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Statistical snapshot: count of small businesses



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ISSN 2203-5249

RESEARCH PAPER SERIES, 2015-16 3 DECEMBER 2015

Statistical snapshot: count of small businesses Geoff Gilfillan

Statistics and Mapping

Executive summary • There were just over 2 million small businesses operating in Australia in June 2014. Of this group just under 1.3 million (or 60.7 per cent of all businesses) were non-employing businesses.

• Small businesses accounted for 97.4 per cent of all businesses operating in Australia in June 2014.

• The number of small businesses grew by 19,700 or 1.0 per cent in the 12 months to June 2014. However, over the four years to June 2014 the number of small businesses has fallen by 27,400 (or 1.3 per cent).

• The construction industry accounted for the largest share of small businesses (at 16.3 per cent) in June 2014.

• The annual exit rate1 of small businesses fell from 14.3 per cent in 2012-13 to 12.9 per cent in 2013-14

• Very small businesses are much more likely to cease trading over time than larger firms. 55.9 per cent of non-employing businesses and 68.0 per cent of micro-businesses operating in June 2010 were still operating four years later in June 2014. This compares with a survival rate of 76.9 per cent for small businesses employing between 5 and 19 employees, 81.4 per cent for medium sized firms and 83.7 per cent for large firms.

Introduction This statistical snapshot outlines change in the number of small businesses over time, the industry composition of small business and survival rates of small businesses.

Definition of small business The ABS defines a small business as a business employing fewer than 20 people. Categories of small businesses include:

• Non-employing businesses (sole proprietorships and partnerships without employees)

• Micro-businesses (businesses employing between 1 and 4 people including non-employing businesses)

• Other small businesses (businesses that employ between 5 and 19 employees)

Counts of small businesses The most recent ABS data for 30 June 2014 shows:

• there were 2.1 million small businesses operating in Australia—consisting of 1.27 million non-employing businesses and 771,000 businesses that employed between one and 19 employees

1. A business exit is where the ABN or GST role of a business has been cancelled and/or where a business ceased to remit GST for at least five consecutive quarters.

Statistical snapshot: count of small businesses 2

• Small businesses accounted for 97.4 per cent of all businesses operating in Australia

• Non-employing businesses accounted for 62.3 per cent of all small businesses, micro-businesses employing accounted for 27.9 per cent and businesses with 5 to 19 employees accounted for 9.8 per cent.

The number of small businesses grew by 19,700 or 1.0 per cent in the 12 months to June 2014. However, over the four years to June 2014 the number of small businesses fell by 27,400 (or 1.3 per cent).

The number of non-employing businesses increased by 9,500 or 0.7 per cent in the 12 months to June 2014 but fell by 29,300 or 2.2 per cent in the four years to 2014.

Table 1: Counts of businesses by employment size at 30 June—2010 to 2014

2010 2011 2012 2013 2014

2013-14 2010-14

Number change

%

change

Number change

%

change

Non-employing 1,303,040 1,306,023 1,306,093 1,264,298 1,273,769 9,471 0.7 -29,271 -2.2

1 to 4 employees 580,177 581,741 582,719 563,412 571,176 7,764 1.4 -9,001 -1.6

5 to 19 employees 189,023 191,812 198,340 197,412 199,915 2,503 1.3 10,892 5.8

Total employing small businesses 769,200 773,553 781,059 760,824 771,091 10,267 1.3 1,891 0.2

Total small business 2,072,240 2,079,576 2,087,152 2,025,122 2,044,860 19,738 1.0 -27,380 -1.3

All businesses a 2,124,650 2,132,412 2,141,280 2,079,666 2,100,162 20,496 1.0 -24,488 -1.2

Small business share of all businesses (%) 97.5 97.5 97.5 97.4 97.4

Note: a

Includes small, medium and large businesses.

Source: ABS, Counts of Australian Businesses, including Entries and Exists, June 2010 to June 2014, Cat. no. 8165.0, Table 13—Businesses by employment size ranges: June 2010 to June 2014.

Industry composition of small business Small businesses are spread among a range of industries. Those industries that account for the largest shares are:

• Construction—333,000 small businesses (or 16.3 per cent of all small businesses in June 2014)

• Professional, scientific and technical services—245,000 small businesses (or 12.0 per cent of all small businesses)

• Rental, hiring and real estate services—228,000 small businesses (or 11.1 per cent of all small businesses)

• Agriculture, forestry and fishing—181,000 small businesses (or 8.9 per cent of all small businesses); and

• Financial and insurance services—174,000 small businesses (or 8.5 per cent of all small businesses)

Some industries are almost exclusively populated by small businesses such as rental hiring and real estate services (99.4 per cent of all businesses) and financial and insurance services (99.3 per cent of all businesses). Other industries have small business concentrations that are lower than the average such as accommodation and food services (92.1 per cent), manufacturing (92.5 per cent) and mining (92.4 per cent).

Information on the number of small businesses operating in individual electorates along with the number of small businesses by industry is available on the Parliamentary Library website http://library.parl.net/Library/Your_electorate

Statistical snapshot: count of small businesses 3

Table 2: Counts of businesses by industry and employer size—June 2014

Source: ABS, Counts of Australian Businesses, including Entries and Exists, June 2010 to June 2014, Cat. no. 8165.0.

Survival rates of small businesses Non-employing businesses and micro businesses have lower business survival rates than other small businesses (employing 5 to 19 people), medium sized businesses and larger firms.

Just under 56 per cent of non-employing businesses and 68.0 per cent of micro-businesses operating in June 2010 were still operating in June 2014. This compares with a survival rate of 76.9 per cent for other small businesses, 81.4 per cent for medium sized firms and 83.7 per cent for large firms.

The annual exit rate of small businesses fell from 14.3 per cent in 2012-13 to 12.9 per cent in 2013-14.

Non-employing businesses are more likely to exit than employing small businesses. Between 16 and 17 per cent of non-employing businesses and 9 and 10 per cent of micro-businesses ceased trading each year between 2010-11 and 2013-14.

This compares with annual exit rates of between 5 and 6 per cent for small businesses employing between five and 19 employees, 4 per cent for medium sized firms and between 4 and 6 per cent for large firms.

Number of employees

Industry

Non

employing Micro (1-4)

Other small (5-19)

Total

employing small businesses Medium

(20-199) Large (200+)

All

businesses

Total small

businesses

Small business share of all businesses

Industry composition of small businesses

Agriculture, Forestry & Fishing 130507 38198 12672 50870 2315 58 183750 181377 98.7 8.9

Mining 4603 2165 957 3122 492 142 8359 7725 92.4 0.4

Manufacturing 35724 24514 17200 41714 5779 495 83712 77438 92.5 3.8

Electricity, Gas, Water & Waste Services 3110 1825 687 2512 253 74 5949 5622 94.5 0.3

Construction 201782 109202 22351 131553 4751 188 338274 333335 98.5 16.3

Wholesale Trade 35661 23885 12659 36544 3885 255 76345 72205 94.6 3.5

Retail Trade 56414 47265 24643 71908 5855 281 134458 128322 95.4 6.3

Accommodation & Food Services 23476 30588 24449 55037 6441 292 85246 78513 92.1 3.8

Transport, Postal & Warehousing 86521 31259 6477 37736 2096 228 126581 124257 98.2 6.1

Information Media & Telecommunications 11809 5270 1307 6577 603 74 19063 18386 96.4 0.9

Financial & Insurance Services 141915 27195 4422 31617 967 177 174676 173532 99.3 8.5

Rental, Hiring & Real Estate Services 196687 23182 7913 31095 1410 67 229259 227782 99.4 11.1

Professional, Scientific & Technical Services 138760 85231 21287 106518 4967 269 250514 245278 97.9 12.0

Administrative & Support Services 41799 24050 8853 32903 3743 388 78833 74702 94.8 3.7

Public Administration & Safety 3726 2243 913 3156 525 28 7435 6882 92.6 0.3

Education & Training 13713 7145 3677 10822 1660 113 26308 24535 93.3 1.2

Health Care & Social Assistance 59546 35523 14353 49876 3478 342 113242 109422 96.6 5.4

Arts & Recreation Services 17073 5980 2302 8282 788 57 26200 25355 96.8 1.2

Other Services 38491 37230 10808 48038 1299 31 87859 86529 98.5 4.2

Unknown 32532 9177 1891 11068 438 21 44059 43600 99.0 2.1

TOTAL 1273849 571127 199821 770948 51745 3580 2100122 2044797 97.4 100.0

Firm type share of total 60.7 27.2 9.5 36.7 2.5 0.2 100.0

Statistical snapshot: count of small businesses 4

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