Developing a new business idea

Once you have got a business idea, take time to refine it. This will help you to decide whether it could be the foundation of a successful business.

There are various established methods of developing a business idea. You can:

    * conduct market research to discover whether your idea fills a gap in the market - see our guide on market research and market reports
    * brainstorm your idea with friends, colleagues or staff - they can give different perspectives on the idea and may know if anyone else is doing the same thing
    * think about whether your idea can take advantage of an opportunity created by new technologies, eg by trading online
    * consider whether social trends will affect demand for your product, eg the increasing demand for organic food or concerns about global warming and carbon footprints

Support for businesses developing new ideas

Designing Demand is a practical mentoring programme developed to help small to medium-sized businesses and technology start-ups use design to improve performance.

It helps businesses embed effective processes for the management of design and innovation and gives managers the skills to exploit design by spotting opportunities, briefing designers and running projects that deliver.

Designing Demand is part of a range of support offered to businesses in England through the government's new Solutions for Business portfolio.

Find out about Designing Demand on the Designing Demand website - Opens in a new window.
Is there a market for my idea?

There are certain criteria you can use to establish whether there is a market or demand for your product or service:

    *
      Does it satisfy or create a market need?
    * Can you identify potential customers?
    * Will it outlive passing trends or capitalise on the trend before it dies away?
    * Is it unique, distinct or superior to those offered by competitors?
    * What competition will it face - direct or indirect, local, national or global?
    * Is the product safe for public use and does it comply with relevant regulations and legislation? Seek legal advice before proceeding.
    * Will the market want your product or service at a realistic price?



Judge your progress

If the goals of any of your checkpoints are not met, you need to analyse why this is the case. Ask yourself whether your objectives were unreasonable. If so, you may need to revise your objectives.

There are circumstances when you should reconsider your original idea.

These include:

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      developing a product or service that isn't commercially viable and won't produce a reasonable financial return
    *
      developing a product that is not technically viable, eg it cannot be manufactured or it doesn't meet performance requirements
    *
      someone else releasing a product or service which is very similar or identical to yours, especially if they are a large or well-established competitor

Finance the development of your idea

Securing adequate funding is one of the biggest obstacles many entrepreneurs face. Your funding needs may also change during the course of product development as it may take longer or cost more than you first expected.

Loans and overdrafts are the most common ways to raise money for a new business.
Government support to help you develop your idea

There are plenty of other ways to raise the finance you need, especially when setting up a new business. Grants and government schemes offering support to new businesses are widely available.

For example, the Small Business Research Initiative (SBRI) provides funding for innovative products that could help solve a specific government or public sector problem. Successful applicants receive a development contract and 100 per cent funding to demonstrate feasibility and develop a prototype.

Read about support for innovation in our guide on government support for businesses or you can see the page on the Small Business Research Initiative in our guide on support networks and facilities for innovation and R&D.
Other sources of finance to help you develop your idea

As well as loans, overdrafts and government sources of finance, you could also investigate:

    *
      realising, or cashing in, the value of shares
    *
      investment from business angels or venture capitalists
    *
      family loans
    *
      joint ventures
    *
      remortgaging your property
    *
      bank loans

You should build into your financial forecasts a generous margin for contingencies and the unexpected. It's not worth investing your money and then running out before you have completed the development stage. You should look at the state of your funding at each development stage or checkpoint to help evaluate your finance options.
Business plan

Whenever you approach banks, potential investors, business partners or government departments for money you will need to show them a business plan. This should explain:

    *
      the goals of your business
    *
      what the purpose of the business is
    *
      your marketing plan
    *
      what you intend to spend the invested or borrowed money on
    *
      how this will benefit both the business and the investor or lender
    *
      how you intend to repay any lenders

See our guide on how to use your business plan to get funding.