How to Write a Virtual Reality Business Plan
A VR business plan should lay out a detailed roadmap for the growth of your VR business over the next few years.
How important is it to create a business plan for your VR business plan?
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…
Creating a business without a business plan is like building a house without a blueprint. 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.
Some studies suggest that if you have a business plan, your business has a 20% higher chance of success than if you didn’t create a business plan.
And that is why, in this blog, we will go through the process of writing a virtual reality business plan.
Blog overview
First, we will take a look at the traditional format of a VR business plan.
This is the format you’ll be using on almost any professional occasion (such as pitching your business to a bank for a loan).
Second, we will look at the most important uses of your VR business plan.
Third, we will look at some important characteristics of a VR business plan.
We’ll conclude the blog with some useful resources to help you create your virtual reality business plan.
Virtual reality business plan - the traditional format
When people say “business plan”, they’re talking about the traditional format most of the time.
This is an expansive and exhaustive document that should capture every aspect and every detail of your VR business.
Like I mentioned earlier, you can take this as a definitive document when you’re presenting your business to formal lenders or investors .
The traditional business plan format consists of the following parts:
The title page should include only a title and a subtitle .
For example,
Business Plan
Virtuality Healthcare Solutions, LLC.
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.
That can be the title page of the business plan a healthcare VR startup . As you can see, it simply states the company’s name (title) , and their main business idea (subtitle) .
Table of contents
I hardly need to explain what this is.
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.
Neither the title page nor the table of contents reveals a lot about your business.
But it’s crucial to include both to make your business plan presentable and organized .
A dishevelled and disorganized business plan will fail to inspire confidence amongst potential investors and lenders about your organizational capabilities.
Executive summary
The executive summary offers the reader a bird’s eye view of your entire business plan.
It should include what your VR startup is aiming to achieve , and why you think your business strategy will work .
In other words, it should summarize for an investor why they should invest in your business.
Key points to be included in the executive summary are:
- Mission statement.
- Your product or service.
- Your company structure and key employees.
- Financial projections.
Oh, and do I really need to tell you that the executive summary needs to be a clear and compelling read ?
Business description
A lot of blogs refer to this section as the “Company description”.
But I do NOT.
Because it’s easy to confuse “Company description” with “Company/Corporate structure”.
Just so we’re clear,
- Business description refers to the details of what demand your business wants to meet.
- Company structure refers to the organizational structure of your company; that comes later.
Here’s 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 .
That question is answered by the business description.
The three main aspects that MUST be revealed by your business description are:
- What products or services your business aims to create.
- Who are your expected customers/clients?
- What strengths does your VR business have (talent, supply chains, prime location, etc)?
Market analysis
Having described your business to the reader, the logical next step is to tell them about the market you plan to tap .
For example, returning to the example of a VR healthcare startup, the market analysis would include:
- Which healthcare niche you’re planning to cater to?
- What’s the size of the market?
- What strategies have your competitors adopted? How do you plan on countering them?
Organizational/company structure
This section tells the reader two main things:
- What legal structure does your company have? It is a partnership, an LLC, an “S” corporation, etc?
- What’s the organizational hierarchy ? How many layers are there in the hierarchy, who fulfils what role, how people are compensated, and so on.
Products you’re planning to create
Include the following points:
- What is your product?
- How specifically does it help consumers?
- Can you differentiate it from competing products?
- What is the product lifecycle?
- Are you filing for patents or trademarks? Are you engaging in R&D?
Remember, you might know a lot about virtual reality, especially the product you’re planning to create; the reader of your business plan will almost certainly not know as much.
You should keep this section simple and appropriately detailed .
Marketing and growth
This section should reveal to the reader how you plan on acquiring and retaining customers/clients ; and how you plan on growing your business .
Your sales procedure should be clearly laid out: I think you can guess that investors would be interested in that.
This is where cost, earnings, and profit projections come into play.
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 (ROI) they can expect.
Some specific items you can include here are:
- Income statements.
- Cash flow statements.
- Balance sheets.
- Capital expenditure budgets.
Try to include projections for upto five years - I’ll explain why shortly.
If your business is already running, provide documentation to show how you’re doing.
Funding requirements
If you have funding requirements , this is where to indicate them.
Be specific as to:
- Whether you’re looking for equity or debt financing .
- What terms you expect on the investment.
- When and how an investor can exit .
- How you’ll use any funds supplied.
Uses of a VR business plan
The most important uses of a VR business plan are:
Organizing and studying your own business idea
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 , and giving you an idea of what lies ahead .
Like they say, if you aren’t convinced by your business idea, how can you expect others to be?
Pitching your business for fundraising
If you’re hoping to raise funds from lenders or investors , whether formal (like a bank), or informal (like your family members), your business plan will be invaluable in pitching your VR business to them.
Helping you attract talent for your VR startup
As a startup, if you’re looking to attract talent , you might end up sharing your business idea (and hence your business plan) with them.
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.
Working in new fields, sound business ideas , shared values - these are some of the attributes that you can use to attract the talent you need.
Characteristics of a good virtual reality business plan
Your virtual reality business plan should be…
Always be precise as to what you’re talking about, and remember to include definite metrics to define your goals and describe your performance .
For example, if you’re setting up a virtual reality escape room , you can include:
- Expected footfall.
- Expected revenue.
- Main revenue source - personal celebrations, corporate events, and so on.
While you’re mentioning all these Key Performance Indicators (KPI’s), remember to be realistic.
Of course you’re not going to intentionally put in misleading information, but as it’s your endeavor, it’s tempting to get carried away and make rosy assumptions.
Returning to the example of a VR escape room, it’s always preferable 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 rather than promise investors a 20% growth in footfall, and fail to deliver.
It’s said that a business plan must be a living document .
As you should know by now, a large part of your virtual reality business plan involves “ guesstimates” which may not transpire into reality .
You MUST be able to adapt your business plan to changing circumstances and to incorporate new business models and ideas.
In fact, this is where a lean business plan format can prove useful.
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.
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.
Medium term
A good business plan talks about the medium term , that is, the next three to five years .
Anything shorter than that and you won’t really give your business a chance to grow; making “guesstimates” for longer periods has generally proven to not be very useful.
Which is why three to five years is the sweet spot for your virtual reality business plan.
Virtual reality business plan resources
Here’s a business plan toolkit provided by the International Finance Corporation.
And here’s a template created by the My Own Business Institute at Santa Clara University.
And now you’re ready to start drafting your virtual reality business plan.
If you’re looking to enter the virtual reality industry through the virtual reality escape room niche, you can check out the premier VR escape room franchise in the USA .
Please leave your thoughts and suggestions in the comments below as we are constantly looking for ways to improve this article. Have a great day!
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7 ways to start a VR café
For nearly three decades, internet cafés have filled an important niche across the globe. Also known as cybercafés, these establishments have provided online access to travelers, and to persons who do not have internet services at home. Thanks to the astronomical growth of virtual reality technology , a new business model is emerging that promises to transform the industry. Welcome to internet café 2.0 — the VR café.
Traditional internet cafés have served both their owners and customers well, and expansion in developing nations remains strong. However, virtual reality offers a shot in the arm for cafés even in nonindustrialized countries. By shifting the focus from merely providing internet access to offering pay-as-you-go VR experiences, you can turn the commonplace internet café into an exciting revenue machine.
We have put together a list of seven ways you can grow your internet cafés business. Some involve renting out your facility to organizations that need to provide VR content to persons in your area. Other ideas allow you to sell VR experiences directly to your customers. We also explain the primary advantages and disadvantages of each.
Let’s get started.
1. VR games
Advantage : Nearly guaranteed revenue
Obviously, VR gaming is at the top of our list. With a market revenue projection of $45 billion by 2025, this is one VR service you cannot afford to ignore. Even if you offer other VR-related experiences to your customers, establishing your facility as a VR game room will ensure a steady stream of gamers throughout the day, along with a corresponding stream of gaming revenue.
Even now, many gamers can’t afford a decent VR headset, let alone the powerhouse of a PC needed to drive it. Providing a neighborhood, or even regional, VR arcade will attract those with an appetite for VR but who don’t have a home system — which is a pretty large crowd.
Café owners have the opportunity to bridge popular anime and video game companies with customers in new and profitable ways. Animate Ltd., Animate Cafe Shops of Japan has even become a bucket-list destination for tourists. Huge interest led Animate to use a lottery-based reservation system. which just proves that success comes with a price.
Disadvantage : Cost
As with all VR services that you might want to offer your customers, VR gaming requires more physical space than traditional Internet cafés. VR is not only a visually immersive experience, it is a physical experience as well. You must provide adequate room for each customer to grope, wave, grab, and swing as they enjoy their game play to the fullest. Providing enough room for each player to move about safely must be a prime consideration.
In addition to the additional space, you will need to purchase suitable headsets, headphones, controllers, wands, and other gear needed for the games. While there is no cheap way to equip your facility, many operators start small and soon find that they can afford to add new stations as business grows.
Finally — and don’t let this discourage you — all of that game revenue isn’t yours to keep. And we are not talking about income tax. The creators of VR games have something to say about using their products for commercial purposes. Some offer licensing agreements, while others do not. Do your research, but expect more liberal licensing requirements as the VR game room market continues to grow. A better solution is to have VR games custom developed for you by a VR development company, in which case you keep all of the profits for yourself.
2. VR escape rooms
Advantage : Interactivity
Don’t confuse VR escape rooms with the regular VR gaming we just discussed. Rather than providing each customer with a gaming computer, VR gear, and room to play, a VR escape room immerses the player in a confined space from which they must “escape.” By solving riddles, problems of logic, or finding hidden clues, players can free themselves from the confines of the escape room, thus winning the game.
VR escape rooms provide not only an immersive experience, but a highly interactive as well. Even non-gamers return again and again to try and improve their speed, or to find more clues. The best part? VR game rooms are group activities, so you are more likely to book four or five people at a time.
Disadvantage : Customization
In addition to the cost of building a custom escape room, you will need special game software to operate an escape room. Although more and more games are available, you also have the option to have one custom designed. There are a handful of outsource development companies that offer top-notch custom VR development, including software for VR game rooms.
3. VR-based training
Advantage : Corporate clients
The value of VR in training is being realized by companies large and small. As an a VR café operator, you can tap into this developing market by renting out your facility for VR training. While companies increasingly realize the need to incorporate VR into their employee training programs, not many organizations have the hardware needed to conduct such training in-house.
As third-party developers create VR training software for various industries, the need for VR training facilities will only grow. Since the client will bring their own training software, all you need to provide is the hardware and a minimal level of support.
Adding “VR training facility” to your café’s list of services can attract corporate clients, and all the VR trainees you can handle.
Disadvantage : Hardware requirements
The primary disadvantage of offering your café to companies for VR training is that you must have enough computers and headsets to accommodate a large group. The cost of setup, however, could be quickly recovered as word spreads that you offer this much-needed and unique service.
4. VR-based education
Advantages : Academia
Renting your café out for VR-based education is done exactly the same way as for training, except that you are targeting schools who need to educate students, rather than targeting corporations that need to train employees.
Despite the fact that many schools in the U.S. and Europe have at least some VR gear for use in educating students, plenty still do not. Now, don’t expect a classroom of students to invade your facility every day, but many schools will welcome the opportunity to use your facility a few times a year. Having a local venue where schools can introducing children to VR technology, or to provide educational VR content, can be a great asset to nearby schools. With a little creative marketing, you can probably corner the market as a provider of VR services to your school district.
Disadvantages : Hardware requirements
As with some of the other ideas, here, you need a lot of VR hardware to host even a small school class. Even so, this untapped market can prove profitable returns, if you can make the experience fun and educational for the students.
5. VR workshops
If you have a passion for all things VR, you might consider offering VR workshops to local businesses who want to explore VR technology. By conducting informative hands-on instruction in virtual reality technology, you provide a valuable service, and add to your revenue stream. Your target clients are both small and medium-size organizations that are considering incorporating VR technology into their product line or operations.
Disadvantage : Expertise
Your knowledge of VR technology must go beyond that of the average VR consumer, if you are going to conduct workshops. While an advanced degree in programming is not necessary, you must able to demonstrate how to use VR hardware and software. You will also be expected to provide innovative ideas on how your clients can integrate VR technology into their business models.
6. VR Events
Advantage : Corporate support
If your café is located near a large metropolitan area, chances are good that there are companies in the area needing a venue for VR events . These companies will have their own VR content, and their own audience, they just need a place to bring the two together. As the marketing potential of virtual reality becomes more apparent, more and more companies will seek ways to wow their customers through VR presentations.
In addition to corporate events, another type of event you can host is the private party. Birthdays, fundraisers, and company promotions all provide opportunities for you to attract a crowd. All you need to do is to advertise your VR café as a hotspot for these events. As long as you obtain licensing rights to the content, you can host multiplayer game tournaments, 3D concerts, or tours of the galaxy.
Disadvantage : Content
While corporate clients will bring their own VR content for their event, you will likely need to provide the software for private events. Even though the list of available VR content is growing , we are still a few startups away from having a smorgasbord of VR material available for public consumption.
7. Amenities
Advantage : Low cost
Sometimes, the best solutions are the simplest. Regardless of the type of content you provide, or the customers you attract, you can generate a surprisingly strong revenue stream by providing a few amenities for you guests.
Food and beverages, document printing, and document scanning are all things your customers need, and are willing to pay for.
As with many types of businesses, you can increase sales by offering package deals for families, companies, or 12-month individual plans.
Disadvantage : Increased staffing and supplies
You will need extra staff to provide customers with snacks and drinks, and to assist them with printing or scanning. You also need to plan well in order to maintain an adequate stock of refreshments and printing supplies.
The VR café is probably going to disrupt nobody, but that does not mean it can’t be a highly lucrative business. As virtual reality becomes more mainstream, consumers will seek ways to explore what VR is all about. If you can provide them with a cost-effective way to immerse themselves into VR games, videos, and educational content, you can get your share of the $37.5 billion VR market.
Dmytro Ternovyi is an IT-business publicist, industry insider and a content manager in AppReal-VR.
Source: 7 ways to start a VR café
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