Start-up numbers continue post-GFC slide

Start-up numbers dropped off slightly during the past financial year, according to official statistics, continuing a trend that has seen fewer people launch new businesses since the global financial crisis.

The Australian Bureau of Statistics figures show 287,521 new businesses launched in the 2011-12 financial year, down from 294,210 new entities in 2011.

This decline has taken place since the high water mark of 2010, when 342,753 new businesses were created in Australia.

The entry rate was highest for sole traders, at 16.2%, followed by companies at 14.4%.

However, the overall number of actively trading businesses in Australia rose marginally during the last financial year, by 0.4%, due to a fall in the number of firms closing.

The entry rate of businesses, at 13.5%, was higher than the exit rate at 13.1%, meaning there’s an increase of 8,868 in the total number of Australian businesses, compared with 2011.

There are now 2.14 million active businesses in Australia, with 96% of them classified as small businesses.

The ABS figures provide an interesting snapshot of the survival chances of start-ups. Of the 299,123 new launches in the 2008-09 year, 76% were still operating by June 2010, with this proportion falling sharply to 51% by June 2012.

Survival rates are strikingly different when various classes of business are considered. While seven in 10 start-ups running as a trust survived from 2008 to 2012, this rate falls to just 51% for sole traders.

Businesses in the agriculture, forestry and fishing industries have the best survival rate over the four years to 2012, followed by mining and manufacturing. Start-ups in the arts, healthcare and education sectors fared the least well, with less than half of those in the arts area making it to the four-year mark.

Tasmania has maintained its crown as the statistically safest state to start-up in, with 56% of businesses lasting the four-year period. NSW firms had a 50% survival rate, Victoria has a 52% rate and Queensland stands at 49.7%.

Overall, the largest number of Australian businesses were in the construction industry (16.2%), followed by professional, scientific and technical services (11.7%) and rental, hiring and real estate services (10.5%).

You can read all of the ABS stats on new business entries and exits here.