Developing a Technology Business Plan
Introduction
If you are interested in expanding a business or developing a new
business using new technology, it is important to develop a business plan
as part of your preparations. Like a regular business plan, your
technology business plan must give details of the proposed venture, along
with expected needs and results (Kuratko and Hodgetts, 1992). In
addition, it must take into account the unique nature of the new
technology.
Purpose of a Business Plan
A technology business plan is a proposal for a new usage of technology.
It is designed to convince the reader to support the proposed project.
If the presenter of the plan is an entrepreneur, the plan's purpose is to
raise capital for the project from investors. If the plan is being
presented by an employee within a company, then the plan's purpose is to
convince internal management to undertake the new project. This planning
also has another purpose: to force thorough and effective analysis.
Technology Business Issues
You have chosen a new technology, which can pose many unique challenges
or offer many unique opportunities. First, most people do not know
exactly what the technology is or what it can offer businesses. This is
a hurdle that must be overcome in your business plan. Second, necessary
resources must be identified. For example, you might need significant
funds for training, implementation, or user/customer adaptation. Third,
the pace of technology is dizzying. Keeping track of the rapidly
changing trends, technology, and competitors is crucial to the success of
your business.
The Ten Sections of a Technology Business Plan
- Executive Summary: This section must concisely communicate the
basics of your entire business plan. Keep in mind that your reader may
be unfamiliar with the technology and its potential.
- Business Description: In this section discuss your firm's
product or service along with information about the industry. Because
your business plan revolves around the technology, spend some time
explaining it first. Then describe how your product and the technology
fit together or complement each other. As with any business plan,
consider your audience. If the readers are technically unsophisticated,
make sure you include definitions along with any technological terminology.
- Marketing Plan: With the business described, next you must
discuss your target market, identify competitors, describe product
advertising, explain product pricing, and discuss any delivery and
payment mechanisms.
- Customers: You must define who your customers are and what
proportion of them are expected to be affected by the technology.
- Competitors: Define known competitors or similar products to
yours. You might wish to use an Internet search engine to look for these
products. Be sure to use several search engines, because each uses
different search techniques. After you have identified your competitors,
perform a new search every few weeks or months. Companies are
continuously joining the Internet, and tend to like to showcase their use
of technology. Remember, readers of your business plan will be very
interested in how you are going to beat the competition.
- Advertising: Will advertising be affected by the new
technology? If so, describe how you are going to tell the community
about your product or service. Describe a marketing program, that can
include any media.
- Pricing: Will pricing be affected by the new technology? If
so, how are you setting prices for your products or services? Whatever
your product, you should try to create some sort of pricing model to
justify your prices. You could start by researching what others are
charging for similar products.
- Delivery & Payment: WIll delivery and payment be affected by
the new technology? If so, how are you going to deliver your product and
get paid? Payment might be conducted electronically or through more
traditional means.
- Research & Development: This is where to get into the
technical aspects of your project. Address where the project is now, the
R&D efforts that will be required to bring it to completion, and a
forecast of how much the project will cost. Since the technology is most
likely continually developing, you should also address continuing plans
for R&D.
- Operations & Manufacturing: In this section, discuss the major
aspects of the business, including daily operations and physical
location. Also, what equipment will your business require for using the
new technology? Will you be using your own, or will you be contracting
with another company? Who will be your employees -- will you hire
knowledgeable staff, or train them in-house? Be sure to include cost
information.
- Management: This segment must address who will be making
decisions about the business and their expertise. Be sure to discuss the
management team's level of technology expertise and where they gained
it. Also, describe your role in the business.
- Risks: In this section, you must define the major risks facing
the proposed technology. In addition to regular business risks such as
downward industry trends, cost overruns, and unexpected entry of
competitors, also include risks specific to the technology. For example,
be sure to address issues such as software bugs, computer viruses, and
unfavorable new policies or legislation.
- Financial: Potential investors will pay close attention to
this area, since it is a forecast of profitability. As in a regular
business plan, include all pertinent financial statements.
- Timeline: In this section, you must lay out the steps it will
take to make your proposal a reality. When developing this schedule, it
might be helpful to talk to others businesses to get an idea of how long
their technology took to become established.
- Bibliography and Appendices: In addition to business
references, include some technology references in case your readers would
like to learn more about the technology as a part of studying your proposal.
Conclusion
You should now have a better idea of what is involved in developing a
winning technology business plan. Remember, the most important point is
to address the business advantages and problems of the new technology.
For further information, the following two sources may be helpful.
Sources
Kuratko, Donald F., and Hodgetts, Richard M. Entrepreneurship: A
Contemporary Approach, Dryden Press, 1992.
Resnick, Rosalind, and Taylor, Dave. The Internet Business Guide:
Riding the Information Superhighway to Profit, SAMS Publishing, 1994