New technology needs a comprehensive business plan for a successful launch. The main purpose of a business plan is to assess where you are, decide where you want to be, and select how you are going to get there.

The process leads to awareness of possible roadblocks, preparation of contingencies, and establishment of a business road map.

The first consideration while preparing the business plan is recognition of the audience, and their requirements. For internally funded technology, one needs to consider the requirements and benefits of the new technology by itself, as well as its impact on the existing company business and its long-term strategy. When technology is funded externally (by venture capital, bank loan, etc.) it often has to stand by itself.

Half of a business plan deals with developing and supporting a sound business strategy, As emphasized in earlier Management Reports in this magazine, specifically, it:

• Looks at the industry, the market, customers and competitors;

• Looks at customer needs, and, benefits of current products/services;

• Identifies existing and potential competitors and evaluates their strengths and weaknesses; and

• Identifies opportunities.

The other half of the business plan deals with the execution of the strategy. Elements include:

• Organizational structure;

• How the product/service is produced;

• Marketing;

• Sales;

• Operations; and

• Support.

A good starting point for business planning is to determine what is the new technology, who needs it, how badly, and who is willing to pay for it.

Caution should be exercised. Just because you think you have a better product does not mean people will buy it. It is difficult to change established buying patterns. Does success depend on stealing business from others? If so, your competitors are not going to sit idle and watch you steal their market.
Honest appraisal

Make an honest appraisal of your present status. What is the real product? What distribution channels are available to you? What are your operational capabilities? What market share do you have (or hope to get) and how much influence will you have on the market? Are your customer royalties with you or with your competitors? What real advantages does the technology offer to the clients? What are the capabilities of your management, technical, sales and other staff? Do you need manufacturing and who is going to do it? Who are your present and future competitors and what are their capabilities? What are the current market pricing structures and how do you fit in it? This is a very soul-searching exercise and should be done realistically and with honesty.

A good business plan usually includes the following elements:

• Strategy overview;

• Description in the introductory paragraph of your specific product or service;

• Strategy logic;

• Why your strategy makes sense;

• Business development;

- What is your present position?

- Key staff and their special talents, expertise, and connections?

• Financial objectives;

- Amount of capital and how it will be used; and

• Business organization.
Product evaluation

Product features and benefits. This part is basically a statement of the value proposition. What makes your product better than competitors', and what financial benefit does the client derive from it.

Market analysis. This section should provide answers to the following questions:

· How large is the potential market?

· How many similar/competitive products are already there?

· Market dynamics:

- Is the market growing, flat, or shrinking?

- What new opportunities are created by the product?

Other market analysis will identify market segments, target markets and customers, customer characteristics, and customer buying factors.

Marketing strategy. In this section you discuss how you intend to address the competitive market place, and, how you will implement your plans? Some possible strategies are:

• Cost leadership strategy: you can produce and market a good quality product at a lower cost than your competitors and at a better profit margin.

• Differentiating strategy: you can create a product or service that is perceived as being unique throughout the industry. Emphasis can be on brand image, proprietary technology, special features, superior service, strong distribution, etc. This should translate into higher than average profit margins.

• Focus strategy: is the more intense form of either cost leadership or differentiating strategy and addresses a focused segment of the marketplace. It serves a particular market target in such an exceptional manner that others can not compete. Usually this means a substantially smaller market but very high profit margins.

Market segmentation. Every market has distinctive segments. This is particularly true for multi-regional products. The questions to ask are:

• Do you need to segment the market to be competitive?

• How do you cope with positive or negative effects it may have on your business?

Almost all markets can be segmented by price or quality, but these do not usually define clear or definitive market segmentation because they are dynamic. Objective is to identify the subset of clients who are most likely to purchase the product based on its value proposition. Prepare a targeted marketing/sales program specifically designed for this group.

Customer and competitors

Customer analysis. Here one seeks answers to the following questions:

• What particular behaviors can impact your goals?

• Which features are most appealing to customers?

• How are choices made between competing products?

• Where does the product fit within the purchasing cycle?

• How are purchasing decisions made?

• What long-term contracts are already in place?

• Do potential customers traditionally lean towards a particular product?

• What characteristics influence the purchase of one production over a competing one?

Competitor analysis. Competitor analysis is one of the most important parts of a business plan. Every successful business either has an existing competitor, or will soon have one. This analysis determines who the current and potential future competitors are. Future competitors can include clients, suppliers, or new entrants. Who is the market leader and why? What are the main differences between competitive products and yours? Are there barriers that can prevent or slow competitor entry (such as intellectual property, dominant market position, existing contacts, etc.). At the conclusion of the analysis the business plan needs to clearly answer what are your main competitive advantages and weaknesses, and how you plan to allay your weaknesses.

Since the competitor is not going to sit idly and watch you chip away at its market, you need to be prepared for its reaction. These can include cutting prices, better technology, better service, etc.

Internal considerations

Sales force. The pertinent questions in this segment are whether your sales force is internal or external, and how are they motivated; commission, performance-based incentives, stock options, career growth, employee benefits, others?

Pricing strategy. This one is often not done properly. In general terms some of the common pricing strategies include skimming, market penetration, comparable pricing, etc.

Operations. This segment deals with how the technology is delivered to the client. In the oil and gas industry this often involves installation of product, or execution of the service. The business plan needs to address which operational units will be involved in the initial execution of the technology, the level of their buy-in, their understanding of the technology and delivery skills, their level of customer support, and closeness of their relationship with clients.

People and organization. The intent is to identify what positions are key to success of the new technology and the skills of those filling these positions. Are there any important positions that are still vacant? Is there an advisory board and who are its members? Are any consultants involved and what are their roles, contributions, and business relationship?

Research and development. How is the new product going to be sustained in a competitive and evolving technology market? What is the past record of the existing technical group? What are some of the key staff skills and competencies? Specific facilities and capabilities?
Business tactics

Critical success factors. The business plan needs to bring focus on those factors that are critical to the success of the new technology launch. Some of the common elements are; financial (revenue and sales, manufacturing costs, delivery and operations costs, cash flow, etc.), operational (establishing reliability, on-site product delivery and support, etc.), sales and marketing (market share, speed of growth), and key staff (who, and why).

Financial statement. These include projected (pro forma) income statements and cash flow that includes sales, costs of operations, cash flow, and profits. Financial scenarios should be realistic and when possible, backed by case histories. It is best if financial projections are prepared for three scenarios; strong case, weak case and most likely.

Exit strategy. Every business plan needs to include an exit strategy. This includes two sub-sections; what would trigger terminating the launch if it is not meeting its target, and what will be done with the business if it is successful. In both cases one can consider sale of the business, mergers and acquisitions, growth, etc.

Communication. Once the business plan is finalized, it needs to be communicated to those who are actively involved in the launch of the new technology, together with a request to keep such information confidential. Some businesses are very reluctant to communicate the business plan to their won people fearing that its disclosure may tip the competitors. But the business can suffer more harm from a group of people each blindly following his/her instincts in the execution of the plan than exposure of the strategy to competitors.

Action planning

The success of every business depends on building and establishing inter-relationships and interdependencies that are critical for the timely execution of the plan. The intent is to cement communication between people and their organizational units, and, to establish coordination between them. Action plans are results driven. For the plan to succeed, each member of the team must understand what it needs to do, and make a serious commitment to get it done. The team should be its own evaluator. Peer influence is far more persuasive than other options. The plan should clearly define goals for the business. These include; longer (12 month) goals, intermediate (6 month) sub-goals, and sometimes short (3 month) or even shorter goals. Precise goals are better than fuzzy broad goals. Goals must be realistic and attainable. Otherwise they intimidate people and become an impediment to plans. Recognize gaps between what you have and what you need to have to reach where you are going. Bridge the gap.

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