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% surviving

1 : THE IMPORTANCE OF DEVELOPING STRONG IDEAS
Figure 1.3 below. Data from the Small Business Service at January 2004
shows that across the UK overall, 92 per cent of the new businesses
registered in 2001 survived one year.

95 One-year survival rates Three-year survival rates

90

85

80

75

70

65

60

55

50
1993 1994 1995 1996 1997 1998 1999 2000 2001
Year of registration

Figure 1.3 Survival rates of UK VAT-registered businesses

Source: Small Business Service, January 200416

The struggle for survival over the next few years does not get any easier.
Far from it. The ability to survive three years (as measured from
businesses which were VAT-registered in 1999) drops markedly to 67 per
cent. While the aggregated figures mask regional and sectoral variations,
and while business failures can be attributed to takeover, voluntary
winding up as well as business insolvency, the three-year business
mortality rate of 33 per cent represents compelling evidence of the need
for a thorough idea development process in advance of implementation.

The formality of following a rigorous and structured idea development
process offers a number of further benefits.

desperately seeking certainty When starting to develop any

business idea, the entrepreneur inevitably experiences initial
uncertainty about the dimensions of the particular idea and whether it
represents a valid business opportunity. The existence of a business
idea might be recognised early on, be it for a product, service or
process, but its scale and scope and how the various elements might fit
together are totally unknown. By challenging the business problem,