As an inventor, we hope that your goal is to manufacture and sell your invention, transforming your idea into a reality. As ideas become products that fill needs in the market, the greatest accomplishment for any inventor is in seeing success firsthand from a product he or she developed. Besides, it is pretty incredible to see your product on the store shelf.
When you make the decision to manufacture and sell your invention you are, essentially, making the choice to start your own business. And, with any good business, you need a plan in place to outline your priorities, finances, and goals for the future. Yes, you need a business plan.
What is a Business Plan?
A business plan clearly defines the goals of your business and how you plan to achieve these goals. Additionally, if you plan to raise capital or seek potential investors, a business plan is vital in showing the professionalism of your business to establish its legitimacy. If success is your destination then your business plan serves as your roadmap.
As an inventor, your business plan is your business’s guide. By outlining how the business will work on a daily basis, a good business plan will manage the business as well as lay the foundation for financial goals and marketing plans. Like I mentioned before, consider it the roadmap to how you will run your business, gain capital, market your product, etc.
What should I include in my Business Plan?
A business plan is typically anywhere from 15 to 20 pages in length and provides a concise outline of your business from its purpose and description to marketing plans and financial needs.
Below are the most common components found in a business plan as well as questions to consider as you begin the process.
Statement of Purpose: What is your product and what need does it fill in the market?
- Summary: Briefly describe your invention/business as well as the market and targeted customers.
- What is the purpose of your invention? What products are offered?
- Who are your customers?
- Why would customers want to buy your product?
- Marketing: Here, you will describe your product in full as well as the market and competitors, which requires some research on your part. You will also elaborate on how you plan to promote and market your product.
- What is your product and how will it function?
- How is your product unique? What problem does the product solve?
- How will your product be packaged?
- Who are your potential customers? Be as specific as possible here so that you can clearly establish the individual who will most likely be interested in your product. Is the customer wealthy? Is the customer educated? Does he or she work in a specific industry or have a particular hobby? What age range or gender?
- What are the strengths of your product? Weaknesses?
- How do you plan on reaching customers? How will they learn about your product? How will you market and advertise?
- Competition: Research your product’s market so that you can fully understand the competition.
- Who or what is your competition?
- Why would customers choose your product over the competition?
- Why might customers choose competitor products over yours?
- Operations: Management & Personnel: Describe how your business will be managed as well as potential staffing needs.
- How will you manage the demands of your business?
- What is the size and scope of your business? Will your business be local, national or global?
- Is another partner involved?
- Do you have investors or a board of directors?
- Who are your legal and business advisors? Include any lawyers required for patenting or intellectual property as well as accountants, etc.
- Product Information:
- How much will your product cost to make?
- How much do you plan on selling your product for in the market (retail price)?
- Business Costs:
- What are the overall costs to run your business?
- What are the potential profits of your business?
- Investors and Capital
- Which investors will your target and why?
- How much capital do you need?
- Capital Equipment and Supplies
- What equipment and supplies are required to launch your business?
- What are the costs associated with the needed equipment?
- What are your expected financial projections?
- What will it require to break even? To earn a profit?
- Supporting Documents:
- Tax returns from the past three years – These documents will show your income and provide financial legitimacy for potential investors.
- Patent, trademark or copyright applications
- Letters of intent from suppliers – These letters show that the process has been initiated and that, pending approval, your suppliers are readily available.
- Resumes of all principals
So, you have a business plan, now what?
- A business plan is an essential part of the invention process. Although it takes time to create, a finalized business plan allows you to have a clearer idea of your invention and your goals for success. Through the process, you will be able to more effectively convey your idea into an understandable and legitimate business opportunity not only to potential customers but to potential investors as well. In addition, the extensive research that you will conduct in completing the plan will also provide valuable insight into the market and potential competitors.
- With your business plan, remember that you are still disclosing information about an idea and, as we have mentioned before, it is always advisable to use caution. Some inventors continue to safeguard their ideas by providing only the information requested in addition to including a non-disclosure agreement even if a patent is filed.