An inventor’s business plan is a framework for bringing a concept to market and achieving profitability. It’s similar to a regular business plan but adds details about intellectual property protection and prototypes. Ideally, a business plan for inventions builds upon a feasibility study. It should highlight your findings from a comprehensive competitive analysis and be tailored to its intended audience, such as investors.
An invention business plan is crucial for getting funding and securing strategic alliances. But you can also use it internally to guide operations, from marketing to hiring. Here’s how to craft an effective report.
Determine your audience and purpose
Although most business plans for a new invention follow a basic outline, you can tailor your approach to appeal to specific readers. Suppose you want to pitch your idea to investors or accelerator programs. In this case, it’s essential to mention funding requirements. But you should also emphasize the skills and experience your team brings to the table. According to Heer Law, “Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.”
However, if you’re looking for co-founders and employees, modify your document to clarify the skills required and long-term benefits for early joiners. Once you understand what drives your intended audience, you can write a business plan that excites them while answering their questions.
[Read more: How These Innovation-Driven Startups Reached an Elusive Milestone: Profitability]
Outline your invention business plan sections
The Small Business Association (SBA) said, “There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.” You can use a basic template, take a free course, or start from scratch. Begin your process by outlining commonly used sections, then modify your document to include invention-specific content.
Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.
Christopher Heer, Annette Latoszewska, and Daryna Kutsyna, Heer Law
Consider adding the following components:
- Executive summary: Keep it concise but touch on each aspect of your plan. Remember to pique interest and compel your audience to read more.
- Company overview: Discuss your industry and niche, including what makes your invention and business stand out. Explain how you will commercialize your design (selling to consumers, wholesale, or retail).
- Organizational structure: This is where you describe your legal business structure (sole proprietorship, partnership, limited liability company (LLC), or corporation). Provide details about inventors, executive team, and current or prospective employees.
- Market and competitive analysis: Share insights from your feasibility study, including an analysis of your industry, competitors, and market. Add statistics about market size and growth. Plus, offer a customer profile and explain what differentiates your invention from others.
- Invention: Tell readers about your design (features and functions) and how it benefits customers. Mention your product research, prototypes, and intellectual property registrations.
- Marketing and sales: Explain how you will apply competitive and market insights to earn a return. Topics may include sales, pricing, promotional strategies, positioning statements, and marketing campaigns.
- Financial information: Show how your invention will be profitable and use spreadsheets, charts, and graphs. Include projected revenue, profit and loss, cash flow, and a balance sheet. Also, detail any funding needs, how you’ll get the money, and what you’ll do with it.
- Appendix: Add all supporting evidence for your invention business plan. For instance, Chron.com said, “Investors respond well to business plans that include endorsements of the product from potential customers.
Add sections for your new invention
In addition to these regular sections, you can expand your business plan to include research and development, intellectual property protection, and owned or future IP assets. According to Heer Law, the research and development component helps readers understand “future products that can be commercially exploited.” Likewise, details about your intellectual property protection ensure investors that you’ve taken action to defend your innovation from unwanted duplication.
Provide information about any assets going through the application process and how various trademarks, patents, and copyrights will impact profitability. Also, discuss if you plan on developing new inventions or have prototypes available.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
