Production Process

An investor will only provide money for a business he or she understands, so walk the reader through the stages of product production from the inception of the idea to when it can be sold. With a service company, describe the process of delivering the service. A company that helps its customers determine Web strategy, for example, would describe the process of finding out about client objectives, researching current offerings on the Web, and presenting a solution. If you were starting a winery, your production process section would describe the harvesting, fermenting, and bottling processes.

Make or Buy

Part of your production process discussion will be a justification of the make or buy strategy for production components. Make or buy strategy focuses on whether you will create all components necessary for the production of your product or service in-house, or buy a service or a product to add to yours. If you are starting a consulting business, you might state in your plan that paying for the services of an administrative assistant (buy), will increase profits by enabling the company principals to spend more time on money-generating activities. A pillow production company, would discuss spikes in production and the cost savings incurred in subcontracting sewing (buy) rather than keeping the sewing (make) in-house.

Location, Location, Location

Also discuss geographic location for the production of your product or service. Justify this decision as well, by talking about savings in rent or lease, convenience to suppliers, labor, materials, or other factors important to your business.

Tips

• Be sure to justify your make or buy strategy by explaining why your approach will lead your business to greater profits.
• Avoid the common mistake of skipping the make or buy section and justification simply because you are starting or running a service business. If you are starting a consulting business, make a case for why assistants and other support staff will increase profits.
• Do not forget to justify your choice of location. Some commonly-overlooked location benefits include proximity to transportation, and availability of skilled, affordable labor.
• If you choose to locate your business in a home office, discuss the cost-savings of this choice of office. Also assure readers that a home office location will not be negatively perceived in your industry.

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