If you have an idea for a new business, product or service you should test it out. This is sometimes called a 'feasibility study'.
You can carry out a basic feasibility study by asking if your idea solves a problem.
Problems and opportunities
You can test if your idea is worth developing by asking:
- if your idea solves a problem
- how many people have this problem
- are people willing to pay to solve this problem
Doing a detailed feasibility study
If you decide your idea solves a problem or is a unique opportunity, you might want to do a more detailed feasibility study. This includes looking at:
- how much your idea will cost to create
- whether you can make money out of your idea
- whether you can deliver your idea
- whether people will want to use or buy it
- whether there are any legal or regulatory issues
The cost of your idea
You should work out the cost of developing and creating your idea. You can compare this with the benefits you expect it to bring to your business.
You should include the cost of any continued or additional support you might need to provide for your idea in the future.
As well as financial costs, you should think about:
- what other opportunities you might not be able to pursue while developing this idea
- how pursuing your idea could affect the day-to-day running of your business
Can you make money out of your idea
Before developing your idea, you should work out how much profit you think you can make from it.
You can try to work out your potential profit as accurately as possible, by considering:
- capital expenditure – what you'll need to spend to create and deliver your idea
- working capital – how much money you'll need to run your business day-to-day
- sales volumes – how much you expect to sell and when
- price – how much you'll sell it for and the terms you'll sell it for
- overheads – running costs for your business, like wages, rent, utility bills
You should also think about when you'll need each part of this. For example, you will need money to fund your idea until sales come in.
Delivering your idea
You should decide if your idea is something you or your business can actually deliver. This will include thinking about the:
- equipment and premises you'll need
- skills and experience needed – recruiting staff or training existing staff
- suppliers and materials you'll need
- distributing your new product or service
- marketing – how you'll let people know about your new product or service
If you're already running a business, you should also think about when you're going to develop your idea. In particular, you should think about whether your business will have the time and resources for it.
The market for your idea
You should consider whether there is a market for your idea. This will include looking at any competitors and whether people would want to use or buy your idea. This is known as 'market research'.
There are different ways to do this including interviews, focus groups or surveys. You can carry these out with either your existing or target customers (people you'd like to use your product or service).
You should think about:
- who you think will use or buy your idea
- how many customers you're likely to have
- why you think they would use or buy your idea
Part of thinking about your market is also thinking about any products or services you'll be competing against.You should include any products or services that are currently being developed.
This could help you work out:
- the size of your market and which part you want to target
- if your idea is different from other products or services
- if there are opportunities to grow in future for example, developing a range of products
Market Research Service
Business Gateway have a free Market Research Service which can do your market research for you.
They can help source:
- market intelligence
- news and trade press
- company lists
- company and credit reports
- property searches
- statistics and demographics
You can find more information about the market research service on the Business Gateway website.
Legal or regulatory issues
You should think about any legal or regulatory issues you might face to create and deliver your idea. You should work out how easy it would be to deal with these issues.
For example, to deliver your idea you might need:
- special licences
- safety certifications
- membership of specific trade or professional bodies
Some of these might involve paying a fee upfront or on an annual basis, for example membership fees.
Developing your idea
If idea passes a feasibility study, you might decide to develop it into a business. Writing a business plan will help you do this.
Managing your idea
You'll also need to start managing the development of your idea. Doing this will help you increase the value of your business, as it can help attract:
This is because managing your idea can show them:
- how your business has progressed
- that you're managing any risks
- your business is developing in the right way
You can manage your idea by treating it as a project. You should break the project down into small, achievable tasks. You should then set a timeframe for each task and work out what you would like to achieve in it.
You'll also need to think about the resources you'll need to achieve each task.
Federation of Small Businesses
The Federation of Small Businesses can offer small businesses advice on market research.
Find more information on the Federation of Small Businesses website.
Call: 0808 202 0888
Scottish Chamber of Commerce
You can contact your local Chamber of Commerce for help with market research.
Find more information on the Scottish Chambers of Commerce website.
Call: 0141 204 8316
UK National Statistics
The UK National Statistics Publication Hub shows the latest statistics released by UK government departments each day.
Find more information on the Office of National Statistics website.