According to the Kaufman Start-Up Activity Index, the number of people starting a new business has increased, and there are approximately 550,000 new business owners each month.
Given that, according to Forbes 80% of business will go bust in the first 18 months, this means that roughly 440,000 of these business owners will fail.
The challenge is that many people who go into business have a great idea, but they don't know anything about running a business; they don't understand what it takes to be successful.
They may be of the "if we build it they will come" mindset which sees many great ideas fail because of a lack of proper business planning, preparation, and execution.
Whenever I take on a new coaching client, I always get them to take my FAST Business Assessment, as this gives me a very quick idea of the state of their business.
It's 20 simple questions that let me know whether they have a business or a hobby.
- Do you have a three-year plan for your business?
- Do you have a clear financial goal for this year which is written down?
- Have you shared your financial goals with your teams/partners?
- Do you know who your ideal clients are, is this written down?
- Do you know what success looks like for your business?
- Do you have the roles and responsibilities for you and your team clearly defined?
- Do you spend more than 50% of your time on the business?
- Do you delegate your administration work?
- Do you review how the business is doing against the plan with your team each week/month?
- Do you have clear targets for each member of your team?
- Do you have a clear list of products and services which are easy to understand?
- Do you have a clear and consistent pricing strategy for new, repeat and referred customers?
- Do you know how many products/services you need to sell each month/week/day to meet your financial targets?
- Do you have a simple value proposition which you can explain to your customers in one sentence?
- Do you know which sales channels your ideal clients use?
- Do you know the cost of sale for each product/service?
- Do you know the gross margin per product/service?
- Do you know the net profit per product/service?
- Do you know where you are against your targets right now?
- Do you track the progress of your business against the target monthly/weekly?
If you answered yes to 80% or more of these questions, then you are probably in a good position, and success will now be down to the demand for your products and your execution.
If you answered yes to 50-80 percent, then you have some work to do to put yourself into a good position and give yourself a better chance of success.
But if you failed to answer yes to more than 50% of these questions then the odds are that you have an expensive hobby and rather than a viable business.