Scientists and engineers often seek to start businesses that involve research and development, cutting-edge technology, large amounts of startup capital and no revenue for one or more years after launch. The challenge of starting such a business requires a deep understanding of how to impress institutional investors who view everything in financial terms, which may not be easy for those with all their experience in science and engineering.
- The most important part of writing a business plan is the brainstorming and research that goes into developing the idea. It is during this research period that you establish your goals and the steps you must take to achieve those goals. If you are developing a technology into a commercial product, you may have to conduct some redesign and redevelopment prior to manufacturing a prototype. After that, you will do testing until you can manufacture the product for distribution to users.
Developing a clear idea of exactly what you will need to do in order to build your company is extremely helpful for writing the business plan, because in order to do your financial projections, you must first figure out how much it will cost for each step--from redesign to prototype to testing and manufacture. Also, administrative management of a research and development company is very different from that of a company manufacturing and marketing a finished product, so you wil l need to set benchmarks that signal when your company has reached the point of build-out. That's the point where you must begin adding manufacturing and marketing personnel. This is an important transition point that many technology entrepreneurs miss and that can result in a company producing a great product that never sells well in the marketplace. - Once you have planned the structural details of your business, it is time to write your business plan. This is a document that will form the basis of your operational master plan, which you will compile over time. Your business plan will be used to attract funding, supporters, service providers and vendors to your project. Angel investors and venture capital firms expect to see a simple to understand document that explains the use of the technology and the benefits it will create, as well as an estimate of the production costs and revenue projections.
When dealing with an invention or a new use for a technology, you do not want to be too detailed about your idea while in the fundraising stage. You might find faux investors looking at your deal in order to steal your ideas. It is advisable to protect your intellectual property with trademarks, copyrights and patents when possible. - An advisory board is extremely important to every large technology project. You should take your business plan around to well-known experts in your field and recruit them to join your advisory board. You will need their expertise as well as their contacts and reputation in order to get the funding necessary for your project. You should also recruit a commercial banker, an intellectual property attorney, an accountant and an investment banker. The function of your advisory board is to apply their collected expertise and contacts toward getting your company planned, funded and launched. Your attorney can help you decide how to compensate your advisory board, but paying them with stock in your company gives them an incentive to become actively involved in helping you develop and launch a successful enterprise.
- If you can't get anyone to finance your project, it won't matter how wonderful the idea, Attracting investment requires expertise in finance and marketing, which you may not have from your scientific or engineering background. Work with people who understand what investors are looking for and have contacts in the venture capital community. Ask your local Economic Development Corporation, SCORE counselors and your advisers and attorney for recommendations on professional venture consultants.
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