Follow on Facebook
Follow on TwitterIt’s no secret that most new business fail.
It won’t take long to find numerous web pages listing the top 5, 7 or 10 reasons that businesses fail. Here’s such list:
- Management in Complete Denial
- Over-expansion.
- Poor Capital Structure.
- Failure to Control the Controllable Costs.
- Failure to Prepare for Volatility of Uncontrollable Costs.
- Add New Products or Divisions that Drag Down the Profitable Ones
- Poor Internal Controls and Execution
- Poorly Designed Business Model
- Reliance on Critical Financing that Dries Up
- Failure to Adapt to a Changing Market
Source: The Entrepreneurial Mind.
I think there’s one key thing missing from many of the lists: the want-to-be entrepreneur’s lack of entrepreneurial potential. Because starting a business isn’t technically hard, it’s not complex and doesn’t require a huge amount of skill, despite what anyone trying to sell you a course on starting a business may tell you.
That said, starting a successful business does require a good deal of hard work, a lot of self belief and the willingness to step outside your comfort zone. It’s the last one – stepping outside their comfort zone – that in reality many people aren’t willing to do. As such any business opportunity they pursue, or think about pursuing is dead in the water.
So what can you do about it? Well in How To Start A New Business I argued that entrepreneurs should road test their new business prior to investing (either time or money) into it. I’d also argue they should test themselves, to determine if they have the potential to be a successful entrepreneur. But how? Well I think it’s quite simple really and the Diet Coke Test For Entrepreneurial Potential is my answer. So here’s the test:
- Buy at least a dozen cans of Diet Coke.
- Head to your nearest park/busy street/public location.
- Approach as many people as possible asking them to buy a Diet Coke.
Keep a record of how many you sell. The compare it to the results below:
- Less than 12 – you don’t have it in you to be an entrepreneur – at the moment.
- 12 – not bad, you have some potential, but why did you stop at 12?
- more than 12 – well done, now go and pursue your new business idea/opportunity.
The legal bit
Please be aware that if you’re not on private land but staying in the same location you may require a street trading license (contact your local council). If you’re going to wander around (i.e. go to your customers) then the you may need a Pedlar’s Certificate instead (contact your local Police station).
Photo by: diaper.
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This blog is about business opportunities and ideas that I spot, think of or hear about and think are useful and interesting. It is intended to provide ideas and inspriation for you to help you find the right business idea for you to then grow it into a successful business.
I’d say the test is whether or not you are willing to take it or not.
Even if you bomb you have taken the difficult step of finding out what doesn’t work. While the rest on the sidelines fear their failure.
True, in fact of the people I’ve spoken to about this test only one has actually been prepared to give it a go.
Not surprisingly he’s the ones who’s business is just starting to take off…
This could be one of Sir Alan’s tasks on the Apprentice.
whether you can sell cans of coke on a street has absolutely nothing to do with whether you can run a business or not. this idea for a test is probably one of the dumbest things i have ever heard of in my entire life. this is my first visit to this site, and i guess its my last.
Never heard of the diet coke test but I’m quite tempted to try it though. Have you ever tried it John?
An interesting idea – something I’m quite tempted to have a go at as I’m currently in the process of setting up a new retail business.
Have you tried this John? How did you do?
Bobby,
I disagree the skills required to run a business can be taught/learned, the willingness to put yourself outside your comfort zone can not.
Ross/Jamie,
No I’ve not tried it. After 8 years of running my own businesses it seems a little late to be wondering if I’ve got any entrepreneurial potential.
I’m tempted though, after the last few months working hard a new Internet start-up I do miss getting out there and selling to people.
That is quite a challenge! Cold calling is scary stuff, but having a known brand to peddle does make things a lot simpler! It is an interesting exercise, and I have to ask you if you have actually physically engaged in this experiment yourself?
i 100% agree with bobby, and the guy hasnt even done it himself, so what reasoning does he have that this in anyway means you can run a business?! and why 12?? if he’d said, “i train young entrepreneurs to run successful business’s and i make all the students do this and 9/10 who sell more than 12 end up running a successful business” then theres some reasoning…but theres not
James,
The reasoning is pretty clear – did you read the post? Starting a business will require you to step outside your comfort zone and start selling. If you can’t do that then your business is doomed to failure.
Why 12? Simply because that’s how big a multipack is. If you sell less than that then you’ve made some excuse and you’re likely to do that in your business. If you sell more then you’ve probably pushed the boundaries of your comfort zone back and found that you enjoy it.
Selling gets easier if you believe that the product or service can benefit others.
LOL John – This would be a good way to see if you are willing to push yourself beyond your comfort zone. And like you say, the folk who don’t want to stop at 12 are more likely to succeed in their own business.
It would be crazy not to sell more when there was clearly a demand for them.
A lot of folk at the school my kids go to are up in arms because the school have stopped them selling stuff like diet coke. Shame they couldn’t stop them selling the drugs and cigs instead.
Apparently the school is like a market at break times. And because the school is a business and enterprise school, the kids reckon that the school should be encouraging them to be entrepreneurial, not stopping them.
Agreed absolutely crazy.
Don’t get me started on schools or the education system, I think it’s flawed on so many levels… not least of which is discouraging anything entrepreneurial.