An invention business plan is similar to planning a trip. It details where you want to go, why you want to go there, and how you are going to get there. It contains all the details of your trip as well as contingency plans in the event you have to make detours.
It is a highly effective planning tool because it often reveals unknown information to you. It helps to identify strategic flaws in why you think your invention will be successful.
As an example, I prepared a business plan for one of my inventions. I estimated sales based upon my market research and methods of distribution.
My estimates were conservative and growth was related to the expansion of distribution. I projected my sales over a three year period and then calculated the manufacturing costs and expenses over that time.
When I projected these costs and expenses, it indicated that I was going to have a problem with the manufacturing capacity in the third year.
Since my invention required a certain amount of assembled labor, it meant that I would need a manufacturing facility for thousands of assemblers.
This was going to be a problem since a facility capable of organizing thousands of assemblers is not only expensive, and difficult to find, but it would also substantially reduce my profits.
This meant that I had to rethink how to maintain profitability by dealing with this manufacturing dilemma.
I could have outsourced manufacturing overseas but that would mean everything would start elsewhere. I would need a high volume of sales in order to secure desirable pricing, delivery and shipping, which I didn't have since I was a new start-up.
It also meant that I would need to send someone overseas to supervise the making of my invention. So I needed to find a way to have my invention assembled locally without increasing assembly costs.
What's the most important information in your business plan?
It depends on who is reading it. But whoever reads it, they will want it to be clear and concise with a logical structure.
They're looking for a well thought out plan.
They will focus on your cash flow, market research, strategic implementation, management, and potential for profitability.
Cash flow projections are a good indicator of your management.
Cash flow is not profits but rather when and how you're going to have money coming into the bank faster than it is going out.
If your receivables are 90 days and your accounts payable are 30 days, you have no cash flow and therefore no cash on hand. That's not good.
When someone is evaluating your business plan they are looking for strategic implementation. They want to see if you have organizational skills.
Do you assign responsibilities, set targets and track performance? This is why management is very important to investors.
The reader wants to know who is going to implement the strategies that will lead the business to profits.
They want to know if you have knowledge of the industry. If you have the capability or experience to operate a successful venture. If you have the necessary tools and team to make it happen.
Your business plan is like your calling card. It will get you in the door so you can convince others about the viability of your invention.
A business plan, though necessary, is only a way to present information. A new idea is harder to sell than an existing one because people don't understand something new and they are unsure if it will work.
When someone is evaluating a business plan they are looking for credibility, confidence and potential for success.
Invention Business Plan Software
There are business planning software programs that you can use that will greatly assist you in preparing a well-developed, professional invention business plan. Some are free with upgrades or come with free trials that you can download.
Search Inventor Strategies Website.