Developing new products and services

New ideas for products or services often emerge when entrepreneurs:

• become aware of a gap in the market in the industry that they currently work in
• need a particular service or product that nobody else provides.

To prompt ideas and identify opportunities, think of a particular audience or group of people and ask: “What could I design or provide that would make life easier or better for them?”

Sometimes there may be an opportunity to come up with a completely new offering or invention, for example when touch-screen technology was invented. Other times, it might involve an innovative adaptation or reimagining of something that already exists, e.g. Apple which took that touch screen technology and focused on applying it in an innovative way that centred on user experience.

Consider how you could use different angles to spot opportunities and generate ideas.

• Provide an existing offering in a different way: Schuh disrupted traditional shoe shops by positioning itself as a fashion shop that sold shoes, with much higher volume of stock and colours than competitors had in a compact space. Timorous Beastie applied a unique diversity of pattern to soft furnishings.
• Provide or adapt an existing product or service for a new audience: Stoats brought porridge to new groups with their mobile “porridge bars”. For those on gluten-free diets, Genius Foods innovated gluten free bread to taste as good as ordinary gluten-containing bread.
• Deliver something at a lower price: Ikea popularised flat-pack furniture which creates manufacturing, shipping and storage efficiencies and improves affordability.
• Deliver greater convenience: Skyscanner launched an online platform to make it easier for travellers to find and compare flights.

Innovations can also be incremental over time, with constant refinement and improvement in quality, price, processes or service.

Once you have some ideas, you need to evaluate them by answering key questions about the market, sector, competitors, intellectual property and regulations.

There are three key checks to undertake:

• Feasibility check. How many customers do you need to be profitable? Are there enough potential customers and who are they? Is there currently a market or will you be creating a new market?
• Sense check. Do people want or need your product or service and how are those needs currently met, if at all? Are there any social trends or economic factors that will affect demand?
• Reality check. Will customers actually buy your product or service, and if so, for how much, and how can you test this?

Find out more in quick ways to test if your business idea is viable.

Careful market research can reduce the risk of wasted time and money and increase your chances of success. The more information you have, the better you will be able to understand your potential customers, the marketplace and how your product fits in, and whether it will outlive passing trends, or if you can capitalise on the trend while it lasts.

As well as your potential customers, you must understand the needs and dynamics of the whole supply chain, including retailers or distributors, as that could impact whether it is feasible to get your product or service to market.

Business Gateway provides market reports on over 100 sectors and more detailed sector information.

You should also research direct and indirect competitors to your offering and you can easily do competitor research online to get a good overview.

You want to establish:

• what competition your offering will face - direct or indirect, local, national or global?
• why would customers choose your product or service over your competitors', now and in the future? Is it unique, distinct or superior to those offered by competitors?

Business Gateway can also help you with individual research requests around markets, sectors and competitors.

Early on you will need to check if there’s any risk of your new idea infringing someone else’s intellectual property. Just because it’s new to you, doesn’t mean it’s not been done before, with the idea already protected by someone else.

You will also want to check if you will be able to protect your new ideas.

Read our guide on the basics of intellectual property.

You will need to establish how you will ensure your product or service is safe for public use, including the completion of any testing or certifications which are needed, to comply with relevant regulations and legislation.

Begin by identifying the regulators and professional bodies operating in your sector, location and geographic markets. Search online or ask Business Gateway to help. You can see examples of regulators on Wikipedia and the UK Government website.

You may need to seek legal advice before proceeding.

By the time you get to this stage, if you haven’t already, you may want to set up proper project management to keep focus and correct tracking of time and budget.

You also need to put your potential customers at the centre of the design process, and the earlier you involve them, the better, as it prevents you progressing to the point you’ve run out of time or money to make changes. Our article about designing for your customers covers techniques you can use to embed user-centred design through the new product development (NPD) process.

Business incubators offer valuable support for innovative start ups. Incubators help entrepreneurs develop an idea through to business launch and some specialise in particular sectors, e.g. digital or creative.

Developing a new offering can be an emotional rollercoaster. While it takes real commitment and dedication to bring something new to the market, there are circumstances when you should step back and reconsider your original idea. These include:

• developing a product or service that isn't commercially viable and won't produce a reasonable financial return

• developing a product that is not technically viable, e.g. 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 yours, especially if they are a large or well-established competitor.

At this point you might need to “pivot” which is when you adapt your strategy when it’s not working - perhaps by looking again at the business model, the product or service, or your target audience.

Whatever you do, remember that even if you have to move on from this idea, you will have a lot of market and competitor knowledge that you wouldn’t have had otherwise and this is likely to come in useful to you one way or another.

Read more about common mistakes and how to avoid them.

Securing adequate funding is one of the biggest obstacles many entrepreneurs face, particularly for developing new ideas as it can be hard to build your business case to attract finance, and it may take longer or cost more than you first expected.

Options for financing include:

• funding it yourself (bootstrapping) where you use your own savings, income or assets

• grants

• bank loans and overdrafts

• crowdfunding platforms

• private investors or business angels.

Find out more about these options in our finance section.

Once you have a final product, you can begin building a brand. A brand includes everything that is visible to the customer, such as the product name, its packaging and its delivery.

Throughout your planning process you will have been thinking about pricing and now it’s time to decide on the best pricing strategy to be attractive to customers as well as make you a profit. This will be influenced by:

• competitors’ pricing

• how innovative your product is and whether this is a new or existing market

• your selling channels, promotional spend and distribution costs

• how quickly you want to establish your product or service

• expected lifecycle of your product or service

• how much you need to charge to cover your costs.

It can take a while to build an audience who are interested and, ideally excited, to hear from you. You may want to think about pre-launching your new offering or business to create interest and anticipation as well as cultivating a database of email addresses (with permission) and social media followers who you can reach as soon as you’re ready. You may also want to:

• test the viability of your idea by launching your most basic offering (a minimum viable product or service)

• test your operations through a soft launch

• build your capability and cash flow with a phased launch.

Once you decide your aims for launch you need to identify:

• who you are going to tell that you’re launching

• where to find them

• how to present your business or product in a way that appeals to them.

Find organisations that can offer support for entrepreneurs.