BUSINESS FORUM: Getting the best business perspective
You must switch your mindset from that of a researcher writing a grant proposal to that of a practical businessperson when you write a business plan.
Q: Please comment on my business plan from the perspective of an investor.
A: You must switch your mindset from that of a researcher writing a grant proposal to that of a practical businessperson when you write a business plan. Every research project has a goal, for sure, but implicitly the purpose of research is to broaden our knowledge in order to discover more possibilities. In theory, a research project is successful if you learn something in its failures to lead to other possibilities. The objective of a business is much more specific and the outcome is binary. A business is a total loss if the company cannot turn an idea into a product that would be bought and generate profits to successfully sustain the business. You can’t toss out many possibilities in a business plan and imply you have the option to work on another opportunity if one doesn’t succeed.
Your business plan reads like a grant proposal in many ways. Seventy-five percent of what you wrote is about the merits of your technology and possible applications. There is very little discussion regarding the specific reasons why customers would want to buy your products and, from these reasons, you would produce statistics to derive the market size. An investor would see that as proceeding on unsubstantiated claims and therefore you are not ready for business. And even if you get funded, you are likely to start many initiatives to hedge your bets simply because you don’t know where to focus, only to run out of money before any one project can come to fruition.
You also provided additional hints that you are not quite ready to start. For example, you still need to choose a laser to provide the optimum wavelength and power level for one of the applications for which you have high hopes. As a businessman, you would have instead picked the least expensive laser that would adequately get the job started. You can always make refinements to improve your product and strengthen the business after you have entered the market. You have to be practical as a businessperson!
Instead, allocate 75% of your effort to solidifying a business case for that one product you are committed to making successful. Pick one application you are willing to commit to, work through every detail by talking to potential customers, gather market statistics, and visualize what you might encounter if you are actually running the business. This is not unlike modeling your product on a computer before committing to building a physical prototype. Doing so would then convey to investors that you understand the business and have the experience to cope.
Q: You wrote in your book that you have been reading Business Week, Forbes, Wall Street Journal, Barron’s, and Fortune since your graduate school days. Which one would you recommend if I were only to subscribe to one?
A: You can probably skip Barron’s since it is for Wall Street investors. You might want to read all of them and other magazines at least from time to time because each publication has a different slant to provide the breadth you need to make better decisions, no matter what you do. It may not occur to most of us that knowing something about business and management enables an engineer to make better design decisions. We can no longer work in isolation!
I would recommend reading at least Business Week (now Bloomberg Businessweek) and Fortune. Business Week covers a range of businesses around the world to keep you abreast of the current economic environment, and Fortune would provide details about the business and management strategy of a company or an individual for you to extrapolate and emulate.
MILTON CHANG is founder and managing director of Incubic Management LLC. He is also director of Precision Photonics, mBio, and Aurrion. Chang is a Fellow of IEE, OSA, and LIA. He has received Distinguished Alumni Awards from the University of Illinois and Caltech, is a trustee of Caltech, and is member of the Committee of 100.
Contact Chang at firstname.lastname@example.org with questions, and visit www.incubic.com for other articles he has written regarding entrepreneurship. See his book Toward Entrepreneurship at www.miltonchang.com.