Once you have secured your patent from the United States Patent and Trademark Office, the next step is commercializing it. But where do you begin that process? The logical thing to do is to begin writing a business plan for your new patent and stating your goals including how you intend to reach them. There are essentially two types of business plans you can write. The one you choose depends on your specific goals.
The first type of business plan is one you plan on showing to others. This might be so you can raise venture capital funding or get a bank loan. The second type of business plan is for yourself. It is in essence a document to keep you on track, something you can refer to in the day-to-day chaos of your operations and use to determine whether you are on target. First, let’s explore the first type.
If you are writing a business plan to obtain funding, you are essentially giving a stranger an overview of your company. This person will want to evaluate your goals, your personell, and your financial projections for the future. Therefore, these are the things you want to address and give special attention to in your business plan. At bare minimum, your business plan needs an executive summary, a marketing plan, financial projections, and a description of the personell involved. Let’s learn a little more about each phase, as each one is crucially important.
Executive Summary
The executive summary is what you might call “the main point.” It is the most important part of your business plan. This is where you summarize the purpose of your company, how you will make money, in essence, what you will be going into business to do. You want to touch upon the surface of all the other categories, but without going into super-specific detail. For example, rather than naming the stores you want to sell your product in or the names of specific personell, you might say something like “We will utilize a robust strategy of discount store selling made possible by high-ranking personell in the retail field.” A venture capitalist or business partner should be able to read your executive summary and come away with a broad understanding of your goals. Of course, you’ll need to firm up specifics of how your business will be run in order to provide that understanding. Therefore, it would be best to hold off on writing the executive summary until after you are down with your marketing plan, financial projections, and personell descriptions. Then you yourself will be intimately familiar with the details and in a good position to sum it all up in your executive summary.
Marketing Plan
Your marketing plan is basically how you intend to reach your customers. It is also where you define your ideal customer: say, 22-35 year old SUV driving males in the northeast with incomes of $80,000 per year or more. The person reading your marketing plan should come away knowing where your product will be sold and how. Details are crucial here. Do you know buyers at Home Depot or Wal-Mart, if that’s where you plan on selling? Will you be using Google AdWords or affiliate deals, if you will be retailing online? How much product can you afford to produce? How do you plan on keeping store shelves (or inventory) stocked? Anything related to how and at what cost your product reaches customers belongs in the market plan, spelled out in as much detail as you can go into. This will firm up your vision in the minds of anyone reading it.
Financial Projections
The number one question on the mind of any business partner is “How much money is going to come out of this?” The financial projections are where you attempt to answer this question. What are your sales goals? What kind of profit margin do you expect? When do you predict the company will be profitable? Are there significant debts that need to be taken and later repaid, such as for machinery or equipment? If so, you need to factor such things into your projections. A person reading your financial projections will want to know that you have taken everything into account and produced some realistic expectations for the business.
Personell
Finally, those reading your business plan will want to know that you have competent, accomplished people working with you. In the personell section, you want to list the names, achievements, and qualifications of anyone who will be working with you. The idea is to convince the VC or partner that the personell you have chosen are suited for the tasks that lie ahead. This is especially important, given the modern trend of venture capitalists appointing their own guys to companies they fund.
The other type of business plan is the one you write for yourself; for example, if you are bootstrapping with your own funds and growing the business organically, by reinvesting profits. This type of business plan can be much more informal in nature, since you will be the only one looking at it. However, you should still be thinking about the same questions. Too many business owners lose sight of why they are in business at all, and try to be all things to all people. This does not work, and a solid business plan is a great way to keep yourself focused on what matters — on what is profitable.
Therefore, no matter how you choose to structure your business plan, it should have the following:
- Specific, numeric sales goals and time frames for achieving them.
- A list of ways you intend on marketing your product and the steps necessary to see it through
- When you expect to be profitable and why
Forcing yourself to think these things through will be an invaluable benefit as you build your company. They will give you standards to judge yourself against daily, as well as show you how to correct any mistakes you are making.