The content, structure, and focus of your business plan should emphasize what makes your company superior - its uniqueness, advantages, and special characteristics. However, an investor expects your plan to include certain elements. They should be laid out in the sequence that will best show off your company's strengths and individuality.
Today, enable provides you with the basic building blocks of a professional business plan. We have included them for demonstration purposes and not as suggested boilerplate chapters for your plan. The plan must be tailored to your own specific company. For the next several weeks we will be dealing with each of the blocks in detail. Today we start with the technology and products block, and include links to help you describe your technology and products in an easily comprehensible way.
Building Blocks of a Business Plan
The basic building blocks of a business plan are outlined below. Please note that the content for each should not be written in a vacuum. Each section must be self-sufficient, yet interrelate with all of the others.
- Executive Summary
- Technology & Products
- Market Analysis And Competition
- Business Model & Marketing Strategy
- Management And Organizational Structure
- Financial Projections
Additional sections could include:
- Use of Proceeds -- Explain why you need the investment. Be as specific as possible -- do not simply use the standard boilerplate responses.
- Intellectual Property -- Discuss your patents, trademarks, and copyrights. Include your policy for protecting your proprietary information, technology and trade secrets.
- Exit Strategy -- Include a section on how the investors will "cash out." Articulate your strategy and let investors know that you have thought very hard about their inherent interests.
- Glossaries -- It may be advisable to include a glossary of technical and professional terms. However, if you do so, you should make sure that your definitions are indeed helpful and provide explanations in layman's terms (see the list of links below).
The Technology and Product Block
This block generally covers the technology, products, research and development, and manufacturing issues. Your main challenge in the technology section is to use layman's terms to inform the reader that you have superior technology that is on the leading edge. You cannot take it for granted that potential investors will have strong technological backgrounds. Moreover, the business plan should be written with all of the members of the management team in mind – including those that are not engineers.
To ensure that laymen can understand, try to use pictures and diagrams to explain the technology. Do not inundate the reader with too much material here.. If you have white papers or other publications concerning your technology, you can include them as an appendix. Also be sure not to expose any proprietary information.
The following links will help you describe your technology and its advantages to non-technical investors and key personnel:
Products – Stress User Benefits
You must describe your product and its competitive advantages in a simple, straightforward way. In doing so, consider the fact that investors look for truly market driven products, that meet an unsatisfied or emerging market need. Focus heavily on user benefits and the needs your product will serve. Explain how your product differs from and is better than its competition. Include a section on product features and their advantages and disadvantages. Discuss the product's price, quality, and reliability. A chart summarizing the user benefits could also be included.
If the product is already on the market, or if it is being used at Beta Sites, include customer recommendations and references. For development stage products, provide a discussion of current status, and development schedules and milestones.
An excellent site to help you describe your product in an easy to understand manner is www.howstuffworks.com. This site provides easy to comprehend explanations for a wide range of technical topics. It provides short and simple descriptions of how things work, along with excellent graphics.
The author, Marshall Brain, encourages you to copy from the site, as long as you give credit where credit is due. For example, "Title of Article", How Stuff Works (http://www.howstuffworks.com), by Marshall Brain. BYG Publishing, Inc., 1998.
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Research & Development
In this section, focus on both on-going R&D projects, and future plans. Key points that investors look for include: the relationship of R&D to your market, how your R&D relates to product upgrades and new releases, and whether the development schedules and timetables make sense. You should also include information on the R&D team.
In developing your time tables, keep in mind all regulatory approvals – they can cause major headaches and delay product launches if they are not factored in at the earliest possible date. For example, medical companies need to pay close attention to sequential timetables, and the completion dates of clinical trials required for FDA approvals – if not, US sales may be delayed.
For help, check out the FDA's Web site at the earliest possible stage.
Manufacturing
In this section, you should discuss the manufacturing facility, equipment needs and recruitment issues. Quality assurance standards and similar issues also need to be addressed. Do not simply state that manufacturing will be done by "best of breed" subcontractors. Try to be as specific as possible.
I apologize for an incorrect link in our last column. The link has been corrected and I would like to thank all of you for bringing it to my attention.
Published by Israel's Business Arena, June 29, 1999