Introduction
 
Developing your business idea into a viable product or service is a critical part of building a business. Thorough assessment and market research at an early stage will help you to establish whether there is a market for your product or service.

This guide will help you assess whether your idea can form the foundation for a successful business and put a process in place to monitor and measure its progress.

It also offers hints and tips on how to finance the development of your idea and how to protect it if other people get involved.

Finding and developing your idea

A new idea is often the basis for starting up a business. Many entrepreneurs spot a gap in the market and start businesses that provide a product or service that fills it. Others come up with ways to improve an existing product.

Coming up with a new idea
If you want to start a business but don't yet have an idea to work with, there are many ways to go about identifying one. The following questions may help:

• Do you have any particular skills that could form the basis of a new business?
• Do you have a hobby that could be turned into a business?
• Has there ever been a time when you have needed a particular service or product which no-one else provides? If you needed it, there is a good chance that other people will too.
  

Developing your idea
Once you've 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
• 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

Is there a market for my idea?

There are certain criteria you can use to establish this:

• Does it satisfy or create a market need?
• Can you identify potential customers?
  Will it outlive any 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 - locally, nationally and globally?
• Is the product safe for public use and does it comply with relevant regulations and legislation? Seek out legal advice before proceeding.

Market research can play an important role in answering many of these questions and increasing your chances of success.

Market research techniques can be basic or sophisticated. You could:

• informally canvass the opinion of friends and colleagues
• survey the public about whether they would use a product
• ask customers of competing products what improvements they would like to see
• use focus groups to test your product or service
• monitor your competitors' activities
• look at what has and hasn't worked in your industry or market niche
• hire a market research agency

It is very important that you are as thorough in your market research as possible, as mistakes made at this stage of development could prove costly later on. Remember, the more information you have, the better you will be able to understand your potential customers, the marketplace and how your product fits in.

Plan the development of your idea

Try to identify the key stages or checkpoints in your product's development. Each checkpoint gives you a chance to evaluate the progress of your product or service and decide whether you need to make any changes.

Your checkpoints may include:

• designing - turning your idea into a product or service that can actually be sold
• prototyping - creating a useable example of your product or service, which can then be tested
• financing - raising the money you will need to get your business started
• operations - setting up the structure of your business, eg finding a suitable location, hiring staff, etc
• marketing - working out how you will sell your product or service

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:

• developing a product or service that isn't commercially successful
• 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

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.

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.

There are also specific funding schemes for entrepreneurs under the age of 30.

Other sources of finance include:

• realising, or cashing in, the value of shares
• investment from business angels or venture capitalists
• family loans
• joint ventures

Remember that your funding needs may change during different stages of a product's development. 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

Sharing your ideas with others

At some stage you will probably wish to discuss your idea with a third party. This could be informally, such as seeking advice or encouragement from friends or family, or formally, by hiring a professional consultant, or forming a partnership or joint venture with another company.

Remember, once you put an idea into the public domain it can no longer be considered confidential or a trade secret. You should therefore take steps to protect your intellectual property.

Intellectual property
Your intellectual property is what sets you apart from competitors. It could be your company brand, invention, design or creative work. Protecting your intellectual property makes strong business sense.

There are several legal ways to do this:

• trademarks restrict others from using your brand or logo
• copyright protects original literary, dramatic musical and artistic works
• patents protect inventions
• design rights and registration protect a product's appearance

If you form a partnership or joint venture, draw up a contract defining who owns the idea and what the share of future profits will be.

You must seek professional legal advice before taking any final decisions. A good place to start is by contacting your local Business Link.

Test the market

Product testing is important throughout the design process. While you are developing your product or service it's a good idea to keep testing the market to make sure you are still on the right track. You can do this by using:

• Focus groups - ask small groups of your target customers what they want from your product or service.
• Questionnaires - try to get as wide a sample as possible.
• Prototypes - show an early version of your product to customers. You may find that your prototype will go through several stages of development as you refine your idea.

You may need to respond to any suggestions from users by modifying the design. Don't be discouraged, as most successful entrepreneurs do not view this as a failure, but as a learning curve.

It's a good idea to send your product to a large or very reputable organisation. A positive testimonial will prove invaluable as you approach other customers.

You may want to consider testing even after your product goes on sale. Ongoing contact with customers can uncover both the shortcomings of your product and possible opportunities that you may have missed.

Once you have a final product, you can then set about building a brand. A brand includes everything that is visible to the customer, such as the product name, its packaging and its delivery.

You also need to consider your pricing policy. You need to price all the materials, other inputs, machinery, processes and administrative time realistically. You will need to research different suppliers and the cost of marketing and distribution. Then check on the price at which your competitors are selling to customers. You can determine the price of your product or service so that it is attractive to customers and you make a profit.