Successful Business Plans

Lesson 2: What Are You Selling?

Research and Development

All companies need ongoing product and service development. Your target market, competitors and current technologies are always changing. To maintain a competitive edge, you must keep on top of new developments that will affect your business.

Some of the questions to consider are:

• Do you have a plan for a new product, service or a new technology?
• Have you established milestones to track your development?
• Have you listed your accomplishments (examples: prototype, development, customer tests, feedback, etc.)?
• Have you determined all the true costs of your development efforts and are these costs for research, testing and development, etc. in line with your budget? What are your competitors spending on R & D?

Whether you are a growing or a start-up organization, small and large companies need to allocate resources to R & D. This may range from staffing a complete department to research customer needs, as well as develop new products, to simply keeping abreast of industry changes through publications and conferences.

The market is becoming increasingly sophisticated and competition is growing in intensity. This means customers are demanding more and your company needs to deliver a better product to remain a significant player in your market. Your current and future R & D plans should show how your company will use test marketing at all key phases of the development porcess to ensure a competitive product.

Product Selection Criteria

As your company grows, selecting your new products or services becomes a bigger gamble. When you had an idea, you put it together, and then tested it to see if it sold. With the marketplace becoming more demanding, competition becoming fiercer, and development and marketing costs soaring, present and future product cycle times generally require more thorough evaluation before selecting new items to develop.

More ideas and concepts are being created now than ever before. If your company has put together its vision, mission, goals and objectives (as discussed in the previous lesson), you will have a big head start on the product selection process. With these planning tools in place, certain concepts will fit more easily than others, and your company focus will be easier to maintain

Writing a Product Selection Criteria for your company may prove to be one of your wisest investments of time and effort for your management group. First of all, it can pay off in wisely selected, profit-rich products or services for development. It can also save your company both financial losses and considerable grief by facilitating the wise discarding of ineffective product concepts that may burden your company.

When putting together your company's Product Selection Criteria, the issues for consideration may include:

• Is there an existing perceived value for accomplishing the task?
• What would it cost elsewhere or by other means to accomplish the same task?
• What's the financial benefit to the company?
• Do you have relatively low investment requirements to ensure positive ROI?
• Does the product line fit with the present strategy?
• How feasible is it to develop and produce?
• What is the time required to see the intended results?
• Is the development and production of relatively low risk?

Your finished Product Selection Criteria may be very short and to the point. Or it may cover a wide range of product questions as they relate to the various departments of your company. By including Product Selection Criteria in your business plan, you show the world that you recognize what your company can produce and that you understand that product focus and execution will carry your company to the profit levels that are envisioned.

After you have presented your current products and how your company decides on its new products, it is time to give a preview of your company hits. Your product intentions and projections should be described in the same detail as your current product or service offerings. After all, the target reader of your business plan is usually more interested in what you foresee than what you have done, which is great news for start-up businesses. This is where the target reader can assist your company's efforts in some way (ideas, investment, management assistance, materials, etc.).

Not only do you want to lay out your product plans in this section, but you also want to show how you will achieve them. Investors are exposed to dozens or hundreds of ideas each year. Most often they are unimpressed until they see a good idea with an excellent plan of execution. In your business plan, show the reader both your planned product concepts, and how the products will be completed and delivered.

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