect?
Be sure to analyse the different research and development to know how you are faring. It is a good idea to have criteria in place for deciding which product/service to move forward with.
These criteria may include but are not limited to:
Relatively low investment requirements
Positive return on investment
Feasibility of development and execution
Uniqueness in the market
Relatively low risk
Timeliness of results
This section requires that you give more details on how your product/service is manufactured or delivered. To better help you in writing this particular section, a product-oriented approach and a service-oriented approach are provided.
If your production is product oriented, Specify and explain capital equipment, material, and labour requirements. Are the above items readily available?
Do you have multiple supply sources? List inventory requirements, quality, and technical specifications, and hazardous materials.
If your business is Service-oriented, it will address issues in a different way. Anyone operating a service-oriented business will state if his or her service is provided by internal staff or subcontracted to field consultants.
If there are procedures for delivering the service, it will be described in this section.
Other things to consider include but not limited to the following:
Sourcing and Fulfillment:
If your business involves buying products from other vendors and selling it to your customers. It is important to include the details of your plan. Including how they get delivered to you, and ultimately how you deliver the products to the customer. If your products are always shipped in from overseas investors will be willing to know about your progress working with these suppliers. If your business is going to be delivering products to your customers, you should describe your plans for shipping your products.
If your business involves dealing with technology, it’s very important to talk about it in your business plan and describe its usage. You do not have to give away your trade secrets in your business plan but you have to describe how your technology is different and better than your competitors.
Remember, your goal is to keep your business plan as short as possible, so too much detail here could easily make your plan much too long.
This section is important if you have an intellectual property that is proprietary to your business. This will serve as a benchmark to safeguard your business in the marketplace against competitors. You should make sure to detail the complete information here to avoid fraud. If you have copyrights right, detail the information here.
Future products and services:
Every entrepreneur and business owners have a broad vision of where they intend to take their businesses to in the future.
While you may want to write more about it in your business plan. It is critical that you just mention it and focus more on the available product and services and not spending all the time focusing on your future business ideas.
Ensure not to allow your business plan to be engrossed in future or potential plan. Just focus on bringing your first product/services to the market.
The idea is to include a paragraph or two about your future plan to show investors where you are headed to in the long run.
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