BUSINESS PLANNING

This section provides some information that may help you make the most of the IP in your business. Several of the IP terms described in this section such as patents, trade marks and confidential information may not be familiar to you, however they will be explained in more detail throughout this section. The IP Glossary also contains definitions of these terms.

Have a plan

High-achievers in the small-to-medium size business sector admit that the turning point in their business was when they prepared their business plan. A plan is a prominent feature of successful operations and should be completed before you embark on a new venture. A business plan pinpoints key issues that need to be resolved once you open the door to your business. It does not have to be long but it must draw an accurate picture of where your business is now and where it's heading.

Preparing a plan helps you to establish key milestones and indicators to measure performance and is essential for getting funds for expansion from bankers, venture capitalists and other sources of finance. Your business plan should be an evolving document-as your business grows, it should be updated to reflect significant changes in your business, or business direction.

Most successful business owners will tell you that it is a smart start to ensure that IP protection and management is an integral part of your business plan.

Where IP fits into your business plan

Day-to-day, businesses sell goods or services, but year-to-year they are building up ideas, goodwill and recognition linked to a brand, logo, product or standard of service. In reality, they are building up value linked strongly to their IP assets. That's why these assets need to be identified in your business plan and strategies to protect them need to be put in place.

What are the key elements of a business plan?

A business plan might include the following:

• An executive summary - is your business plan in a nutshell and should highlight IP issues that need to be addressed.
  
  
• Objectives - clearly define your goals in a quantifiable way.
  

• A description of your business - indicates how it will be set up, its intended name, target markets, product or service and market edge.
  
  
• Legal Requirements - this identifies any licenses or legislative requirements you'll need to meet to legally operate your business. Registering your business name in every state and territory you'll trade in will be required. This is where you should also seriously consider the value and protection of a trade mark.

• Your selling and marketing strategy - outlines how potential customers will be targeted, and your distribution strategy for your intended market. It will also raise issues such as your Internet strategy and obtaining a domain name. There could be issues related to keeping your IP secure if and when you hold discussions with major product distributors.

• A research and development plan - describes what will be done to create and enhance your product or service to attract customers. This section may involve your plan to secure a patent or a registered design for your product.

• Production or operating strategies - shows how you'll actually make your product or service. The IP issues here could include identifying any processes or information that should be protected via trade secrets and how you will ensure important information remains confidential.

• An ownership and management plan - establishes the ownership shows how you'll actually make your product or service. The IP issues here could include identifying any processes or information that should be protected via trade secrets and how you will ensure important information remains confidential.

• A funding strategy - covers where the money you need comes from to achieve your goals.

• The finances of the operation - details the financial structure of your operation. Your taxation strategy should be here and a strategy to regularly review the value of your IP.

• Strengths, weaknesses, opportunities and threats - this is an objective analysis of your business. An IP issue would be recognition that your business could be weakened if a patent is not obtained as rivals could move in on your market. A key strength could be your ability to register your brand as a trade mark in the marketplace.
  

Identifying your IP assets as part of your business planning process

As your business grows it is essential that you identify and keep an inventory of your IP assets. This is called an IP audit and will help you when it comes to seeking protection for your intellectual property.

You should also value your IP assets, just as you would physical assets. For example, your customer list or database can be a competitive intangible asset you need to identify and protect. A secret recipe or a unique service technique also falls into this category. As a starting point you can try to calculate how much time would be required to develop these assets from scratch, or estimate how much a competitor might pay for them. An accountant can help you to value these assets and place them in the context of your business.

Once you have these key assets identified, you can then consider the types of protection available and take steps to seek appropriate protection (such as a patent or trade mark) or determine other less formal strategies for protection (such as trade secrets or rapid production and development).

The audit process will also enable you and your legal adviser to determine:

• the best intellectual property strategy for your business;
• the likely costs, risks and benefits of that strategy;
• the best way to maintain your intellectual property assets; and
• whether you are likely to infringe someone else's property rights.

It is important to ensure that you understand the IP rights of other people or companies you have dealings with. For example, a large amount of off-the-shelf software is limited in the way it can be used by a licensee. You may find that if your products or services rely on such software, you may be breaching the licence conditions and infringing someone else's IP rights. Once the audit and valuation process is complete, you can then look at your options to commercially exploit your IP. We'll talk more about this in the sections IP and Profiting from Your New Idea and IP and Buying a Business later in this booklet.

Get help with your business

• IP Australia is the government agency responsible for patents, trade marks, designs and plant breeder's rights and is the ideal information source for finding out more about these rights. This is a great first stop to immerse yourself in as much information about IP as possible before talking to other professionals such as patent attorneys or specialist IP lawyers. Visit www.ipaustralia.gov.au or call 1300 651 010.
  
  
• Patent and trade mark attorneys can help you obtain IP rights and provide advice about your IP and related strategies. Lists of these professionals in your state are available in the phone book, or on the IP Australia website www.ipaustralia.gov.au. Alternatively, contact the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) www.ipta.com.au
  
  
• IP Lawyers can assist you to identify, protect, commercialise and enforce your IP rights. To find a lawyer, contact the Law Society in your state or for a list of IP lawyers visit the IP Australia website www.ipaustralia.gov.au
  
  
• Accountants and other valuation professionals can help you to value your IP assets. To find an accountant in your area contact the Institute of Chartered Accountants www.icaa.org.au, National Institute of Accountants www.nia.org.au, or CPA Australia www.cpaaustralia.com.au
  
  
• Marketing consultants can help you with corporate and product marketing and market segmentation. Visit the Australian Marketing Institute's website www.ami.org.au for a list of marketing professionals in your state.
  
  
• Branding consultants and graphic designers can help you with your corporate image, product branding and business naming. Visit the Australian Graphic Design Association website www.agda.com.au for a list of designers in your state. However make sure that you own whatever image and branding you have developed by a consultant-you need to stipulate up front that you wish to own the copyright in any materials developed by the consultant or designer. Simply paying for it does not mean you own it!
  
  
• For information or copyright, visit www.law.gov.au/copyright_enews or www.copyright.org.au
  

How to be IP savvy when planning your new business - a quick recap

• Given the importance and complexity of some IP issues, seek help. Experts can objectively assess your plan and may suggest other options. The key is finding experts you feel understand your business and its unique assets. The right adviser will help you to grow your business. A list of potential contacts is available in the Useful Contacts Directory. While this can add additional expense when starting out in business, some attorneys will offer the first consultation free of charge.

• Write a business plan that outlines your goals. Your plan should give strong pointers to what IP assets are to be created, their value and how they will be managed and protected.
  
  
• Once you have a handle on where your business is heading, understand the role your IP plays, or will play, in its growth. IP rights can be used both as a “sword” and a “shield” against your competitors. Therefore, you have to be completely sure about the protection you have, or will obtain, for your inventions, innovations, brands, designs, processes, promotional materials, etc. Seek objective assessments on this critically important issue.

• Put in place a review process and policies to develop your IP as your business grows. This might mean thinking about the potential for you to commercialise your IP through franchising, licensing or simply selling off your business and/or its processes, inventions, brands and other IP assets.

• Have an updated register of your IP that can be regularly reviewed. IP assets can be assessed for their usefulness and that becomes the basis upon which these assets might be upgraded, sold or retired.