Statistical snapshot: count of small businesses


3 December 2015

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Geoff Gilfillan
Statistics and Mapping Section

 

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 rate[1] 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
  • 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 businessesa
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).

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

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.

 

[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.

 

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