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 initial stage will assist you in establishing whether there is a market for your product or service. A new idea is often the basis for setting up a business. Many entrepreneurs spot a gap in the market and set up businesses that provide a product or service that fills it. Others come up with ways to improve an existing product.
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 know-how that might form the basis of a new business?
- Do you have a hobby that can be turned into a business?
- Has there ever been a time when you needed a particular service or product that nobody else provides? If you needed it, there is a good chance that other people will too.
Once you’ve got a business idea, take time to refine it. This will assist you in deciding whether it could be the foundation of a growthful business.
There are is a variety of 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
- reflect on 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
A market for your idea
There are certain criteria you can use to establish this:
- Does it satisfy or create a market need?
- Can you make out potential customers?
- Will it outlive passing trends or capitalise on the trend before it dies away?
- Is it exclusive, 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 laws and regulations? Seek legal advice before proceeding.
Market research can play a very important role in answering many of these questions and increasing your chances of growth.
Market research techniques can be basic or sophisticated. You could:
- canvass the opinion of friends and colleagues
- survey the public about whether they would use a product
- ask customers of competing produce and 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 essential 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
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
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 growthful
- 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 your
Finance the development
Securing sufficient funding is one of the biggest obstacles many people 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 starting up a new business. Grants and government schemes offering support to new businesses are widely obtainable.
There are also specific funding schemes for people under the age of 30.
Other sources of finance include:
- cashing in the value of shares
- investment from business angels or venture capitalists
- family loans
- joint ventures
Bear in mind that your funding requirements 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 assess your finance options.
Business plan
Whenever you approach banks, potential investors, business partners or government departments for money you will have 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
At some stage you will most likely 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 measured as confidential or a trade secret. You should therefore take steps to protect your 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 look for professional legal advice before taking any final decisions.
Test the market
Product testing is essential 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 initial 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 suggestions from users by modifying the design.
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 think about 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 be required 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 decide the price of your product or service so that it is attractive to customers and you make a profit.
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