What could be a description of this proposed business and what could be the reason someone could invest in my business? I'm thinking of starting a sporting goods business. 

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kplhardison's profile pic

Karen P.L. Hardison | College Teacher | eNotes Employee

Posted on

The description of your business is part of your overall Business Plan. The business description is aimed at potential investors in your business who might provide venture capital, research and development capital or other categories of investment capital so that you have the financial backing to run your business and present your goods or services to those you have targeted as your customers. 

Business description differs significantly from "sales pitch" in two aspects: Who it addresses and what it is an element of. The business description addresses investors while the sales pitch addresses potential customers who are being approached through a project proposal, bid or marketing strategy. The business description is an element of a comprehensive Business Plan as opposed to being a one-time presentation geared to a specific project, contract or marketing strategy.

A business description for a sporting goods business would describe the business structure as type of business, in this case, retail; legal form of ownership; projected customer base, including marketing strategy and customer service; description of product or service, including unique position in the marketplace, unique (proprietary) concepts and "competitive edge" using projected specifics to illustrate these points; and expectations and avenues of profitability answering "why" and "how" your business is going to be profitable.

The main three reasons investors or bankers will invest in your business are (1) your convincing descriptions of your clear vision and understanding of your business and of the marketplace; (2) your business's market position and your anticipated competitive edge; and (3) your projections of profitability. These are all described in your business description and, when effectively done, are what could be the reasons someone might invest in your business.

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thanatassa's profile pic

thanatassa | College Teacher | (Level 3) Educator Emeritus

Posted on

A sporting goods store is obviously a retail business. Your main issue in trying to write a business description is working out a solid business plan that would convincingly show a prospective investor that you would be likely to be profitable. To do this, the first thing you would need to do is show that there is a genuine need for your products.

Demonstrating need means two things. First, there need to be people who want to buy your product. If you are considering a bricks and mortar shop, this means potential buyers within a limited driving distance. For an internet shop, you eliminate the geographical limits on your potential buyers, but you also end up in competition with every other online sporting goods seller. 

Next, you need to define your specific market segment and how it is positioned against the competition. For example, if you want to open a generic shop competing on cost, you will be trying to go head to head against places like Walmart, which can get much better deals from wholesalers than you can. If you are looking at a niche market, such as handcrafted canoes or teaming with artists to make unique snowboard and skateboard art, you have a more limited market but less competition. Another possibility is second-hand sporting goods which is a small but thriving local market with fewer fixed costs, as you can take goods on consignment and earn a profit on a percentage of sales, rather than having to invest in building inventory.

Next, you need a financial plan that breaks down your costs in some detail, and analyzes the sales volume you would need to make a profit. 

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