Road-test your idea

Before you invest in premises, equipment, a website, staff or an expensive marketing campaign, and before you speak to your bank manager about potential investment, you have to be sure that there is a market for your bright idea. This is where a road-test is essential…

In brief

• Is there a market for your idea?
• Free advice
• The value of focus groups
• Soft launching
• Government grants
• What to do next

Ask yourself: is there a realistic market for your business offering? And if so, is that market big enough to justify investing your time and money? It's both challenging and expensive to create an entirely new market for a product or service. The vast majority of successful entrepreneurs don't actually create a market; rather they provide a service or product that is cheaper or better than the competition.

Here are some further questions that need asking before you road-test your business idea:

• Do you have what it takes in terms of persistence and determination?
• Can you offer a better, cheaper or more reliable alternative to the product or service that is currently on the market?
• Do you have, or can you learn, the appropriate skills in terms of sales or marketing in order to make your idea work?
• Can you afford to invest your own money in the business?

• Friends and family Objective and impartial opinion does not usually come from friends or family. Unless your idea is completely barmy, most will tell you it's a terrific idea and wish you luck, so be cautious of compliments and enthusiasm from those closest to you.
• Business Link Advisers Can be an invaluable, and free, resource for all would-be entrepreneurs. Many advisers have real business experience. All can help you make shrewd, objective judgements when it comes to assessing new business ideas or ventures.
• Business bankers Speak to the business banking specialist at your local branch. In addition to offering a wealth of knowledge, these professionals can offer guidance in terms of future funding requirements, which will help when it comes to drawing up your business plan.
• British Library If you have an idea for a new product or invention visit the British Library in London. It runs a ”Business & IP Centre”, which offers free events and courses for budding entrepreneurs. It also boasts an impressive range of free online databases. These give up-to-the minute company, business and industry information, in addition to financial news. The library also employs an ”inventor in residence”, someone who can (again, for no charge) discuss your idea and its commercial potential, as well as the implications in terms of patenting and intellectual property.
• The Intellectual Property Office Here you can find help in obtaining legal protection for your creation or invention. As the official government body responsible for granting Intellectual Property rights in the United Kingdom, the Office covers patents, designs, trademarks and copyright issues. You can also use the Office as a means of discovering whether or not there are patents pending on certain products already on the market. If there are, this may impact on the viability of your idea.
• Free business support websites and publications The internet can be a useful research tool, however there is also a plethora of small business-focussed magazines and newspaper supplements, all of which are searchable and offer valuable real-life stories of success and failure, for example, Smarta.

Focus groups help large companies when it comes to launching new products and they are equally useful for start-up companies or anyone with a new business idea. Groups only require 10 or so people, are relatively inexpensive, or free, to arrange, and can prove invaluable in identifying the strengths and weaknesses of a product or service.

Another way of focusing your idea is to speak to potential clients. If you are selling a product that would appeal to local authority leisure centres, for example, why not ask your local centre for its opinion? In certain situations where there is intellectual property involved, you would be wise in getting these potential customers signed up to a non-disclosure agreement.

Before committing time and money to a roll-out, perform a soft launch/pilot of your product or service, by initially selling only to a very limited market. Test the water locally at first or sell solely to a specific location. Central government often tests its initiatives this way and it's a good form of practical assessment for your product or service that may help iron out teething problems.

And remember, whether you're using focus groups, approaching potential customers, or opting for a soft launch it's important to consider acting upon any feedback that you receive - especially if it's negative!

Under the Government’s ”Solutions for Business” portfolio which provides financial support for entrepreneurs, grants are available to help companies prove the concept of a business idea.

Although these grants are administered by Regional Development Agencies (RDAs) your first port of call should actually be your local Business Link. advisers there will tell you what's available.

The grants are intended to help innovative small firms test their market ideas. As such, they could fund the hiring of a consultant or help commission market research. Equally, some of these funds could be used to build prototypes or demonstration models to show potential customers.

The rules for applications vary slightly between RDAs, but, as with all grants, the money available will not cover the total cost of a validation exercise. You will need to raise the remaining sum from other sources.