This is the 4th post in our “Writing a Business Plan” series.
Of all the sections in a business plan, I have the most fun writing the “Product” section. You can get into the nitty-gritty of the products that your business will create and sell.
One of the things I learned when starting my first company: you need something to sell. It may seem obvious, but it’s very common to see plans or businesses that form around a technology or idea. You can’t sell a “technology.” It might be the most amazing invention since integrated circuits, but if it’s not a product, nobody will buy it. This section focuses on how you use your knowledge, ideas, intellectual property, and customer needs to define a specific product to sell.
For some types of plans this section is called “Services.” But technology companies and tech companies looking for equity investment in particular rarely have a section for services. Services are usually not scalable, high-margin opportunities. If you have a complicated product or technologies that will require maintenance and management, you can include descriptions of the services in the products section.
What You Get
Having a defined development path is a huge help when going from your idea to an MVP, and then a released product. It gives you a chance to specify the features that you’ll support, how you integrate your ideas into your products, and you can also get into any manufacturing requirements you’ll have when your company is generating revenue.
What To Include
If you have multiple products, start with the simplest first. Describe the product in detail. For each of the features, I recommend including some information about its value for your customers. This not only reinforces how you’ll sell, but it also gets across the purpose for each feature. You’re not limited by space in this section, but being clear and readable is important. Try to avoid techno-babble, but don’t be afraid to use industry-specific terms. Your audience at this point probably has knowledge of your market and will be familiar with most of the concepts. For each of your products you should include options and development path details to show how you’ll reinforce the company’s growth.
You should also list competitive products in this section. Although much of the details should be kept for the marketing section, you should acknowledge alternate products while highlighting your competitive advantages. If you can’t find any alternative products, you’re not looking hard enough.
You should also include as much detail as possible about your intellectual property. Nearly all VC funds and most angels say they require some sort of protection for your intellectual property. Patents are the most effective way to demonstrate your protection. Provisional patents aren’t as helpful, and “corporate secrets” and NDAs are basically useless for your audience. Describe your IP and how you’ll leverage it to stay ahead of the competition.
You’ll have a Marketing Section later in the plan, but you should introduce some of your marketing concepts. You should include the strategic ideas for your products, rather than the tactical implementations. The marketing topics to address include pricing, placement, and distribution methods. Focus on the specific strategies but save the detailed tactics for the marketing section.
If your products require specialized construction, high manufacturing costs, long research and development time, or anything that would pique an investors interest or concern, use this section to address those possible concerns. Don’t fool yourself into thinking they won’t notice some downsides; address them head-on to demonstrate your understanding of the market.
What The Reader Wants
The reader at this point probably understands the target market and industry landscape. They’ll want to know how your product differentiates itself from the existing solutions. They’ll also be very interested in any intellectual property the company owns, as well as how it’s protected. The marketing details should answer some of the initials questions. Basically, they want to know what you’re selling, so make sure that’s easily found and clearly described.
Coming up next: The Market Analysis Section