Business Plan

Develop your Product and Market

The purpose of the design and development plan section is to provide investors with a description of the product's design, chart its development within the context of production, marketing and the company itself, and create a development budget that will enable the company to reach its goals.

There are generally three areas you'll cover in the development plan section:

• • Product development
• • Market development
• • Organizational development

Each of these elements needs to be examined from the funding of the plan to the point where the business begins to experience a continuous income. Although these elements will differ in nature concerning their content, each will be based on structure and goals.

The first step in the development process is setting goals for the overall development plan. From your analysis of the market and competition, most of the product, market and organizational development goals will be readily apparent. Each goal you define should have certain characteristics. Your goals should be quantifiable in order to set up time lines, directed so they relate to the success of the business, consequential so they have impact upon the company, and feasible so that they aren't beyond the bounds of actual completion.

Goals For Product Development

Goals for product development should center on the technical as well as the marketing aspects of the product so that you have a focused outline from which the development team can work. For example, a goal for product development of a microbrewed beer might be "Produce recipe for premium lager beer" or "Create packaging for premium lager beer." In terms of market development, a goal might be, "Develop collateral marketing material." Organizational goals would center on the acquisition of expertise in order to attain your product and market-development goals. This expertise usually needs to be present in areas of key assets that provide a competitive advantage. Without the necessary expertise, the chances of bringing a product successfully to market diminish.

Procedures

With your goals set and expertise in place, you need to form a set of procedural tasks or work assignments for each area of the development plan. Procedures will have to be developed for product development, market development, and organization development.

Using the brewery example, to produce a recipe for a premium lager beer, you would need to:

• Gather ingredients.
• Determine optimum malting process.
• Gauge mashing temperature.
• Boil wort and evaluate which hops provide the best flavor.
• Determine yeast amounts and fermentation period.
• Determine aging period.
• Carbonate the beer.
• Decide whether or not to pasteurize the beer.

Before the product is ready for final delivery, you must go through three steps:

• 1. Preliminary product review: All the product's features and specifications are checked.
• 2. Critical product review: All the key elements are checked against the schedule.
• 3. Final product review: Elements are checked against goals to assure prototype integrity.

Scheduling and Costs

Scheduling includes all of the key work elements as well as the stages the product must pass through before customer delivery. It should also be tied to the development budget so that expenses can be tracked. Its main purpose is to establish time frames for completion of all work assignments.

Development Budget

When forming your development budget, include all expenses required to take the product from prototype to production:

• Material: All raw materials used in development.
• Direct labor: All labor costs associated with development.
• Overhead: Taxes, rent, phone, utilities, office supplies, etc.
• G&A costs: Salaries of executive and administrative personnel.
• Marketing & Sales: Pre-promotional materials and campaign planning.
• Professional services: Accountants, lawyers, and business consultants.
• Capital equipment: Costs to lease or purchase required machinery.