{"id":2413,"date":"2020-08-31T22:55:35","date_gmt":"2020-08-31T22:55:35","guid":{"rendered":"https:\/\/enterthemission.com\/?p=2413"},"modified":"2020-12-15T00:29:50","modified_gmt":"2020-12-15T00:29:50","slug":"how-to-write-a-virtual-reality-business-plan","status":"publish","type":"post","link":"https:\/\/enterthemission.com\/blog\/how-to-write-a-virtual-reality-business-plan\/","title":{"rendered":"How to Write a Virtual Reality Business Plan"},"content":{"rendered":"\n
A VR business plan should lay out a detailed roadmap for the growth of your VR business over the next few years.<\/strong><\/p><\/blockquote>\n\t
How important is it to create a business plan for your VR business plan?<\/p>\n
Well, there are many ways to answer this; but the best has to be this one that I read in an article not too long ago\u2026<\/p>\n\t
Creating a business without a business plan is like building a house without a blueprint.<\/p>\n
The chances of success are limited; the chances of creating something exquisite are remote; and the chances of the entire thing just falling apart are very high.<\/p><\/blockquote>\n\t
Some studies suggest that if you have a business plan, your business has a 20% higher chance of success<\/strong> than if you didn\u2019t create a business plan.<\/p>\n
And that is why, in this blog, we will go through the process of writing a virtual reality business plan.<\/p>\n
\n\t\tBlog overview\n\t<\/h2>\n\t
First, we will take a look at the traditional format of a VR business plan.<\/p>\n
This is the format you\u2019ll be using on almost any professional occasion (such as pitching your business to a bank for a loan).<\/p>\n
Second, we will look at the most important uses of your VR business plan.<\/p>\n
Third, we will look at some important characteristics of a VR business plan.<\/p>\n
We\u2019ll conclude the blog with some useful resources to help you create your virtual reality business plan.<\/p>\n
\n\t\tVirtual reality business plan – the traditional format\n\t<\/h2>\n\t
When people say \u201cbusiness plan\u201d, they\u2019re talking about the traditional format most of the time.<\/p>\n
This is an expansive and exhaustive document<\/strong> that should capture every aspect and every detail<\/strong> of your VR business.<\/p>\n
Like I mentioned earlier, you can take this as a definitive document when you\u2019re presenting your business to formal lenders or investors<\/strong>.<\/p>\n\t
The traditional business plan format consists of the following parts:<\/p>\n
\n\t\tTitle page\n\t<\/h3>\n\t
The title page should include only a title <\/strong>and a subtitle<\/strong>.<\/p>\n
For example,<\/p>\n
<\/p>\n
Business Plan<\/i><\/p>\n
Virtuality Healthcare Solutions, LLC.<\/i><\/p>\n
<\/p>\n
Virtuality Healthcare Solutions is a Virtual Reality startup catering to the healthcare sector. We aim to create custom-made VR simulations to help surgeons plan and prepare for individual surgeries.<\/i><\/p>\n
<\/p>\n
That can be the title page of the business plan a healthcare VR startup<\/a>. As you can see, it simply states the company\u2019s name (title)<\/strong>, and their main business idea (subtitle)<\/strong>.<\/p>\n
\n\t\tTable of contents\n\t<\/h3>\n\t
I hardly need to explain what this is.<\/p>\n
But I need to remind you to include it in your virtual reality business plan. It sounds trivial, which is why some people forget about it.<\/p>\n\t
Neither the title page nor the table of contents reveals a lot about your business.<\/p>\n
But it\u2019s crucial to include both to make your business plan presentable<\/strong> and organized<\/strong>.<\/p>\n
A dishevelled and disorganized business plan will fail to inspire confidence amongst potential investors and lenders about your organizational capabilities.<\/p>\n
\n\t\tExecutive summary\n\t<\/h3>\n\t
The executive summary offers the reader a bird\u2019s eye view of your entire business plan.<\/p>\n
It should include what your VR startup is aiming to achieve<\/strong>, and why you think your business strategy will work<\/strong>.<\/p>\n
In other words, it should summarize for an investor why they should invest in your business.<\/p>\n
Key points to be included in the executive summary are:<\/p>\n
\n
- Mission statement.<\/li>\n
- Your product or service.<\/li>\n
- Your company structure and key employees.<\/li>\n
- Financial projections.<\/li>\n<\/ul>\n
Oh, and do I really need to tell you that the executive summary needs to be a clear<\/strong> and compelling read<\/strong>?<\/p>\n
\n\t\tBusiness description\n\t<\/h3>\n\t
A lot of blogs refer to this section as the \u201cCompany description\u201d.<\/p>\n
But I do NOT.<\/p>\n
Why?<\/p>\n
Because it\u2019s easy to confuse \u201cCompany description\u201d with \u201cCompany\/Corporate structure\u201d.<\/p>\n
Just so we\u2019re clear,<\/p>\n
\n
- Business description<\/strong> refers to the details of what demand your business wants to meet.<\/li>\n
- Company structure<\/strong> refers to the organizational structure of your company; that comes later.<\/li>\n<\/ul>\n
Here\u2019s how the logical flow works: once a potential investor has gone through your executive summary, they will want to know more about what goods or services your company provides<\/strong>.<\/p>\n
That question is answered by the business description.<\/p>\n
The three main aspects that MUST be revealed by your business description are:<\/p>\n
\n
- What products or services your business aims to create.<\/li>\n
- Who are your expected customers\/clients?<\/li>\n
- What strengths does your VR business have (talent, supply chains, prime location, etc)?<\/li>\n<\/ul>\n
\n\t\tMarket analysis\n\t<\/h3>\n\t
Having described your business to the reader, the logical next step is to tell them about the market you plan to tap<\/strong>.<\/p>\n
For example, returning to the example of a VR healthcare startup, the market analysis would include:<\/p>\n
\n
- Which healthcare niche you\u2019re planning to cater to?<\/li>\n
- What\u2019s the size of the market?<\/li>\n
- What strategies have your competitors adopted? How do you plan on countering them?<\/li>\n<\/ul>\n
\n\t\tOrganizational\/company structure\n\t<\/h3>\n\t
This section tells the reader two main things:<\/p>\n
\n
- What legal structure<\/strong> does your company have? It is a partnership, an LLC, an \u201cS\u201d corporation, etc?<\/li>\n
- What\u2019s the organizational hierarchy<\/strong>? How many layers are there in the hierarchy, who fulfils what role, how people are compensated, and so on.<\/li>\n<\/ul>\n
\n\t\tProducts you\u2019re planning to create\n\t<\/h3>\n\t
Include the following points:<\/p>\n
\n
- What is your product?<\/li>\n
- How specifically does it help consumers?<\/li>\n
- Can you differentiate it from competing products?<\/li>\n
- What is the product lifecycle?<\/li>\n
- Are you filing for patents or trademarks? Are you engaging in R&D?<\/li>\n<\/ul>\n
Remember, you might know a lot about virtual reality, especially the product you\u2019re planning to create; the reader of your business plan will almost certainly not know as much.<\/p>\n
You should keep this section simple<\/strong> and appropriately detailed<\/strong>.<\/p>\n
\n\t\tMarketing and growth\n\t<\/h3>\n\t
This section should reveal to the reader how you plan on acquiring and retaining customers\/clients<\/strong>; and how you plan on growing your business<\/strong>.<\/p>\n
Your sales procedure should be clearly laid out: I think you can guess that investors would be interested in that.<\/p>\n
\n\t\tFinancials\n\t<\/h3>\n\t
This is where cost, earnings, and profit projections<\/strong> come into play.<\/p>\n
Your aim is to convince investors that your business is worth investing in, and give them an idea of what kind of returns on investment<\/strong> (ROI) they can expect.<\/p>\n
Some specific items you can include here are:<\/p>\n
\n
- Income statements.<\/li>\n
- Cash flow statements.<\/li>\n
- Balance sheets.<\/li>\n
- Capital expenditure budgets.<\/li>\n<\/ul>\n
Try to include projections for upto five years<\/strong> – I\u2019ll explain why shortly.<\/p>\n
If your business is already running, provide documentation to show how you\u2019re doing.<\/p>\n
\n\t\tFunding requirements\n\t<\/h4>\n\t
If you have funding requirements<\/strong>, this is where to indicate them.<\/p>\n
Be specific as to:<\/p>\n
\n
- Whether you\u2019re looking for equity <\/strong>or debt financing<\/strong>.<\/li>\n
- What terms you expect on the investment.<\/li>\n
- When and how an investor can exit<\/strong>.<\/li>\n
- How you\u2019ll use any funds supplied.<\/li>\n<\/ul>\n
\n\t\tUses of a VR business plan\n\t<\/h2>\n\t
The most important uses of a VR business plan are:<\/p>\n
\n\t\tOrganizing and studying your own business idea\n\t<\/h3>\n\t
The most important use of a business plan is to lay out your own business idea in front of you, placing information in the proper context<\/strong>, and giving you an idea of what lies ahead<\/strong>.<\/p>\n
Like they say, if you aren\u2019t convinced by your business idea, how can you expect others to be?<\/p>\n
\n\t\tPitching your business for fundraising\n\t<\/h3>\n\t
If you\u2019re hoping to raise funds from lenders or investors<\/strong>, whether formal<\/strong> (like a bank), or informal<\/strong> (like your family members), your business plan will be invaluable in pitching your VR business to them.<\/p>\n
\n\t\tHelping you attract talent for your VR startup\n\t<\/h3>\n\t
As a startup, if you\u2019re looking to attract talent<\/strong>, you might end up sharing your business idea (and hence your business plan) with them.<\/p>\n
Good talent will be in demand, and as a startup VR business, you have no track record to convince people why they should join you instead of some other firm.<\/p>\n
Working in new fields, sound business ideas<\/strong>, shared values<\/strong> – these are some of the attributes that you can use to attract the talent you need.<\/p>\n
\n\t\tCharacteristics of a good virtual reality business plan\n\t<\/h2>\n\t
Your virtual reality business plan should be\u2026<\/p>\n
\n\t\tSpecific\n\t<\/h3>\n\t
Always be precise<\/strong> as to what you\u2019re talking about, and remember to include definite metrics<\/strong> to define your goals<\/strong> and describe your performance<\/strong>.<\/p>\n
For example, if you\u2019re setting up a virtual reality escape room<\/a>, you can include:<\/p>\n
\n
- Expected footfall.<\/li>\n
- Expected revenue.<\/li>\n
- Main revenue source – personal celebrations, corporate events, and so on.<\/li>\n<\/ul>\n
\n\t\tRealistic\n\t<\/h3>\n\t
While you\u2019re mentioning all these Key Performance Indicators<\/strong> (KPI\u2019s), remember to be realistic.<\/p>\n
Of course you\u2019re not going to intentionally put in misleading information, but as it\u2019s your<\/i> endeavor, it\u2019s tempting to get carried away and make rosy assumptions.<\/p>\n
Returning to the example of a VR escape room, it\u2019s always preferable<\/strong> to mention that you expect a 10% annual growth in footfall by your third year, and then do your best to exceed your own estimate <\/strong>rather than promise investors a 20% growth in footfall, and fail to deliver.<\/p>\n
\n\t\tFlexible\n\t<\/h3>\n\t
It\u2019s said that a business plan must be a living document<\/strong>.<\/p>\n
As you should know by now, a large part of your virtual reality business plan involves \u201c<\/strong>guesstimates\u201d<\/strong> which may not transpire into reality<\/i>.<\/p>\n
You MUST be able to adapt your business plan to changing circumstances and to incorporate new business models and ideas.<\/p>\n
In fact, this is where a lean business plan format<\/strong> can prove useful.<\/p>\n
In a lean format, you can follow the same structure, but condense each topic to a couple of sentences…except where you feel details are necessary.<\/p>\n
Use the lean format to capture frequent changes in the business environment, and then put effort into creating a full-fledged plan when the changes become permanent.<\/p>\n
\n\t\tMedium term\n\t<\/h3>\n\t
A good business plan talks about the medium term<\/strong>, that is, the next three to five years<\/strong>.<\/p>\n
Anything shorter than that and you won\u2019t really give your business a chance to grow; making \u201cguesstimates\u201d for longer periods has generally proven to not be very useful.<\/p>\n
Which is why three to five years is the sweet spot for your virtual reality business plan.<\/p>\n
\n\t\tVirtual reality business plan resources\n\t<\/h2>\n\t
Here\u2019s<\/a> a business plan toolkit provided by the International Finance Corporation.<\/p>\n