How do I know if I have a good idea?

Business idea

The starting point for the Barclays Take One Small Step Competition is an idea, but how do you know if your idea has what it takes, and how do you know if your idea will be successful? The answer is to do some research and development.

The first step is to investigate the validity of your idea, and one of the best ways to do this is to produce an 'elevator pitch'. Try and get the essence of your idea into a one-minute speech, then when you're happy with the pitch take it out and present it to friends, family and your target audience. As entrepreneur and business author Emma Jones of Enterprise Nation points out: 'When people hear about your idea and then ask how or where they can buy it, then you know you have a good idea.'

The next stage is to build and develop the idea. Ask yourself: has someone already filled the gap that you're aiming at, and, if so, what makes your idea new and exciting? What are the barriers involved in making the idea work? Who will be the target market for your idea and how will you market the idea to this audience? But don't expect this to be an overnight process, as Emma says: 'Business ideas develop over time. Ask for feedback from potential customers and use this to refine your idea.'

Identify your strengths and vulnerabilities

A helpful process is to brainstorm the idea further and to create a SWOT analysis of the idea, where you look in detail at your business ideas' Strengths, Weaknesses, Opportunities and Threats (SWOT). Think about what is unique about your product or service compared to a competitor's product or the ability of a competitor to create a similar business. Also consider the opportunities and threats for your idea or business. For example, can you scale the product to franchise it to other markets? What if a newer, better product comes onto the market?

By the end of this process you should have a much better idea of how your product will perform in the real world – meaning it's now time to do some research into funding your venture.

Raising funds

Finance needn't be the hardest hurdle to jump in starting and growing a business. Emma recommends that whether you are seeking finance from a third party or friends and family, you are well prepared: 'If you can prove there are customers willing to buy your idea, there's a strong likelihood you will be able to raise funds.' 

The important thing about funding and investment is knowing your product or idea and how much it's worth in today's marketplace. How much are your competitors selling their products for? Are you undercutting them or is your idea more expensive? You need to be able to answer these questions if you're going to secure investment. It is also wise to be ahead of the game and know how any potential funding will be spent and what difference this will make to the way the business idea is developed.

Research and development

Lastly, many businesses think research and development (R&D) is something you do at the beginning, but it's something that Emma recommends you continue to do throughout: 'You should never stop your research, always try to stay informed of changing customer needs, new products/services from competitors, and market trends.'

Find out how other successful entrepreneurs launched their successful businesses. Read about chocolate entrepreneur Claire Burnet and discover how Simon Duffy's Bulldog natural grooming is grabbing shelf space from the big global brands.