By Adelaide Raymond
According to Investopedia a business plan is “a written document that describes in detail how a new business is going to achieve its goals.” Creating a strong business plan could be essential for inventors in order to raise the capital necessary to manufacture and sell an invention. Here are few reasons why a business plan can be a strong asset during your invention process.
New ideas can be exciting but also a bit overwhelming, so one of the greatest benefits of creating a business plan is it enables you to see your idea on paper. By laying everything out, you can separate emotion from business and evaluate the opportunities at hand in a non-biased way. You can evaluate the plausibility of your idea, as well as determine financial needs and how to allocate available funds. Additionally, you can assess the validity of assumptions you’ve made concerning capital. This will help you to avoid major mistakes by ensuring you have not only the necessary capital but partners and resources. Overall, these assessments will help reduce business risks.
A formal business plan shows you are organized and serious about your invention. It serves as a great way to get everyone on the same page whether it be family, friends or partners. When looking for investors, your business plan is the heart of the proposal process. It answers important questions regarding the need for your product in the market, finances and strategy. A business plan serves as a revenue model, showing how your business will generate profit, which is important when attracting investors. It will also help to establish important milestones thus allowing you to track your progress. By establishing milestones, you will have the means to keep focused on achieving the goals you’ve set.
The research required to create a business plan will give you a better understanding of what will be involved in your venture as a whole. Through your findings, you will see the trajectory of other products on the market in your industry. A better understanding of similar products may inspire you to differentiate your product, as well as help size up your competition. This also gives you a chance to analyze your direct and indirect competitors. Through your research, your will devise a customer analysis to better understand your market.
By creating a business plan, you are giving yourself a chance to fully illustrate your invention while gaining a better understanding of your needs, the market and the goals you intend to achieve. As your business grows and develops so will your business plan!