Start-up numbers on the rise as Tasmania ranked top for SMEs

Start-up numbers are on the rise across Australia, with Tasmania ranked as the state with the highest proportion of small businesses, according to a new report.

According to the Bankwest Business Trends Report, there was a 3.3% increase last year in the number of people running their own business. There were 42,000 more start-ups in 2010 than the previous year.

The data, which was averaged out by Bankwest over the four quarters to February 2011, was drawn from the ABS Labour Force Survey.

The report states that this is the strongest level of start-up growth seen in almost a decade, with 1.3 million Australians now running their own business, accounting for 11.5% of employed Australians.

The state or territory with the highest number of SMEs is Tasmania, with 12.9% of workers running their own business, compared to the national average of 11.5%.

Bankwest senior analyst Tim Crawford says while the result is slightly surprising, Tasmania is considered a good place to do business.

“The cost of doing business is less, they have lower house prices and wages are slightly lower. It’s a more conducive environment for small businesses to operate in,” he says.

Over the past 12 months, NSW recorded the strongest growth in the number of SMEs, with a 7.4% increase.

But over the last five years, the most significant growth in the number of people running their own business has been in Victoria, with a 12.7% rise.

According to Crawford, this growth can be partially attributed to Victoria’s construction sector, which is rife with activity amid a strong housing market.

The report reveals that the highest number of people running a business are in construction, followed by agriculture, and professional, scientific and technical services.

The report also provides a breakdown of the percentages of people running a business in each industry. Agriculture, forestry and fishing lead the table, with 46.3% of workers running their own business.

This is followed by administration and support services, with 22.6% of workers running their own business, and 21.7% of those working in the construction industry.

With regard to growth, accommodation and food services has seen a 27% increase in the number of people running their own business in the past year, while retail has seen a 8.4% decrease.

Crawford says growth in the accommodation and food services sector proves that people are continuing to go out to dinner, which could be fuelled by the popularity of cooking shows such as MasterChef.

The report also reveals that there are more men than women running their own business, recording figures of 13.9% and 8.7% respectively. However, the strongest growth has come from women.

“We have found that over the past year, the growth rates for women running a business are almost double compared to men and over a five year period, the growth rates for women are more than triple that of men,” it says.

According to Crawford, women are increasingly choosing to work for themselves for the added flexibility, in addition to the ease with which one can now work from home.

Meanwhile, the latest report in the Bankwest Financial Indicators series shows that the number of people working for themselves grew faster in the past year than overall employment growth.

“The data tells us that on a five to 10 year view, there are more sole traders and contractors but fewer businesses taking the next step and employing staff,” Bankwest Business chief executive Ian Corfield says.

There has been a contraction in the number of SMEs employing staff over the longer term, with a drop of 8.6% in the number of employers over the past decade and a fall of 1.5% over five years.

“This could be attributed to the tougher trading conditions for small business during and post the GFC,” Corfield says.