With a record number of new start-ups, astonishingly generous tax breaks for investors and ever-more crowdfunding sites gaining traction, more and more entrepreneurs are queuing up to get backing.
Now, I can’t claim to know which entrepreneurs and businesses will definitely make it - and anybody who claims they do is pulling your leg. But one thing I have worked out is the knack of identifying in a few minutes (and in most cases, a few seconds) the entrepreneurs and businesses that definitely won’t make it big and therefore aren’t right for investment.
Of course, I can’t claim this is an exact science - and a lot comes down to the personality, passion and persistence of the entrepreneur when you meet them. I must have met hundreds of entrepreneurs over the last few years and seen hundreds of others make presentations. So I’ve put together a quick quiz so you can find out if you have what it takes to make it in business on your own.
So, entrepreneurs, here are 10 questions that could change your life (or not, as the case may be).
1: Why do you want to start up your own business?
a. To make a difference.
b. To make a lifestyle choice.
c. To make a bundle of cash.
2: How committed are you?
a. Whatever it takes.
b. Whatever time I can manage.
c. Whatever makes sense - I have a lot of things on the go.
3: Are you a team player?
a. I know I can’t do this all alone - I do, or will, work with experienced people with complementary skills.
b. I know I can work on my own or with other people.
c. I know what I am doing and I can take this on myself - after all, the reason I am in this business is that I can do it better than other people.
4: Where do you want to be in five years' time?
a. I want to see my product or service used by thousands of people.
b. I want to be happy.
c. I want to be sitting on a beach.
5: How are you going to make money?
a. I have spoken to customers, know what they want and what they would pay and worked out my supply and distribution costs.
b. I have spoken to suppliers, worked out the costs and reckon I can make a margin.
c. I will provide it, customers will come.
6: How are you going to grow sales?
a. I am going to lead initial sales and then hire more experienced people.
b. I am not a sales person, so I will get focus on getting the product right and sort out the rest later.
c. I will provide it, customers will come.
7: Have you got any competitors?
a. Yes, but we have identified the gap in the market, understand the market size and opportunity and outlined clear reasons why people would buy from us.
b. Yes, there are some big competitors but we know who they are and we will watch them closely.
c. No, we haven’t got any competitors - we are unique.
8: How much profit is the business going to make in five years' time?
a. We are ambitious and forecast strong growth based on reasonable assumptions from what we already know of the market and the opportunity.
b. As long as we pay the bills and do our best to grow, we should make profits.
c. We are going to be massive. Revenues are going to go through the roof, while costs will stay really low.
9: How much do you know about your industry or sector?
a. I and/or my team have experience and contacts in this sector.
b. I have done a bit of work in this area and reckon I should be OK.
c. I know what I am doing. How hard can it be?
10: What have you achieved so far?
a. I have sorted out my initial product/service and got some initial sales/traction/data/PR/social media followers/marketing exposure.
b. I have done a lot of research.
c. I have a brilliant idea.
If you answered mostly As: Well done. You are on the right track to getting outside help, backing or investment.
If you answered mostly Bs: Think carefully about what you really want. You may be a lifestyle or consultancy business - which is great and can give you the freedom and control you want. But to get backing or investment you may need to be more ambitious.
If you answered mostly Cs: Business is much harder than you think. You might get lucky and you may have struck gold. But don’t be in a gold rush to give up the day job.
Andy Yates is an experienced entrepreneur, business mentor, advisor and angel investor and helps a portfolio of exciting growth businesses reach their potential including Huddlebuy, Europe’s largest business money saving website. Follow Andy on Twitter: @smallbizhelp Follow Huddlebuy on Twitter: @huddlebuy