Business Plan & Presentations
Can you bring an investor to an enthusiastic belief that the potential investment rewards will be greater than the perceived risks?
Until recently, most angel investors and virtually all venture capital investors expected to see a traditional, detailed business plan before giving serious consideration to an investment in a startup opportunity…
Professional investors are now just as likely to want to see the background work involved in your customer needs assessment and business model development presented in some form of a “business model canvas” format, as shown below.
The term “Business Model Canvas” was first described by Alexander Osterwalder. The concept was further popularized by Eric Ries in his book entitled The Lean Startup,where the phrases “minimally viable product” and “agile development” were also coined to describe the process of efficiently developing and launching new products, and by Steve Blank in his Lean LaunchPad course, where he incorporated the concept of “customer development” into the search process for a business model. Ries is an entrepreneur-in-residence at Harvard Business School, and Blank is a serial entrepreneur and lecturer at Stanford University and UC Berkeley. For more on this, visit Business Model Design.
Many see this new business modeling platform as representing an entirely new thought process that will reduce the incidence of new business failures, and some even discourage the continued teaching of traditional business planning processes and presentation formats. At a minimum, these tools provide a great template for answering the important questions relevant to new business formation.
Regardless of the method employed in developing and presenting the evidence of your business opportunity, investors understand that such plans are “living documents” and that many elements of your initial plan will change over time; however, they will challenge from the beginning that your plan reflects a careful, knowledgeable presentation of all the elements that you believe will contribute to success (supported by reasonable assumptions), along with balanced, objective descriptions of your plans to avoid elements that could potentially cause failure.
NOTE: In case you are required to produce a traditional, formal Business Plan, guidance is provided below utilizing the medical devices industry as an example.
Medical Product Considerations
As repeated often throughout this Reference Guide, it is important to get out and talk to prospective customers early, and to get their feedback incorporated into your product design and business model evaluations before you invest serious time in business plan writing.
When your research reaches the point that you believe you could convince investors to join you in a commercial venture, you must then translate your plan into a document that effectively communicates your enthusiasm for the product or service opportunity…
You must also demonstrate your knowledge regarding those commercialization requirements that are unique to the medical technology business sector.
If you are the entrepreneur or CEO of a new business venture, you may ask others to help you construct reasonable business plan assumptions, but you alone must author the plan and become totally intimate with every word, number and assumption rationale. The financial partners you are attempting to attract will meticulously study the plan, prepare questions, and want answers only from you.
NOTE: In general, professional investors are aware of the critical need for medical product developers and entrepreneurs to be knowledgeable of the regulatory and reimbursement requirements that must be met in order to achieve approval, and to successfully market such products in any developed country that the company has selected for first product introduction. This knowledge must be presented effectively, regardless of the format.
Traditional Business Plan Format
There is an endless number of formal business plan formats from which to choose. Most plan formats will suggest that you first describe the proposed customer problem and solution that is addressed by your technology, followed by a description of the resulting business opportunities, along with forecasts of sales and profits. These plan outline recommendations will vary mainly by the order in which it is suggested you provide this type of information.
Guidance regarding your analysis and presentation of this basic customer and market-oriented information can be found by visiting the following links within this website:Commercial Opportunity Assessment, Intellectual Property, Raising Capital
Example Outline: Medical Product Business Plan
An example plan outline is presented below that addresses the routine components of a traditional business plan, but which also includes elements that are specific to the medical products industry. This outline reflects a “regulatory-driven” product development and commercialization plan.
Example Outline: Traditional Medical Product Business Plan
- Commercial Opportunity
- Corporate Development Status & Plan
- Revenue Projections
- Management Team
Overview of Medical Opportunity
- Description & Facts: Medical Scenario
- Define Unmet Medical Need
- Overview: The Technology
- Addressing Medical Need
- Competing Technologies
- Intellectual Property Overview
- Overview: Target Market & Strategy
- Market Development Plan
- Sales & Distribution Strategy
- Projections: Revenues & Market Share
- End-User Reimbursement Plan
Regulatory & Product Development Strategy
- Regulatory Pathway & Strategy
- Research & Development
- Clinical Development Plan
- Manufacturing Plan
Corporate Development Plan
- Customer Service/IT Infrastructure
- Business Development
- Organizational Expansion
- Capital Formation
- Financial Forecast
Personnel Bios & Exhibits
Before embarking upon plan writing, you may also want to visit the following sites within this guide to review relevant background information in the areas of FDA regulations, as well as issues surrounding third-party (Medicare and private insurance) cost reimbursement that may be required by end-users of your company’s products: Med Tech Regulatory Considerations, Medical Cost Reimbursement
Do not disclose, within your business plan or presentation materials, enabling know-how or proprietary information that has not been properly protected by copyright assertions or patent applications.
For guidance regarding protection of Intellectual Property, go to Importance of Intellectual Property.
Business Plan “Tips” — U.S Small Business Administration (SBA)
This is a link to a SBA website that provides guidance regarding mistakes commonly made when writing a business plan.
Business Model and Plan Presentations
If you’re preparing to raise money, you will need to develop an investor presentation that is a condensed version of your Business Plan. As in business plan formats, there are many recommended templates, but considering that your target investors are likely to be “Angels”, you might want to review the investor presentation recommendations provided here by the largest angel network in the U.S., the Tech Coast Angels of Southern California.