This is a high level guideline on how to build a product business plan. Broadly, there are four aspects that you need to cover at a high level. They are as follows:
· Market Research focused plan
· Product focused plan
· Financial Plan
· Business execution focused plan
Once the four above sections are completed, you need to create an executive summary. Now I will discuss the above areas in detail.
Market Research focused plan
The objective of this section would be to discuss the market trends and to give an overall view of the business environment. This section must cover the aspects like trends in the market where your product will compete along with specific opportunities that this product wants to tap. You need to define the problem that your product is going to solve. Moreover, in this section you need to have a clear segmentation strategy for the market and also need to identify a target segment whose problems your product will solve. You could use some quotations from research firms or other authentic sources to bolster your argument for the need of having this product.
After covering the above aspects, you need to talk about high level customer needs analysis and customer use cases that your product is trying to address. Next you need to give a view about the competitive landscape for this market. Hence you need to give a view about who are your competitors, who is the market leader, what are the products etc.
Product Focused Plan
In this section you need to cover the specifics about your product and quantify the size of the business. Hence first, you need to add a section on product objectives and the goal for your product. Next you need to talk about the high level product features (only the top five or six) that you are planning. It is good to have a section on “what it is “and “what it is not”. Next, you need to cover the strategic fitment of your product in the existing portfolio of the company (if there is a portfolio). You also need to have an initial SKU (stock keeping unit) strategy (hence a licensing strategy) for the product.
Financial Plan
In the next section, you need to have the detailed financial projection for the product business. Hence you need to cover the detailed aspects of the costs involved for developing the product and also the revenue projection for the next three to five years. Thus you need to define a time-line for launching the product. Specifically you need to have a revenue projection, a view on the cost of goods sold in addition to the cost of developing the product (initial cost), the opex and tax. You need to arrive at the Net profit figures for the projections, the cash flows and the Net Present Value ( NPV) using an appropriate cost of capital. You could also calculate break-even and ROI for this investment. I will be covering this section in detail in a future post.
Business execution focused plan
It is not enough just to have a plan; you need to have an execution strategy as well. Specifically, you need to have a program execution team with roles and nominations identified. Next you need to have a service plan and strategy, supply chain plan and strategy for distribution and sourcing any OEM components, marketing plan for promotions, technical support plan and strategy, maintenance plan, in-case you are substituting an existing product from your company, you need to provide a migration plan for your customers as well. Additionally, you need to have a plan for customizations ( if your product needs customizations for deployments), training plan and warranty requirements.
Please note that the product business plan or business case needs to be customized to suit your product, your company or your domain. Hence the above mentioned components are high level guidelines which you need to follow but you could deviate to suit your case.
