Business Plan Development

As soon as a company initiates development strategy and planning activities, the time is right to start thinking about the creation of a business plan. The steps below have been excerpted from Chapter 6.2 and are presented with active web links to assist innovators in getting started in this effort. Define the Purpose and Audience for the Business Plan 1. What to Cover Depending on its stage of development, a company may have different reasons for creating a business plan. Early stage ventures may use a business plan to clarify the key opportunity and funding requirements in order to seek capital from venture capitalists (equity investments). More established companies may use a business plan to map out a change in strategy or a plan for accelerated growth. As a result, it is important to clarify the purpose of the business plan before a company begins developing a draft. Similarly, the company must define its audience and understand the unique needs and interests of those audience members. 2. Where to Look Once the purpose of the business plan has been clearly defined and the target audience has been identified, innovators should tap into their networks to clearly understand what the target audience looks for in a business plan. For example, if the objective is to seek funding, talk with retired venture capitalists or other innovators who have recently made a pitch to VCs for advice and guidance. If the purpose is to solicit clinical input from expert physicians, informally talk to trusted clinicians about their preferences and requirements. Confirm What Is Unique About the Companys Innovation and/or Industry 1. What to Cover Before developing a draft of the business plan, it is important to think about what is different or unique about the companys innovation and/or industry. Audience members experienced in a particular industry or field will know what critical success factors, potential pitfalls, unusual characteristics, and atypical dynamics the company is likely to face. An effective business plan not only acknowledges these unique factors, but includes information about how the company will address them. Make a list of such factors and refer back to it throughout the business plan development process to ensure that each issue is addressed. 2. Where to Look In getting started, it may be helpful to revisit with the products value proposition(s) as defined in 5.7 Marketing & Stakeholder Strategy and the companys competitive advantage as defined in 5.9 Competitive Advantage & Business Strategy. Colleagues within the company should be able to help brainstorm on what other issues to include on this list. External advisors (e.g., board members) can also provide useful feedback.

Develop an Outline

1. What to Cover The next step is to develop an outline for the business plan. Before developing detailed content in any one section, think about the business plan as a whole. Start by following the conventional organizational structure for business plans in the medtech field (see the Structuring the Business Plan section of this paper) and then make modifications based on the most logical and compelling flow of information for communicating the companys innovation and needs. Within each section, make notes about the information that should be included, data that needs to be collected, supporting documentation that needs to be compiled, and ideas for effectively transitioning between or linking the various components of the plan. During this process, it will be helpful to read as many example business plans as possible. See Appendices 1 and 2 in the book for some high-level analysis of the plans. 2. Where to Look o U.S. Small Business Administration Planning tools to help in the development of a business plan. o Local Small Business Development Centers (SBDCs) Available across the U.S. to provide assistance to small businesses with business planning and other start-up activities. o Bplans.com Resources and tools for developing business plans, including some business plan examples in the medical device field. o Entrepreneur.com A website with a step-by-step instruction on creating a business plan. o BusinessPlans.org Sample Business Plans from the MootCorp Competition at the University of Texas. o Carnegie Mellon University Business Plan Index An index of business plans by business types available online at the CMU library website. o The Nuts and Bolts of Business Plans An MIT course on Business Plans with extensive online resources. o Business Planning Software Software packages designed to help lead innovators through the process of writing a business plan, including: Planware Business Plan Pro, BRS Business Plan.

Conduct Research and Compile Supporting Documentation 1. What to Cover Once the general structure of the business plan has been mapped out, an innovator can begin to conduct research in an organized manner. Refer back to the various activities in the biodesign innovation process for the resources that can be leveraged to locate important data. Remember that an effective business plan will be factbased and specific. In addition to performing secondary research, it may be helpful to consider primary research with key stakeholders. In addition to referencing this information within the text of the business plan, results from primary research can be included as supporting documentation. Other supporting documentation to compile may include copies of patents, licenses, and other legal documents, letters of intent from customers and/or suppliers, testimonials, resumes of the management team, and other documentation that demonstrates the credibility of the venture.

2. Where to Look See Table 6.2.1 in the book for a mapping of the biodesign innovation process to the major sections of the business plan. Refer back to these documents for resources that can be used to conduct additional research in each area.

Write the Plan, Seek Input, and Iterate 1. What to Cover Once all the necessary data has been collected and organized into the various sections of the outline, it is time to begin writing the plan. As mentioned, some experts suggest drafting the executive summary first and then using it to guide the development of the overall business plan. Others suggest saving the executive summary for last and then developing it by using the most compelling information from each section. All innovators have to decide on the system that works best for them. Regardless of the approach taken, remember that business plan development is iterative. Once a first draft has been developed, seek the input of colleagues and advisors (see 4.1 Intellectual Property Basics for addressing issues of confidentiality, and be explicit about asking people if they have a potential conflict of interest before sharing a draft with them), and then use their input to iterate and improve the document. Continue this process until the business plan is truly clear, informative, and compelling. However, it is important to recognize that each reviewer will have his/her own preferences and that all feedback should not be considered equal. Once feedback has been collected from a handful of individuals, compile the questions, comments, and issues, and then carefully evaluate the data. Correct obvious problems and address common concerns. For issues about which there is no common agreement, probe further to be sure that a change is warranted. A company must be careful not to dilute its position by responding to every reviewers individual preferences. 2. Where to Look Leverage the innovators network to find appropriate advisors and contacts to review the business plan.