Development and Production

In this section you will describe the current state of your product or service and your plan for developing it. This is also where you tell your reader more about how your product is created or your service delivered. This section should include details about development costs, location and labor requirements. After providing this information, you use it to create some financial forms, including operating expenses, cost of goods, and cash flow.

DEVELOPMENT STAGE

Describe the current status of your product or service and what still needs to be done to make your product or service ready to be marketed. Include a schedule detailing how you plan to complete work on the product or service. Readers of your plan, especially potential angel investors, will scrutinize your development plan to determine if you have considered all facets of the development of your product or service. Tips

• Include provisions for obtaining a patent/trademark/or copyright, if applicable.
• Angel investors often focus on a few industries and may already be well acquainted with the development procedure for your type of product or service. For this reason, be sure to create a high-quality, detailed plan.

MAKE OR BUY

Part of your discussion will be a justification of the make or buy strategy for production components. Make or buy strategy focuses on whether you will create the components necessary for the production of your product or service in-house, or buy a service or a product to add to yours. Tips

• Justify your make or buy strategy by explaining why your approach will lead your business to greater profits.

COST OF DEVELOPMENT

Present a development budget. This budget should include the cost of designing a prototype as well as the expense to start its production. Important points to address include labor, materials, and consulting fees. Tips

• When outlining costs, provide a plan for what will happen if problems such as delays or mistakes occur.
• Include the cost of patents and other elements necessary to the production of your product or service.

LABOR REQUIREMENTS

This section does not include information about your management team; it will be outlined in the management section. This section discusses other labor you will need for your business. Address how many people you will need and what skills they should possess. It is suggested that you cover the following issues:

• The supply of local labor and your recruiting strategy.
• The amount of initial training needed and how it will be done.
• Current and future costs of labor.
• Plans for ongoing training.