How to Write Products and Services Section of a Business Plan
The core purpose of any business is to sell its offerings to its target customers. To do this, you devise a plethora of strategies, tactics, and plans. While that is important, your sales ultimately depend on the value you provide to your customers through your products and services.
FYI, we have used the term “product” in this article to refer to both products and services unless mentioned otherwise.
What is a products and services section?
The products and services section of your business plan is where you mention and elaborate on your product range, product descriptions, pricing strategies, and other relevant details.
If you're looking for investors or partners, this section plays a crucial role in persuading them. What you include in this section and how you write it can deeply impact whether or not your investors will seal the deal with you.
8 things to include in the products and services section
In the products and services section of your business plan, you provide an overview of what you offer. Here are all the key elements your products and services section should cover:
In this part, you include all the important details of your offerings. To write an accurate description, you can use the 5W2H method and answer these questions:
- Who can use this product? Mention the details of your ideal customer.
- What are the fundamental aspects of your product? These may include features, materials, ingredients, costs, dimensions, etc.
- When should someone use this product? Mention the occasion, or the season if it's a seasonal product. You can also mention if it is designed for a specific purpose.
- Where should your customers use the product? Is it used indoors or outdoors? Specify these details.
- Why should your customers use your product? Mention how the product fulfills their needs.
- How should they use your product? Mention if there are any important user instructions.
- How much should they use it? Mention the ideal frequency of usage that’s essential to follow while using the product.
2. Pricing procedure
A pricing strategy refers to the tactics you use to set a price for your products and services. There are several pricing strategies to choose from; you can pick the one that best fits your business model.
There are several things to consider before setting your price. Conduct a price analysis to get an idea of which pricing strategy works for you. Here are the steps involved in conducting a pricing analysis:
- Determine cost of goods sold (COGS): To calculate the total cost of your products and services, add all the expenses that you incurred before the sale. This will include costs such as manufacturing, labor, warehousing, distributing, packaging and labeling, marketing, etc.
- Collect data about the price preferences of your customers: Study your target customers' opinions regarding pricing through surveys and questionnaires.
This helps you know your customers’ price sensitivity. Using this data, you can set an equilibrium price i.e. low enough to sustain demand and high enough to secure profits.
- Study your competitors' prices: Perhaps the best way to tell whether a price works is by looking at the prices of your direct competitors. Direct competitors are those who sell the same products as you do.
Analyzing their pricing strategy helps you understand the price range for similar products in the market. With this information, you can modify your prices to set a competitive price.
- Consider all the legal and ethical aspects: Setting a price that induces sales is essential. But setting prices too low to cut off competition is an illegal practice; this is called predatory pricing. To avoid such troubles, make sure to read up on the relevant laws that apply to your business.
After conducting a pricing analysis, you can look at these pricing strategies to choose one for your business.
3. Product comparison
Regardless of what you're selling, chances are someone in the market is already selling it. Unlike direct competitors, indirect competitors are those who sell similar products with slight variations.
Looking at your competitors can help you draw a comparison. To do that, examine their products and services and list down the similarities and differences.
Categorize this information into qualitative and quantitative aspects and organize it in tables. Finally, summarize it by including your advantages over competitors. Also, include how you will leverage them to balance your drawbacks.
4. Sales literature
Sales literature refers to the promotional and informative materials you use to inform, clarify, and convince your customers to make buying decisions. These include brochures, catalogs, newsletters, price lists, customer testimonials, and case studies.
List out all the sales literature you use or plan to market your products and services; explain the information it conveys in brief. Another integral part of your sales literature is your website; explain how it contributes to your sales.
Perhaps you run a blog to promote your products and inform your customers about new releases. Maybe you sell your products and services directly from your website; in that case, your sales literature material will go there.
Sales literature is a quick and attractive tool to market your products and services.
5. Order management
Order processing refers to the stages from the moment a customer places an order to the delivery of the product paired with after-sales services. Here, you explain how customers will order or buy the product and the delivery process.
For instance, if you are an online retail store, your order processing may include these stages:
- Order placement
- Order processing
- Picking inventory
- Product Delivery
- Customer support
Depending on your offerings, your order processing workflow can have several stages. Describe each step and provide elaborate details about the execution.
6. Delivery requirements
If the delivery or creation of your products and services need any resources, you mention them here. These include equipment, vehicles, technology, and software.
For instance, a cafe owner will need kitchen equipment and IT solutions to run provide its services. These should be mentioned in this part of the products and services section.
To cite another example, a consumer electronics company needs an IT infrastructure and production facility to create its products. For delivery, it needs vehicles and an online portal for customers to place and receive orders. All these are mentioned here.
7. Intellectual properties
Mention all the IP documents that are related to your products and services. These include trademarks, seller permits, patents, other licenses, etc. Here you can also include any legal issues you are currently facing. Explain how you are dealing with the existing issues.
Further, mention the issues that might occur in the future and the counteractive measures you will take to prevent them. These include adding safety labels, disclaimers, opting for insurance policies, etc.
8. Future offerings
This is a chance to impress your investors or partners by briefing them about your future products or services. This shows that you're already working on new ideas which help convey your potential and dedication.
If your future products are an extension of your current ones, you can proentivide an outline of the improvements made. Mon whether your future products are under development or ready for launch.
6 tips to write your products and services section
- Opt for a customer-centric approach: Your goal is to cater to the needs of your customers through your products or services. Hence, write as if you are talking to your customers and directly addressing their issues. Point out how your product will make their lives better and easier.
- Keep it simple: Clearly represent the information. You can use bullet points and lists to convey your message. You can also use tables and charts to display product comparisons, strengths, etc.
- Ditch buzzwords and industrial jargon: Everyone who reads your business plan may not understand the industrial jargon and buzzwords. Therefore, it is best to skip the complicated lingo and use layman terms.
- Specify market pain points: Elaborate on the problems your target audience is facing. You can gather this data via conducting market analysis. Mention the various pain points and the features of your product that address them. Consider citing examples and relevant statistics to display how your product solves a customer problem.
- Emphasize your USP: Highlight the benefits and the unique features of your products and services. Mention the things you do differently than your competitors and how you offer more value in comparison.
- Flaunt your achievements: Make sure to show off the business milestones you’ve achieved such as awards, news articles, customer reviews, etc. You can also include your past sales numbers, your customer base, and the projects you fulfilled. These instill trust and help investors, clients, and partners to make decisions.
Persuade interest with a products and services section
Products and services are the lifeblood of your business. An accurate representation of your offerings is crucial to score funding and to demonstrate your potential to grow in the market.