Writing Your Business Plan, Step 2: The Company Description

Company Holiday Party (Creative Commons License)

Today is step 2 of 13 in the writing of your business plan.  We’ll be covering the General Company Description.  I like to think of this section as the “backbone of the business”.  These are the elements of your business that support all functions and make it run smooth as butter.

About the General Company Description

This section gives the nitty-gritty about your business, specifically organizational structure.  It describes the following about your company:

Mission statement

The mission statement is a company’s reason for being and its guiding principle.  For example, the mission of Sage Wedding Pros is to be a resource for wedding professionals who want to have smarter businesses.  A few weeks ago we discussed the writing of your mission statement.  Visit here to see some tips on writing this.

Company objectives

This section is a good follow-up to the mission statement.  Lay out your business goals and philosophies.  The objectives should be short and concise because you will be expanding on this later in the plan.  (Think of this as your “elevator speech”.)  SCORE (counselors to America’s small businesses) recommends BRIEFLY describing:

• What business are you in?
• What do you do?
• What is your target market? (Explain briefly here, because you will do a more thorough explanation in the Marketing Plan section.)
• Describe your industry. Is it a growth industry?
• What changes do you foresee in your industry, and how is your company poised to take advantage of them?

Form of ownership

Is your business a sole proprietorship, partnership, corporation, or limited liability corporation (LLC)?

Company history

Give a detailed history of your business.  I like to give a chronological account of my business.  Start at the beginning (when you were working out of your basement) and end in the present moment (when you are sitting on your yacht sipping martinis all day.)  Here are some things you can cover:

• When was the business founded?  Who founded the business?
• Did you acquire the business?  Who were the previous owners?
• What successes have you had?  Products you’ve launched?
• What failures have you had?  Significant problems?  Lessons you’ve learned?
• What is your place in the industry?  How are you perceived by the community?
• What sort of trade affiliations are you an active member of?
• What is your sales and profit history?
• Do you have any employees?

Strengths and core competencies

Here is where you get to brag about your business.  Describe what makes your company successful:

• How do you achieve success?
• What are the strengths you have over competitors?
• What makes your business different?
• What do you personally bring to the business?

Significant challenges the company faces now and in the near future

What are the greatest challenges you face now and in the future?  This question will make you take a hard look at the core of your business.  Don’t let it scare you.  It is an attempt for you to be honest and realistic with yourself.  It is in identifying these challenges that we become stronger business people.  If you are asking for funding, go on to explain how the new capital will help you meet these challenges.

Long term plans

In this section, you’ll describe your future plans for the business.  You’ll have a chance to elaborate on details later in the plan.  But, start laying out some of your goals here.  This is a tough section to write because it forces you to think about where you want to be 5, 10, 15, 20 years down the line.  Write something now.  You can always come back to this at the end of writing your plan and elaborate.  I find that as people write their business plans they learn a lot about themselves and what they want from their business.  Here’s where you can start:

• What are your plans for the future of the business?
• Do you want to grow the business? If so, at what rate and how will you achieve it?
• Do you plan to have continued growth?  If so, what are your plans for increased production?  Regional expansion?  National expansion?
• Are you interested in growing the business to the point where you can sell it?
• What are your time frames for these?

Next step

The company description is something that can be easy to do because you know so much about your business.  The challenging elements are those that require you to look forward.  Looking forward is one of the most valuable exercises in writing a business plan. Just remember: you can always come back to this section later in your writing once you have discovered more about your business.  If you are stuck, you may want to review the tips for business plan writing that I laid out on Day 1.  On Monday, we’ll get into writing about your Products and Services.