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The best plans have 10 components:

Executive summary

Market analysis

Company description

Organisation and management

Strategic analysis

Marketing and sales management

Service or product line

The amount of funding needed to start or expand the business

Financials

Appendix

Fern, who advises inventors coming into the Brisbane-based AIC, says there is a 10 piece template for

business plans that incorporates all these components.

1. Intellectual property strategy: Every company needs to know it has the freedom to operate and to offer

products and services that are unique, allowing it to carve out a niche. Companies also need to know they are

not infringing on the intellectual property of competitors.

2. Product overview: This does much more than examine the item or service being sold. The company hereidentifies its mission statement, core competencies, the organisational values and its broad goals.

3. Corporate structure: Fern says many entrepreneurs ignore this but it's critical. Things can get ugly if a plan

is not in place, identifying who owns what and who has the rights and if it just relies on handshake agreements.

The plan needs to look at the spread of equity and identify who owns the shares and who has what rights.

Having a shareholder agreement in place is essential. Does the company have a board? Who are the

directors? "If you want external funding, you need to show you are serious, so this is important,'' Fern says.

4. Marketing: The plan needs to identify the product and service and who the competitors are. It also needs to

examine the marketing plan. How will the product be taken to market? What are the marketing plan's goals and

objectives, strategic initiatives and tactics? Tactics are about the four Ps of marketing: price, product, promotion

and place. So what sort of tactics will the company use to implement each initiative? What are the distribution

channels? Will the company be working through dealers? Is it B2B? And what sort of sales force is in place?

5. Financial modelling: This examines sales forecasts, start up expenses and projections. The best plans look

five years ahead. The first two years is done on a month basis which means 24 sets of projections. After that,

they should be annualised over the next three years. The financial modelling also needs to look at sensitivities

and scenarios. What would happen, for example, if the sales price was 10% below the original figure? How

would the financials look if the margins slipped from 20% to 15%? Fern says this is all part of normal business

planning for the future. "You can't be 100% sure of anything so everything has to be in ranges,'' he says.

6. Operational plan: This section looks at such issues as how the product is placed on the market, research

and development needs, business systems and the supply chain. The level of complexity depends on the

business but that should not be an excuse not to do it. "A lot of entrepreneurs put this on the back of an

envelope,'' Fern says. "You need to make sure you have a good handle on it."

7. Funding and investment: Where is the money going to come from? The plan needs to look at how the

company deals with shareholders. This section has to look at the strategy that's required to keep the cash

coming in, something that's absolutely critical for many start ups which run negative for the first few years. The

reality is that most companies are debt funded so the plan must identify funding sources. That is the minimum

expected by the banks.

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8. Potential partners: This part examines who the business might be working with once it is up and running.

These could be distributors, or they could be licensees who rebrand the product. Either way, this part of the

plan looks at how third parties will help spread the product through the market.

9. Legal and compliance: Every business has to work its way through a jungle of laws and regulations, both

here and overseas. A restaurant or caf, for example, needs to look at food regulations. Electronic goods

manufacturers need to know that all their products need a CE mark in Europe, showing regulatory compliance.A manufacturer of electric bikes here has to stick to a set wattage. It's the same for every business. Whatever it

is, the plan needs to identify the relevant laws and rules.

10. The team: The plan looks at the current staffing levels and how this will drive the growth. Even if it is a

team of one, the plan needs to look ahead at what changes will be required once the business reaches a

certain point. When it reaches a certain level, more staff might be required. The company might be looking then

at bringing in a chief financial officer or human resources manager. The plan has to identify when all this will

happen.

The business plan also needs to be flexible. Nothing should be set in stone. A vendor might change, new

customers might come in and the market could suddenly change. Experts say that it is important to update the

plan regularly, at least once a quarter.

Fern says that while many entrepreneurs avoid doing a plan, it is the best way to keep things steady when the

market changes. In any case, having a good idea is not enough and sometimes the best product doesn't

always win. "A lot of changes take place and having a plan is good because it gives you the scope to work

through the issues,'' Fern says.