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DEVELOPING NEW BUSINESS IDEAS18

and another thing: benefits of the idea
development process The hostility awaiting new business

ideas within the economic environment cannot be overemphasised.
Any assertion by inexperienced entrepreneurs that all this emphasis on
the idea development process is overstated – that once you have got the
idea, success is bound to follow – is countered by the facts.

Enterprise guru Jeffry Timmons reports that for every 100 ideas
presented to investors in the form of a business plan or proposal of some
kind, a maximum of 3 per cent will ever get funded.15 Rejections are fast
and brutal – around 80 per cent of proposals will be rejected in the first
few hours, with a further 10–14 per cent being spiked after investors
have read the business plan carefully. In other words, a maximum of
only 10 per cent of proposals typically generate sufficient interest even
to warrant further investigation by the potential backers (see Figure 1.2).

Rapid rejection
80%

Considered rejection Early rejection
10%

Receive funding 7%

3%

Figure 1.2 Typical life-chances of an initial business plan

For the 90 per cent aspiring but rejected entrepreneurs, such swift and
summary dismissal represents a massive investment of time in chasing
ideas which are literally going nowhere. The rate of attrition highlights
the importance of following a thorough, multi-step process which
allows you to proceed to the next step only when the requirements of
the previous steps have been satisfied. Only then will you be able to
decide effectively whether your business proposal represents a real
opportunity or is just another good idea which does not yet merit
placing in front of potential backers.

Market hostility once ideas come to fruition is equally harsh, where the
record of survival for business start-ups is not good, as demonstrated by