BD1 Check the likely success of a business idea
Why this is important
You need to check a new business idea to see if it will succeed. This will:
- help you know that an idea is worth developing further; and
- stop you wasting time and money on an idea that will not succeed.
Who might do this
You might do this if you are:
- setting up a new business or social enterprise;
- expanding your business or a social enterprise; or
- changing or adapting the products or services offered by your business or a social enterprise.
What it involves
Checking the likely success of a business idea involves:
- looking at your business idea as a whole, in an open-minded way and identifying how it will work in practice;
- developing a clear understanding of your customers’ needs, your competitors activities and the market for your business idea;
- identifying the implications of any laws you will need to meet, resources you will need to buy and skills you or others will need to develop; and
- deciding whether your business idea is likely to make you enough money to cover your costs and any profits that you need to make.
Other units that link closely with this
|WB1||Check what customers need from your business|
|BD2||Define the product or service of your business|
|BD10||Get support for a creative business idea|
|YS3||Improve your business skills|
|OP1||Review the skills your business needs|
|OP6||Develop people's skills for your business|
|BS1||Identify needs and suppliers for your business|
|MN4||Manage cash flow in your business|
|LG2||Keep up to date with current legislation affecting your business|
What you need to do
- Describe your business idea and why it will be successful.
- Understand the kind of market your business idea will be in.
- Research to make sure there is room for your business idea in the market.
- Find out who your competitors would be, what their strengths and weaknesses are and how you might compete with them.
- Check up on market trends, business trends and anything else beyond your control that might affect your proposed business idea.
- Check what laws and regulations would affect your business idea and how you would meet them.
- Identify what skills, abilities or knowledge you or other people will need to deliver your business idea.
- Identify what equipment, tools, materials or additional people you would need to deliver your business idea and how much they would cost you.
- Find out how much it is likely to cost you to deliver your business idea, how you will pay for it and how you will pay early running costs.
- Work out how much you can charge your customers to cover your costs and meet your profit targets.
- Judge your business idea and decide whether you should pursue it, adapt it or discard it .
What you need to know and understand
- How to identify a business idea’s unique selling point and why it will be successful.
- How to judge whether a business idea is worth developing or adapting.
- What you need to research, how you can get hold of published market research and how you can carry out your own.
- How customers’ actions and choices might affect the success of your business idea.
- How you can tell if your competitors will affect your business.
Market and business trends
- What political and commercial changes could affect your business idea.
- What local, national and international events could limit or improve your business opportunities.
Law and regulations
- What laws will affect your business idea and how.
Skills and abilities
- How you can judge your own and other people’s skills, abilities and knowledge.
- Different ways that skills, abilities and knowledge can be developed.
- How to identify resource needs and how much they will cost.
- How much profit you hope to make, how to cost a product or service and how to work out a selling price.
- How to understand and use cash-flow forecasts and profit and loss accounts and what information you would need to produce them.