So you have a novel idea that you want to commercialise. As an (aspiring) entrepreneur, you already see the future in front of you: a major healthcare issue is solved and your company’s profits are skyrocketing.
1. Team & company organisation
Who is at the steering wheel and who is in the crew? Is there anyone watching over you?
Having the right team of people is paramount in achieving your goals. The skills of your team members must be complementary to each other, resulting in a synergistic effect. Investors will be looking for solid organisational structure, strong management (preferably with track record), and the presence of a supervisory board. In case the personnel are not yet complete, mention how many employees are required, what expertise they should possess and when you expect to hire them.
Tips:
- Clearly state what your company’s mission and vision are, as it is what unites the team in their pursuit. Mission is the end goal (can be utopian) and the vision is how you envision the future to look like once the goal has been met.
- Underline the specific expertise of each team member. Why are they best-placed to perform a particular task?
2. Market and Need
Is there a market opportunity and what is the need?
It is important to identify the clear unmet need for your solution to a particular problem. There must be either no solution currently available, or your product must be highly superior to the current state-of-the-art. Use the blue ocean strategy: capture the uncontested market and differentiate yourself.
Furthermore, segment the market and find the most appropriate segment to target. One cannot fathom the unfathomable. Finally, when analysing the market, do not overlook your competitors. Provide a thorough competitor analysis and don’t let them put you off track, their presence is a good sign of market opportunity.
Tips:
- Provide numbers and references for every claim that you make. “Patients must undergo reoperations.” In what percentage of cases? “There is an economic burden because of the insufficiency of the devices.” What are the estimated costs of this burden?
3. Proposition and its unique selling points (USPs)
What are you developing and is it any good?
In terms of proposition, investors will be looking for a disruptive technology or a non-incremental improvement of currently available technology. Innovation is the keyword. However, to show that your proposition is superior, it is important to clearly describe what the current state-of-the-art is. Subsequently, show how your product solves the need that was described in the previous section, mention the preliminary data and what the results are.
Tips:
- Do not focus too much on technical details of the product, these can be described in a particular project proposal.
- Create a table with your product and state-of-the-art to compare the two.
- Create a table with the USPs of your proposition.
4. Risks, mitigation strategy and financial projections
Are you prepared? How will you make money?
Now that you have shown investors that there is an opportunity and you have the solution, it is time to show them that you are aware of the problems that might arise. Therefore, always mention what the risks are and what mitigation strategy you will choose should they become an issue. Keep in mind that risks differ depending on the phase of product development: early stages are high in risk and later stages are lower in risk.
In terms of financial projections consider providing the best- and worst- case scenario. Give a 5- to 10-year forecast based on the market segmentation that you have found and make your projections risk-adjusted. Having solid financial projections will convince investors that they will at least get their money back.
Tips:
- Mention your expected Return on Investment (ROI).
- Consider using risk-adjusted Net Present Value (NPV), this shows the investors that you have all bases covered.
5. Intellectual property
Can anyone else do or already be doing this?
A general rule is to strive to have your idea patent-protected. However, it is not always possible and not always desirable, e.g. if the invention can easily be modified and used in the same way (gene sequences etc.). Therefore, some companies choose to keep it as proprietary know-how. In this case make sure to explain that you have an IP strategy and how you intend to keep the know-how within the company. Finally, mention if the Freedom to Operate (FTO) research has been done.
Tips:
- If the invention cannot be patented, consider patenting the technique of its usage for solving a particular problem.
- If your idea is not patent-protected, give relevant (so no Coca-Cola or WD-40) examples of the companies that have similar strategy and are successful.
- Beware of the fact that some patents are stronger than others.
Bonus: Executive Summary
Pitch your business!
This section must be stellar. If the business plan is a biography of your business, then the executive summary is your business’ CV. Sifting through multiple business plans to find the most appealing one is a laborious process from investors’/reviewers’ point of you. For this reason, the executive summary is likely to be the first (and sometimes only) section to be read and is therefore your chance to grab readers attention. If you leave no “wow” impression, chances are high that your business plan will end up in the “reject” pile. The ideal executive summary is therefore a concise and strong synopsis of the entire business plan.
Tips:
- Limit it to 1-2 pages.
- Executive summary is not an introduction to your business plan!
- This should be the very last section that you write! You must have a clear big picture in mind and all the research must be completed.
In a nutshell
A strong business plan clearly shows the value of your idea, the existence of the opportunity to implement and commercialise this idea and that you have the means and a plan on how to do that. It must be short, to the point with no redundancies.
Having prepared multiple Life Sciences themed business plans, we have in-house expertise as to how to avoid common pitfalls and increase the strength of your business plan. Amongst others, our services include market research, strategic planning of the optimal route-to-market, in-house support, and ultimately financing consultancy regarding dilutive and non-dilutive funding.
Request Assistance
Should you require any assistance with these questions, please do not hesitate to contact us by filling out the form below.