Number of businesses in Australia continues to stagnate: ABS

The number of businesses in Australia remains static and has failed to increase according to data released today by the Australian Bureau of Statistics.

The ABS figures show less new businesses are starting up in Australia, but the number of businesses shutting up shop has also decreased slightly.

The statistics are available in full here.

For the 2011–12 financial year, the entry rate of businesses at 13.5% was higher than the exit rate at 13.1%, resulting in an incremental increase in the number of overall businesses.

This means the number of actively trading businesses in Australia has risen by 0.4% to 2.14 million as at June 2012.

That’s an increase of 8868 businesses from 2011.

In terms of business survival rates, of the 2.07 million businesses operating in June 2008, 84.6% were still operating in June 2009, 75.1% were still operating in June 2010, 67.9% were still operating in June 2011 and 61.8% were still operating in June 2012.

Of the 299,123 new business entries during 2008–09, 75.8% were still operating in June 2010, 60.5% were still operating in June 2011 and 51.0% were still operating in June 2012.

The leading industry was the construction industry with the highest number of businesses operating in Australia at 347,197.

The survival rates at June 2012 for businesses operating in June 2008 were highest for those in the healthcare and social assistance sector, followed by  agriculture, forestry and fishing, and rental, hiring and real estate services.

Survival rates were lowest for businesses in the public administration and safety sector, where only half the businesses are still operating, followed by accommodation and food services and administrative and support services.

The vast majority of Australian businesses in June 2012 were small businesses, making up 96% of businesses.

At June 2012, there were 597,930 businesses operating in the ‘zero to less than $50k’ turnover range, 739,869 businesses in the ‘$50k to less than $200k’ turnover range, 673,065 businesses in the ‘$200k to less than $2m’ turnover range and 130,416 businesses in the ‘$2m or more’ turnover range.

Exit rates were highest for businesses in the ‘zero to less than $50k’ turnover range and exit rates were lowest for businesses in the ‘$2m or more’ turnover range.

Gavan Ord, business policy adviser at CPA Australia, told SmartCompany the ABS figures showed the number of businesses remained virtually unchanged.

“To us, that’s a significant indicator of where the economy is at, an economy that is growing strongly is one that creates more businesses,” he says

“This is a cause for concern and it should be a cause for concern for governments at all levels as well.”

Ord says there has been no real increase in the number of businesses in Australia since the start of the global financial crisis in 2008.

“Without more small businesses in the economy, the economy is not performing as well as it could be and there are not as many jobs as there should be,” Ord says.

“Businesses are the creators of jobs, the generators of wealth and a significant source of innovation in the economy.”

Bruce Billson, shadow small business minister, told SmartCompany the statistics show things are flat and there are still 3,000 fewer employing small businesses now than when Labor was elected.
“It reflects other surveys and sentiment indicators around and confirms it is a difficult economy for small businesses,” he says.