Introducing new products can be a good way to grow your small business. In fact, a survey with Neilson found that 63% of those surveyed liked when businesses offered new products. These products can bring awareness to your brand and fit a consumer’s needs. They’re also a good way to earn more income. 

But product development can be time-consuming and lead to profits if it’s not well-planned. 

This guide will discuss how to create a new product development business plan, including: 

  • Creating a product idea 
  • Business planning for your new product development 
  • Marketing your new product 

Creating a product idea 

If you’re wondering how to create a new product development business plan, you may want to start with brainstorming.  

Outline the concept and idea

The idea for your new product is the first step in developing new things to sell for your business. These ideas should keep your target customer and market in mind. Try to consider what your customer wants from your product. For example, if you have a baking business, you may think of ideas for baked goods or baking tools. 

The idea will be the actual product you may develop, whereas the concept is its purpose and plan. You may want to create a list of ideas to narrow down to a final concept. 

When considering your ideas, outline a few key factors for its development. Ask yourself about the functionality of the product. Is it solving a problem or answering a question? Would your customers be interested in buying it? Is it realistic to create and sell? 

Do market research 

Once you narrow down your idea and concept, do market research to understand the product’s marketability. You might look at similar product listings, prices, and reviews to get an idea of demand. 

Compile some information on your target audience. Determine how stable this market is and how long it may last. If the trend doesn’t last long, you may not be able to profit from the interest before it goes away.  

Also, outline potential competitors to see how difficult it may be to convince buyers to pick your product. Then, determine what you can do to stand out. 

Create a pitch

With your idea and concept, put together a pitch. This pitch can be the beginning of your new product development business plan. The pitch will include a product description, a development plan, and potential customer benefits. You could also put together a sample.

Then, give this pitch to a few people you trust. If they agree that it could be a beneficial and successful product, you can get started on a more detailed business plan for the product development. 

Business planning for your new product development 

The development plan will outline how you’ll create the product and sell it to customers to earn money from it. We’ll cover a few things you may want to consider in this business plan. 

Creating the product

First, determine what you’ll need and how you’ll put the finished product together. You may want to get quotes from vendors to get materials for your new product. If it’s more of a service than a product, outline what it will offer and how you’ll successfully achieve the service for customers. 

Consider the finances

To develop your product, you’ll need to determine the money you’ll need. Start by deciding how much it will cost to make the new product. Then, decide how many you might make for a release. 

Use your vendor quotes to estimate the cost of production. When putting together a budget for your development plan, look at startup costs and ongoing expenses for the new product. Then, determine if your business’s cash flow can support these. If not, you may need to consider funding options or start saving for the product development. 

Determine a price point 

Once you outline the cost of production, use that information to determine how much you’ll charge for your new product. You may want to establish a competitive price so buyers may choose yours over competitor’s. 

Your pricing will need to promote profitability. To do this, establish a profit margin, or markup, which is the product’s price divided by the cost of the production. This might be about 10-20% or more, depending on the industry and the demand.   

Research profitability

After deciding on your product price, project how much you could earn from it. Consider how many products you might sell in the first few months. Plus, decide how many you’ll need to sell to cover your startup costs and begin earning revenue from that new product.

You may also want to consult your current customers to see if they’re interested in the product. In addition, consider putting together a focus group to see what a sample of people thinks of the new product. With this new information, you can set sales goals and create a timeline towards profitability.   

Marketing your new product  

The last part of your new product development business plan will be to decide how you’ll market that product to earn sales. You’ll need to create buzz around it’s release. 

Product launch 

To build awareness and promote sales, you can create a product launch event that celebrates the product and demonstrates its usefulness. Consider sending out a newsletter that announces it’s release or posting on social media with a launch countdown. 

Create incentives 

Since it’s a new product, you may want to incentivise it to potential customers to try it. You could offer existing customers a discount or free trial of the new product. A trial can help you understand the product’s effectiveness and see if it needs any tweaking. Then, consider asking these customers to review the product for others to see how well it works. 

Keep your finances in good shape

As you plan for new product development, you’ll need to manage your finances to support your business growth. Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.