You have a business idea. That’s a great first step, but there’s lots more to do. You have weeks, months, or even years of research, planning, and hard work ahead of you before your idea becomes a viable business. Before you start, you need to find out if your idea is worth pursuing.
A great idea isn’t enough to start a new business; it’s just the first step. You need solid research and detailed planning to be successful. Don’t invest your time and money into an idea without doing your research—plan before you act.
Want the good news? Our in-house startup experts and market research experts can help you evaluate your idea and get the research to back it up! Find out what kinds of research we can provide.
How to Know if You Have a Good Business Idea
Does your idea have a real opportunity for success? Before you take any further steps towards starting your business, it’s important to carefully consider the feasibility of your idea and whether it’s likely to make you money.
Is Your Idea Original?
If someone has already produced a better or cheaper version of your idea, it’s time to stop and re-evaluate. Without a major differentiator, it will be difficult to find customers willing to purchase your product or service.
Find out if someone else got there first:
- Search the Canadian Patents Database for free on the Canadian Intellectual Property Office (CIPO) website
- Search the United States Patent and Trademark Office website
- Check stores, catalogues, and the Internet
- Check trade associations and trade publications in the same industry
- Go to trade shows and talk to others in the industry
- Search business and popular media publications
Can Your Idea Be Produced and Distributed?
Make sure you can bring your idea to life and get it into the hands of your customers. You have three options for producing and distributing your product:
- Arrange for your own production and distribution
- You assume all the financial risk
- You need to have the right manufacturing and distribution systems and infrastructure in place, which can be expensive
- You maintain control and retain any profits
- Sell your idea to a large established company
- They already have the systems and know-how
- They are unlikely to buy an idea from an outsider
- They are more risk-averse
- They need to sell larger quantities
- Sell your idea to a small- to medium-sized company
- They don’t have as many support systems as a large company
- They are often more willing to accept outside ideas
- They are comfortable with smaller quantities
If you choose to do your own production and distribution, you will also need to consider a number of other factors:
- Do you know the quantity, quality, technical specifications, and price ranges for all your products?
- Do you have all your supplier arrangements secured?
- Will suppliers’ prices allow you to achieve an adequate markup?
Is There a Market for Your Product or Service?
This is the most important question for potential backers. If you don’t have a market, you can’t run a successful business.
It’s a hard question to answer—even the most successful companies have flops. Here are just some of the considerations:
- Where is your market located?
- What is your demographic?
- Is the market concentrated or dispersed?
- Could the size of the market change suddenly?
- Do you know what kind of people will want to buy your product or service?
- Do people like to live in the area where you want to open your business?
- Will consumers pay money for your product or service?
- Does your idea serve a presently unaddressed need for your market?
- If not, can you open a different kind of business or go to another location?
- Do you have a plan for finding out what your customers want? Do you know how you will conduct market research?
- Do you understand your advantages over your competition (e.g. better price, location, etc.)?
- Could your competition drive you out of the market?
Can You Protect Your Idea?
Once you’re sure you can make and sell your new product, think about how you will legally protect it. Protecting your unique ideas, designs, and creative work is crucial—without protection, competitors may use your work for their own profit. You may lose your competitive advantage and endanger your business’ success.
Your unique, protectable ideas are known as intellectual property. According to CIPO, intellectual property (often abbreviated as IP) is an idea, design, or creative work. IP represents the legal rights of their rightful owner, and legally protects your idea from being stolen or used without permission.
In Canada, these are the four most common types of intellectual property:
- Patent: Patents are granted to new inventions that must have a useful function. They must not have been made public for more than one year. Patents are granted under three different criteria: novelty, utility and ingenuity.
- Trademark: Trademarks protect a symbol, design, or trade name such as “Nike™” or “Coca Cola™.”
- Copyright: Copyrights give you exclusive rights to reproduce original works such as books, plays, films, songs, paintings, or computer programs.
- Industrial design: Shapes, patterns, or ornamentation can be registered as industrial designs, providing they will be used in mass production of 50 units or more.
You can learn more about intellectual property, including trade secrets and integrated circuit topography, on the CIPO website.
Can you obtain a patent? To find out, start here:
- Find out everything you can about the patent application process. The CIPO website has a wealth of information on everything you need to know about patents and the process for obtaining one.
- Contact a patent attorney or agent to get a “state of the art” patent search. A state of the art search isn’t as detailed as a formal patent search, so use it as a starting point for further research.
- Decide if you will pay a patent attorney or agent to create your patent application for you. Contact an agent to discuss the process, benefits, and potential costs of leveraging their professional experience.
If you are interested in finding out more about protecting your IP outside of Canada, you can use these resources:
- United States Patent and Trademark Office (USPTO) can help you file a patent application in the United States.
- The World Intellectual Property Organization (WIPO) has internationally-focused information on intellectual property and a wide range of online training materials to help you learn.
- The Patent Prosecution Highway (PPH) Fast-Track Examination can make the patent application process faster and streamline international patent applications.
Do You Have Access to Enough Financing?
- Do you know what financial investment your business will require?
- Do you know what your expenses will be for rent, wages, insurance, utilities, advertising, interest, etc.?
- Do you know which expenses are direct vs. indirect or fixed vs. variable?
- Do you know how much your total overhead will be?
- Do you know where you can borrow the rest of the money you need to start your business?
- Do you know how much credit you can negotiate from your suppliers (the people you will buy from)?
More Ways To Evaluate Your Business Idea
- Alberta.ca: Is my new venture idea profitable?: This resource from the Government of Alberta will help you conduct preliminary assessments, detailed analysis, and long-term business planning.
- Entrepreneur magazine: How to research your business idea: A high-level guide to generating, researching, analyzing, and evaluating your business idea.
- Small Business BC: How to evaluate your business idea: Information about researching your market, competition, and industry trends.
Conducting Market Research
You can’t start a new business based on guesses and intuition, and experience isn’t enough—you need to do real market research and analysis to test your assumptions. If you have an established business, you can use market research to keep up with the changing business environment. Don’t forget: our in-house market research experts are here to help! Find out what kinds of research they can provide.
When to Do Market Research
Research isn’t a one-time-only activity. Use market research throughout the life of your business, no matter how big or small, old or new. Regular research helps keep your business efficient and competitive.
Visit the Business Development Bank of Canada’s (BDC) guide to market research and analysis for more information on when to conduct market research.
Before You Start a New Business
Market research is an essential part of planning your business, and should be a central part of your business plan. Gut feelings and intuition aren’t enough.
Before You Launch a New Product or Service
Even if your business is already successful, conduct market research before you launch a new product or service. Research is valuable any time you want to make a major change to your operations: an expansion, a new market, etc.
To Maintain an Established Business
Market research is also important for established businesses. You need to keep up with where your industry and customers are going. Success today doesn’t necessarily mean success tomorrow—you should conduct regular research to stay on top of changing trends.
How to Conduct Market Research
- Decide what you want to achieve. What do you want to know, and why? You need clear goals to design good research.
- Define your research methods. You might choose some combination of primary research (gathering your own information) and secondary research (compiling information that others have already gathered). Depending on your goals, you might conduct surveys, interviews, focus groups, or use other methods. The Business Development Bank of Canada (BDC) has excellent guides on how to conduct market research and market research methods.
- Decide who will conduct your research. Will you do all the research yourself, or pay a third-party research company to do it for you? Maybe a combination of both? Do-it-yourself research costs less, but can take longer and be less effective (especially if you have no experience). If you are looking for help with secondary market research, we provide market research expertise!
Researching Market Trends
Start your market research with high-level information on trends. Find demographics, statistics, and publications that will affect your business idea.
Find More Information about Industry Trends
- Innovation Canada financial performance data reports: View financial data based on industry averages for over 1000 Canadian industries. This data will help you measure your success compared to your competitors.
- The Government of Alberta’s list of statistics and publications: Huge volume of information about business in Alberta, including region-specific economic indicators, productivity trends, and small business performance data.
Researching New Ideas and Innovations
Market research is especially important if you have a new idea or invention. You need to make sure no one else has already patented your idea or started a similar business you can’t compete with. There are many ways to get help evaluating your idea, such as patent attorneys, invention brokers, or government programs.
Where to Get More Help Evaluating Your Idea
Patent Attorneys and Agents
Attorneys and agents can help you search existing patents and create your patent application if you can’t do it yourself. See the Canadian Intellectual Property Office’s list of registered agents, or search the Internet or telephone directory for “patent attorney or agent [name of your city or town]”.
Invention Promotion Firms
Invention promotion firms will—for a fee—promote and protect your idea on your behalf. Be very cautious before hiring a promotion firm. If you do decide to use one, make sure:
- They can provide you with solid evidence of their track record. Not just a few flashy success stories, but verifiable statistics on the number of clients they’ve had and the number who have actually made money.
- They don’t collect the entire fee in advance.
- They will provide you with samples of their promotional materials.
- You check the firm’s reputation with your local Better Business Bureau, Chamber of Commerce, a patent attorney, or a local inventors/innovators club.
Brokers work for a portion of the profits from an invention. They can help you raise capital and form companies to produce and market your invention. They often provide sophisticated management advice. Expect these brokers to be interested in more complex technology with larger sales potential.
University Innovation/Invention/Entrepreneurial Centres
These centres, some funded by the National Research Council, are dedicated to helping inventors and innovators. Many (such as the Canadian Innovation Centre at the University of Waterloo) evaluate ideas for a very modest fee.
Innovation centres will help you weed out bad ideas and identify trouble spots. If your idea looks like it has merit and commercial viability, they will help you find funding sources.
Government of Alberta
The Government of Alberta’s Alberta Innovates program helps Alberta entrepreneurs in multiple sectors such as energy and environment, health, and technology. They can help you obtain funding, conduct research, develop prototypes, or bring your product to market.
Visit the Alberta Innovates website for more information.
Government of Canada
The Build in Canada Innovation Program lets you test your product in federal government departments before it goes to market. They’re looking for innovation in environment, safety and security, health, enabling technologies, and the military.
Visit the Build in Canada Innovation Program website for more information.
Talking with other inventors is probably the most helpful thing you can do. Find someone who has been through the entire patent application, research, finance, development, and launch process. It doesn’t matter if the end result was a success or failure—talking about the process is what’s important.