Sweet Success or Bitter Failure: Should Business Startups Require Certification?

How do we stop so many failures?

Alright, picture this: you make the 👏best 👏cupcakes 👏ever. Your friends and family rave about your red velvet chocolate chip cruffins. You've got the recipe nailed, you’ve got a bunch of followers on your Instagram account, and you're convinced it's time to turn this passion into a business. But wait— what’s missing?

Over the last years, I’ve seen so many start ups failing from a lack of knowledge of basic business principles. Sometimes I wonder should there be a test or certificate to pass in order to get an ABN. More than that, it really highlights the value of having a business coach or mentor by your side to guide you through.

Here’s what I mean…

Cupcake Master vs. Business Brains

So, you've got the cupcakes nailed, but do you know how to handle taxes, manage inventory, or even market your product? Turns out, many small business owners don't. And the stats don’t lie. A whopping percentage of small businesses don’t make it past the first few years. Why? Because being good at making something doesn't automatically make you good at running a business.

Stats That’ll Make You Cringe (or Cry into Your Cupcake Mix)

• Small Businesses: Entry/Exit Rates: 60% of businesses in Australia fail within their first three years of operation, with 20% failing in their first year. As of 2022-2023, there have been 406,365 business entries and 386,392 business exits (Source: ABS).
• High Startup Failure Rates: Estimates suggest that one in three new small businesses in Australia fail in their first year, two out of four by the end of the second year, and three out of four by the fifth year. Lack of product-market fit, poor marketing strategies, and cash flow problems are the main contributors.
• Micro-Business Wage: Many micro-businesses don’t even make enough to pay themselves a decent wage. All those hours and effort, and you're still struggling to cover the basics. I come across so many in the space we operate, even after 3 years in business. Often people are only making wages of $30k a year! With no real pathway to change! Don’t pull that lifestyle crap!

Is There a Case for Certification?

Imagine if there was a test you had to pass or a certificate you had to earn before starting your business. Before ASIC will give you a new business name or even an ABN. It might sound like an extra hurdle, but think about it as a way to ensure you’re not just throwing your passion into a black hole of paperwork and problems.

A test could cover the basics—financial literacy, marketing strategies, customer service, and legal know-how. It’s not about stifling your creativity; it’s about giving you the tools to turn that creativity into a sustainable business.

Nothing Happens Until You Sell Something

Here’s the where the rubber hits the road in small business: nothing happens until you sell something. You could have the best cupcakes and most beautiful branding in the world, but if no one wants to buy them, you’re out of luck (and probably out of business).

Enter the Mentor

This is where a dedicated mentor or business coach comes in. They can guide you through business management, help you avoid common pitfalls, and maybe even help you identify where you need to outsource some tasks to an expert. With their help, you can build a solid foundation for your business, ensuring you’re not just a flash in the pan but a long-term success story.

There is government support available, be it your local council, the Small Business Development Corporation (SBDC), or even the Federal Government workshops. Plus, there's private support in abundance.

In my opinion - you can’t afford not to seek help!

Wrapping Up (and Not in Cupcake Liners)

Small businesses have an imperative role in the Australian economy. Making up the largest portion of businesses in Australia, small businesses have a vital role in employment, industry operations, and economic growth. There are a whole host of factors that determine the failure and/or success of a business. It takes more than a great product and an Instagram account!

While the idea of a test or certification might seem like an unnecessary barrier, a level of education on these factors could be the very thing that sets these valuable small businesses up for success. Because at the end of the day, nothing happens until you sell something. And to sell, you need more than just a great product—you need the skills and knowledge to run a business.

So, should a business have to take a test or gain a certificate to start? Maybe. But more importantly, every entrepreneur should seek out a dedicated mentor or business coach. Because no matter how good your cupcakes are, they won't sell themselves!