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Why Do It?

Unless you can hold a ton of data in your head and exploit your invention without financial help from anyone, you’ll reach a point where you need a business plan or project plan. Producing one isn’t many people’s idea of fun, but there are some things you just can’t do without a business plan. Keeping control of your own exploitation plans and activities is one, raising investment or any other kind of significant support is another. This Project nags you to grasp the nettle early and have a good business plan ready well before potential investors and stakeholders start demanding one.


Learn To Love Business Planning

If you want investment, grant funding or some other kind of significant support to develop your invention, it’s almost inevitable that you’ll be asked to provide a business plan (if there’s going to be a business) or project plan (if you’re still at the R&D stage with business activity some way off). The line between a project and a business can be fuzzy so from now on we’re going to lump the two together and use only the more familiar term business plan.

Business plans get a bad press. At bottom they’re simply predictions that are about as reliable as a weather forecast, but that hasn’t stopped business planning turning into an industry in its own right, full of specialists who for the right (high) price will produce a dazzling and perhaps not entirely frank business plan for you. Thus, business plans are often disparaged as little more than future fiction. So what’s the point of them?

The point is that the person who will benefit most from your business plan is you.

You need it to prove the viability of your idea and to guide your progress. It’s your certificate of seaworthiness and navigation chart combined. It’s also your main tool for reducing risk to you, your team and other stakeholders.

SOURCES OF BUSINESS PLANNING HELP

Putting together a good business plan is never a quick or simple process. All the detail you might need to know could easily fill a book on its own, so consider this Project as no more than base camp. Don’t skip it though, because business or project plans based on inventions are not the norm and require a different approach from the models used in most business literature. This difference is what we focus on and you might not learn about it anywhere else.

Bank websites are the best place to find instant, high quality and (usually) free guidance on business planning. Many offer information kits, worked examples and software. Take the lot. Nor is it hard to find specialist books on business planning, though to be on the safe side choose one written for the country you’re in, or intend to raise money in.

Enterprise support organisations may be able to give you some help with business planning at little or no cost. When it comes to paying professionals other than your accountant, solicitor or patent attorney, beware. Consultants who specialise in business planning will always be expensive and won’t necessarily improve your funding prospects. Few private inventors can afford to use them even once, let alone for the continuous updating that a good business plan needs.

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Due Diligence

Your business plan should in fact be a written expression of due diligence. Due diligence (or due care) is a fundamental requirement in the business and investment world. It basically means that before inviting other people to gamble on you, you’ve done your level best to eliminate grey areas and minimise everybody’s risk. This is what we’ve been repeatedly urging you to do throughout this book, so by now you shouldn’t have any qualms that you haven’t been duly diligent. The business plan is simply one of your most important opportunities to prove it.

(By the way: falling down on due diligence can be considered negligence, which can potentially have severe legal repercussions. We therefore hope you have been paying attention to all our previous advice on risk reduction.)

The main uses of a business plan are:

  • To describe what you want to do, and why.
  • To provide evidence to justify the claimed market or technology opportunity.
  • To explain how you can successfully exploit that opportunity.
  • To identify and evaluate competition.
  • To put figures on everything: costs (including need for funds), potential sales and profit, timescales.
  • To enable others to check your facts and figures for themselves.
  • To enable you and others to spot potential problems or omissions.
  • To help you and others track progress.
Many seasoned investors look most keenly at only one thing: the skills and experience of the management team (item 7 below). One way to counteract a lack of relevant experience is to update your business plan every month or even every week, replacing guesswork with hard fact as events unfold. It may be a chore, but you’ll win valuable respect for making the effort to maintain an accurate and honest account of your situation.

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How To Construct A Business Plan

There are no rigid rules about how to put together a business plan, so the format below is for guidance only. No matter what anyone else may tell you, when you’re an inventor the virtues to aim for are:

  • Clarity. Your idea is something new and unfamilar, so make sure it can be fully understood. Appropriate use of illustrations can be a big help.
  • Brevity. At your level, few investors will tolerate a business plan an inch thick. Aim to top out at 10-12 pages of 1.5-spaced A4 - a length that can be skimmed in under five minutes and read comfortably in ten.
  • Fact, not fiction. A business plan isn’t the place for slick sales patter. Present your idea positively but let facts and figures do the persuading. And be honest about any significant weaknesses. Experienced investors are sharp as knives so don’t kid yourself that you can kid them.
  • Good organisation. Considered simply as print on paper, is it pleasant to read and easy to navigate? We’d argue for a plain, unpretentious look. Style laid on with a trowel risks triggering subjective reactions you don’t want: irritation, suspicion, a perception of amateurishness etc.
Remember that it’s you who most needs the business plan, so aim to construct one that informs and convinces you and all your team. Be your own harshest critic and you’ll improve your chances of getting it right when you eventually pitch to investors and other stakeholders.

In terms of content this, roughly, is what you need:

Keeping It Current

A business plan isn’t a once-and-for-all document. It should be continuously updated as things naturally progress, the quality of data improves, and your plans need to be modified. This is where keeping your business plan clear, short, factual and well organised pays dividends: it’s far less of a chore to review it regularly and make changes whenever necessary - possibly even weekly. The advantage of keeping your business plan current is twofold:

  • It keeps you and your team fully informed about the state of play. This can be necessary if you’re each handling a different aspect of the enterprise.
  • If an opportunity arises to present your business plan to a potential stakeholder, you can impress them by handing over a bang up to date version. (So many times we’ve been given a business plan and told, almost proudly: ‘Of course, a lot has changed since this was written’. So many times we think: ‘Then why should we bother to read it?’)
Tip: Give every version of your business plan an issue number or date or you and others may lose track of which is the most recent.

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Project 8 Checklist

The following checklist is partly an action planner and partly a reminder of what matters. If you’re tempted to think ‘I don’t need to do all this stuff’, it may help to point out that we’ve modeled the checklist on questions professionals are very likely to ask if you want their advice, support or money. We therefore have to be stern and say that if you aim to be a respected and successful inventor, you can’t afford to duck any of it.

 
Draft a business (or project) plan
 
Ensure that every member of your team is OK with the plan
 
Ensure that the plan is kept up to date
 
Remember:
The more conscientiously you plan, the more you’ll avert problems and reduce risk.

Next Project…..
PROJECT 9
Project 9

Finding companies

The first step towards a licensing deal is finding the right companies to approach.


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