Features
Part of Company descriptions: reading yours as a lender, then as an investor
Create company descriptions that match the whole plan
Create company descriptions that agree with the rest of the plan: anchor on the unit of sale, run five cross-checks, and fix records that contradict it.
A company description is read against every other section of the plan. Contradictions between sections are what reviewers find fastest, because checking internal consistency is the quickest way to assess a document they cannot otherwise verify. The work is to build the description from records, then test it against the rest.
What to take away
- Build the description from records, then test it against the product, market, team, projections and cost lines.
- The unit-of-sale sentence anchors every checkif it cannot state a price, other sections cannot be built yet.
- A contradiction between a record and the business is fixed in the record, not in the prose.
- A loose end that cannot be fixed yet gets one plain sentence saying what the position is and when it will be settled.
Put the records on the desk first
The cross-check is only as good as what you check against, so start with a folder of records kept as files rather than as memories. Every statement in the description should trace to one of them. Put these in one folder.
Records to pull first
- Formation filing and registry record
- Assumed name registration
- Operating or partnership agreement
- Lease or deed for each site
- Licenses, permits, pending applications
- Latest tax return and insurance schedule
Anything you cannot find is the first thing to chase. A missing document is more likely to be a problem with the business than a problem with your filing system.
Reconcile the names next. The legal name, trading name, bank name and invoice name disagreeing is the most common defect here. If they do not match, decide which is correct and fix the others at the source. A lender comparing an application to a registry record is doing so in the first ten minutes.
Entity type is a state matter as well as a tax one. A limited liability company is a business structure allowed by state statute, so the description should name the type the state record shows, not the one the plan assumes.
Five places the name appears
Place
- Registry
- Legal name
- Bank account
- Legal name
- Invoices
- Legal name
- Website
- Legal name
- Application
- Legal name
Must match
- Registry
- Bank account
- Invoices
- Website
- Application
Anchor the description on the unit of sale
Write one sentence before anything else: what a customer buys, once, and what they pay for it. No adjectives, no range, no "solutions". Every later check hangs on this sentence, so it has to be plain enough to compare against the rest of the plan.
Can you state the unit of sale?
One sentence: what a customer buys once, and what they pay
write it, then move to the fact block
pricing decision is unmade; stop before projections
This is the hardest sentence in the section, and its difficulty is diagnostic. If three different things come out, you have three revenue lines and the plan needs to say so. If you cannot state a price, the pricing decision has not been made, and nothing in the financial section can be built until it is.
Draft from a fact block, then trim
Fill the fact block field by field from the folder, never from memory. Where a record is missing or contradicts another record, leave the field blank and write the reason next to it. The blanks are your task list, and they are usually short.
Filling the fact block
- Work field by field from the folder
- Never fill a field from memory
- Leave blanks where records conflict
- Write the reason beside each blank
- Treat the blanks as your task list
The fact block has one entry per field, and each entry is copied from a record, not from memory. A blank means the record is missing or disagrees with another one.
| Field | Record it comes from |
|---|---|
| Legal name | The state's business registry record, usually held by the Secretary of State's office |
| Trading, bank and invoice names | A bank record and a recent invoice |
| Entity type and state | The same state record, not the plan |
| Licenses and permits, including pending applications | The licenses and the applications themselves |
| Tax classification and fiscal year end | The most recent tax return |
| Premises and permitted use | The lease |
| Owners and percentages | The operating agreement |
| Unit of sale and price | The sentence written in the previous step |
The SBA's launch guidance says a business must register, pay taxes and get licenses and permits in the place where it locates, so the permit row sits beside the premises row. A blank layout is in the descriptions template. Use it or your own, as long as every entry has a document behind it.
Then write three paragraphs from the fact block, not from the folder: what the business is, how it got here, where it stands now. Keep events as dated events, and put a date on anything that does not yet exist.
Three paragraphs, then cut
- Write what the business is
- Write how it got here, dated
- Write where it stands now
- Delete sentences true of any competitor
- Expect to cut about a quarter
Then read the three paragraphs and delete every sentence that would still be true of a competitor. Turning a promotional sentence back into a factual one is worked through in the description examples. What is left is the part only you could have written.
Five comparisons against the plan
Compare the description with five other parts of the plan, a minute each. The table says what to look for and what to fix when the two disagree. Change the record or the plan first, and only then the sentence.
| Check against | Looking for | If they disagree |
|---|---|---|
| The product section | The thing you say you sell is the thing that is priced | Name each revenue line, or make the pricing decision |
| The market section | The customer described here is the customer being sized | Describe the customer once, in the same words |
| The team section | The owners named here are the same people, at the same percentages | Correct the operating agreement or the plan, whichever is wrong |
| The projections | The stage described here matches the first forecast period | Move the stage or the forecast start |
| The cost lines | The premises described here appear at the amount in the lease | Correct the cost line to the lease |
How each section hands its figures to the next is set out in the section hand-off guide. Run the table after every change to the plan, because one edited number is enough to put two sections out of step.
When a record contradicts the business
Sometimes the cross-check shows the record is wrong, not the plan. The lease permits a use narrower than what you now do, the registration lists an activity you dropped two years ago, or an owner on the operating agreement has quietly stopped being involved.
Do not resolve it in the prose. Resolve it in the record, and if that will take time, write one plain sentence in the plan saying what the position is and when it is expected to be settled. A reader can work with a disclosed loose end. What ends a reading is finding one that was known and not mentioned.
A description that skips all this and reads as an advertisement fails the same test from the other side. Its failure and its cures are covered in the descriptions guide.
Common questions
How long should the cross-check take for an existing business?
Three hours for the whole section if the paperwork is in order, and a week if it is not, because the work is not writing. Businesses that have never had a reason to check their own records commonly find two or three things to fix.
Can I write this section first, since it appears near the front?
You can draft it, but revise it last. A description written before the numbers exist describes the business you had in mind, and the reader will be comparing it against the business the projections describe.
Do I need a lawyer for any of this?
Not for writing the section. For anything the cross-check turns up, such as an ownership split nobody documented or a lapsed registration, an hour of professional time is usually cheaper than the problem it prevents.
What if I genuinely have no records because nothing is registered yet?
Then say that, with the intended structure, the state, and the date you plan to file. An unregistered business at planning stage is ordinary. A document implying registration that has not happened is not.
