Company description in a business plan: What it is and How to write it

Company description in a business plan is a part of a business plan that describes the vision and direction of a business so that stakeholders develop a good impression of the business. A good company description should concisely outline key details while conveying the passion for the business mission. Components of a company description include business name, business goals, competitive advantage, target customers, mission statement as well as the business structure.

The main purpose of a company description is to relay information about your business so that stakeholders understand your entity. One of the benefits of a company description is that it presents the first opportunity for you to showcase to investors why your business will be profitable. A company description should not be too long as a very detailed one is difficult to read through. A business plan writer is able to help you write a good company description.

What is a company description in a business plan

A company description in a business plan is an overview of your business that briefly describes its history, location, mission statement, vision statement, personnel as well as its structure. It is the second section of a business plan coming next after the executive summary. A company description should give an accurate impression of who you are,what you do and why. It also explains what makes your business unique.

Anyone reading your company description should understand the scope of your business and know what customers your business serves. Your company description is the foundation on which you will build the rest of the business plan as it gives the basics and background of your business. A strong and clear company description attracts potential investors to your business as it shows that you have a thorough understanding of what you do. 

How to write a company description in a business plan

Writing a company description entails several steps which consider the 5Ws and a H framework. The framework refers to six questions to ask when gathering information. A good company description should adequately answer the 5Ws and H questions of who, what, where,when, why and how. To answer the question of who you are, include your name as the owner as well as the name of the business.

The second question is what do you sell and what are your goals? Be clear in enumerating your products and services and indicate your short term and long term goals. Thirdly, answer the question of where your business is located by indicating the address of where your business is currently operating. The fourth W stands for the question of when you plan to achieve your goals. Give a timeline for both short term and long term goals.

The fifth question is why should customers buy from your business and why are you in business. Explain why your business stands out from other similar businesses and make sure to include your mission statement which defines why you are in business. The H stands for the question how are you going to structure your business. Indicate if your business is a sole proprietorship or a company. 

What to include in a company description

The elements to include in a company description vary depending on what details of your business are important. However, there are some common elements that should be included such as basic business information. It is an introduction for your business which includes the official name of your business and its location. You then include your business’ history, mission statement and future goals.

Business name

A business name is how people will address your business.This entails the official name of your business exactly as registered in the state where you do business. Include also your name as the owner as well as those of key members of management. Your business name is the cornerstone of your brand hence has the power to communicate what your brand value and what it stands for. 

Business goals

Business goals are what you are aiming to achieve with your business venture. They should be specific, measurable, achievable, realistic and timebound. Include both short term and long term goals. Business goals give the overall direction for your business plan. They give readers of your business plan a clear idea of where your business wants to go as well as what it wants to be.

Competitive advantage

Competitive advantage refers to what gives a business an edge over its competitors to help attract more customers. It explains what differentiates your business from other similar businesses.Competitive advantage also sets out why people want to do business with you.  For example excellent customer service will set you apart from your competitors resulting in a loyal customer base. Other competitive advantages include good reputation, advanced technology and company culture.

Target customers

Target customers refer to who  you are selling to and why they will buy your products and services. They are the people that your business will serve. Identify the demographics of your target customers such as age, income and interests so that your business meets their needs. If you don’t know your target customers, high chances are that no one will be interested in your business.

Mission statement

Mission statement communicates why your business exists. It should highlight your motivations for starting the business as well as summarize your target market, products and services. Your mission statement should acknowledge the existence of a problem and explain how your business solves the problem. It helps stakeholders such as customers and investors understand the top priorities of your business. Additionally, a mission statement should include a general description of your business, its key function and goals.

Products or services

Products and services are the offerings of your business to customers. Have a list of products and services and a brief and concise  description of each of them.  Outline the benefits of your products and explain their difference with those of your competitors. Include details on your pricing as well as the products’ lifespan. Patents and trademarks associated with your products and services should also be included.

Opening date

Opening date is when you first opened your business and is considered to be the date when your business began its operations. It helps people know that your new business is open to them. Consumers are inclined to visit a business premises in its first years rather than a business established long ago. Additionally, including the opening date  for your business is important for ensuring legal compliance such as tax filing.

Business structure

Business structure refers to what type of business you are operating. Types of businesses include sole proprietorship, partnerships, companies,corporations and cooperatives. Business structure element helps people understand the type of business that you run. It provides a context for how your business legally operates. The structure of your business impacts how you will file your taxes and what type of insurance you will need.

Future goals

Future goals are goals that a business anticipates to accomplish in a set period of time. They represent an entity’s larger purpose to establish an end goal for staff to work towards. Future goals do not have to be specific or have defined actions. They are broad results that a business wishes to achieve. Future goals are important as they provide a way to measure success and keep everyone involved in the business on the same page as to what the goals are.  Include also  a brief description of your business growth goals.

What is the purpose of the company description in a business plan?

A company description in a business plan  has many benefits. If you are seeking investment from potential investors, it explains the legal structure of your business and who is involved in its ownership and management. A company description provides a platform for stakeholders to learn about your firm. It gives the readers interest in reading the rest of your business plan.

Your company description is your first chance to please lenders and show them why your business will be profitable. The purpose of the company description is to inform stakeholders how your business benefits customers and its position in the market. It should give a clear understanding of your business as well as its functions.

For your members of staff, the company description communicates your vision ensuring that everyone is working towards the same goals. In addition, your company description helps to attract new customers as it includes what makes your products and services unique. It also helps to build credibility of your brand through sharing your business history with your potential customers. 

How do you write a business plan?

Writing a business plan entails various steps including drafting an executive summary which introduces your business along with its relevant information such as objective and vision. The next step is writing your company description which explains why you are in business and why you are a good investment to make. Next up is describing your products and services by outlining how they work, their prices and the market that they will serve. You then conduct a market analysis which explains the industry’s current state as well as your competition. A competitive analysis comes next, followed by drawing up a marketing and financial plan.

Writing a business plan requires immense research so ensure that you are objective and track your research as supporting documentation. In addition, know why you are writing your business plan to guide the approach to your project planning.

What other business plan components are written together with a company description?

Apart from a company description, a business plan has other common elements. They include an executive summary which comes first in the plan, a product and services description also known as a problem statement and a description of the organizational management structure. It also includes a market analysis, a competitive analysis, a marketing and sales plan as well as a financial plan. Other business plan components include a funding request, key milestones and metrics and the appendix which contains information that supports your business plan.

Do business plan writers help in writing company descriptions?

Yes, business plan writers help in writing a company description. Professionally written company description is one of the business planning services offered by experts. Expert business plan writers possess the expertise and experience in writing a good company description. Business plan writers are found online through platforms such as websites or through referrals where you plan to meet physically.

How long is a company description in a business plan?

A company description is one page long consisting of a few paragraphs. A company description is the shortest chapter in a business plan. Avoid making your company description too long as it can overwhelm the reader. You will lose the attention of the reader if it is too lengthy yet the goal is to ensure that they get to read the entire business plan. The length of a business plan greatly varies depending on the type of business but is typically 15 to 20  pages long. 

Company Description in a business plan example

An example of company description in a business plan gives you an idea of how it looks. To get you started, sample company descriptions made public by some businesses on their company profiles online. Additionally, business planning softwares have templates that showcase the structure of a company description. While company descriptions vary depending on a business’ circumstances and needs, you can reference the language and style when crafting yours. 

Company Description Example