Bringing a new product to the marketplace is a complex business venture that requires extensive planning. The new product business plan is critical for establishing a clear path to profitability and for raising money from lenders and investors. Some of the major issues associated with a new product include product development, patents, prototypes, manufacturing, and sales distribution channels, to name a few. Getting a new product manufactured, and to the point where it is generating revenues, is an expensive process because each step from development to sales is breaking new ground.
The essentials of the new product business plan are designed to lay out the justifications for pursuing the new product development, production and sales. This is not just for investors. The business plan forces the inventor-entrepreneur to consider each step necessary to convert an idea into a tangible product.
Therefore, the business plan will discuss information like the following:
- Company legal structure and management qualifications
- Registration of the patent and trademark using an experienced attorney
- Product function or features that make it unique and desirable to customers
- Market analysis identifying the target market, product testing results, customer purchasing habits, etc.
- Identification of the manufacturers (contracted or self) that can produce enough product to meet projected unit sales
- Sourcing of domestic and foreign materials and research evidence that there will not be a shortage of critical materials
- Facilities and information on space leasing or property purchase for manufacturing and/or retail activities
- Contracts in place with manufacturers, suppliers, wholesalers, sellers, and import/export companies (if applicable)
- Marketing strategies that include promotional materials and selling method (in-store, online, catalogue, direct selling, etc.)
- Analysis of the competition and analysis of barriers to entry into the industry or market and how they will be overcome
- Staffing requirements
- Amount of funding required, how it will be spent, and the timeframe for expenditures
Once the market has been analyzed, it is possible to develop proforma financial statements. The statements can include historical financial information for an existing business, but all businesses need to include a five-year projected profit/loss statement, balance sheet, and cash flow statement. It may also be necessary to include a capital expenditure budget depending on the type of new product involved. The appendices could be extensive in a new product business plan because it will include product pictures, schematics, market studies, licenses and patents, legal documents, and so on. However, it is important to find the right balance of supporting documentation and only include the items that contribute to an understanding of the new product.
Business people ready to develop and market a new product and in need of a new product business plan to obtain financing or funding should contact OGS Capital consultants. Completing the online form is the first step towards developing a high quality business plan able to attract investors.
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