RESEARCH PAPER SERIES, 2015–16              2 DECEMBER 2015

Statistical snapshot: small business contribution to economic performance in Australia

Geoff Gilfillan

Statistics and Mapping Section

Executive summary

•        Small businesses make a significant contribution to the total value of industry output but a much smaller contribution to the value of total exports.

•        Small businesses contributed just under a third (33.1 per cent) of total industry value added in the economy in 2013–14. This compares with a contribution of 40.5 per cent in 2006–07.

•        Small business industry value added (IVA) grew by $8.1 billion or 2.4 per cent in the 12 months to June 2014.

•        There were 19,970 small business exporters operating in June 2014 that accounted for 44.1 per cent of all exporting firms

•        Goods exported by small firms were valued at $1.4 billion in 2013–14 which represents 0.5 per cent of the total value of all exports.

Introduction

This statistical snapshot outlines the contribution of small business to the Australian economy as measured by industry value added and value of export performance.

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)

Medium sized businesses employ between 20 and 199 employees while large businesses employ 200 employees or more.

Small business contribution to industry value added

Industry value added (IVA) is the measure of the contribution by private businesses in each industry to Gross Domestic Product (GDP)[1]. Small business IVA totaled $343.4 billion in 2013–14—$8.1 billion or 2.4 per cent more than the previous financial year.

The major industry contributors to small business IVA in 2013–14 were:

•        Rental, hiring and real estate services—$53.8 billion or 15.7 per cent of small business IVA (and 5.2 per cent of total IVA)

•        Construction—$50.4 billion or 14.7 per cent of small business IVA (and 4.9 per cent of total IVA)

•        Professional, scientific and technical services—$42.5 billion or 12.4 per cent of small business IVA (and 4.1 per cent of total IVA).

Table 1: Value and share of Industry Value Added (IVA) by small businesses by industry

Small business IVA ($billion)

Share of small business IVA (%)

Total IVA ($million)

Share of total IVA (%)

Agriculture, forestry and fishing

22.0

6.4

27.5

2.1

Mining

12.5

3.6

124.5

1.2

Manufacturing

18.5

5.4

97.5

1.8

Electricity, gas, water and waste services

2.8

0.8

44.0

0.3

Construction

50.4

14.7

108.4

4.9

Wholesale trade

22.6

6.6

66.8

2.2

Retail trade

24.3

7.1

71.4

2.3

Accommodation and food services

12.3

3.6

37.0

1.2

Transport, postal and warehousing

15.5

4.5

67.0

1.5

Information Media & Telecommunications

2.6

0.8

35.9

0.3

Rental, hiring & real estate services

53.8

15.7

67.4

5.2

Professional, scientific & technical services

42.5

12.4

102.3

4.1

Administrative and support services

13.6

4.0

50.2

1.3

Public administration and safety (private)

1.2

0.4

5.7

0.1

Education and training (private)

3.5

1.0

23.7

0.3

Health care and social assistance (private)

25.3

7.4

66.6

2.4

Arts and recreation services

2.6

0.8

11.7

0.3

Other services

17.3

5.1

29.6

1.7

TOTAL SELECTED INDUSTRIES

343.4

100.0

1,037.2

33.1

Source: ABS, Australian Industry, cat. no. 8155.0, Table 5.

Small businesses contributed just under a third (33.1 per cent) of all IVA in the economy in 2013–14. This compares with a 44.4 per cent contribution by larger firms while medium sized firms contributed 22.5 per cent. The contribution of small businesses to total IVA in 2013–14 is down on its 40.5 per cent share of total IVA achieved in 2006–07.

Table 1: Industry value added by firm size

Firm size

2003–04

2004–05

2005–06

2006–07

2007–08

2008–09

2009–10

2010–11

2011–12

2012–13

2013–14

Small ($billion)

218.5

233.7

263.7

289.6

300.0

283.2

312.8

325.8

340.9

335.3

343.4

Medium ($billion)

118.5

127.3

139.6

145.3

168.8

196.6

188.4

215.2

229.1

226.2

233.6

Large ($billion)

210.9

236.8

263.4

280.8

302.3

354.1

357.0

401.6

433.0

439.7

460.2

TOTAL ($billion)

547.9

597.7

666.7

715.7

771.1

833.9

858.1

942.6

1002.9

1001.2

1037.2

Small business share of total IVA (%)

39.9

39.1

39.6

40.5

38.9

34.0

36.4

34.6

34.0

33.5

33.1

Source: ABS, Australian Industry, Cat. no. 8155.0, Table 5.

Figure 1: Contribution to total industry value added by firm size—2008–09 to 2013–14

Source: ABS, Australian Industry, 2013–14, Cat. No. 8155.0, Table 5.

Figure 2: Small business industry value added—2002–03 to 2013–14

Source: ABS, Australian Industry, 2013–14, Cat. No. 8155.0, Table 5.

Small business contribution to exports

Small businesses account for 44.1 per cent of all exporting firms but are a much smaller player in terms of their contribution to the value of exports.

The latest ABS data for 2013–14 shows:

•        there were 19,970 small business exporters operating in June 2014 that accounted for 44.1 per cent of all exporting firms[2]

•        the number of small business exporters grew by 1,600 or 8.7 per cent in the 12 months to June 2014

•        goods exported by small firms were valued at $1.4 billion in 2013–14 which represents only 0.5 per cent of the value of all exports (at $272.9 billion). Large firms accounted for $260 billion (or 95.1 per cent of the value of all exports) and medium sized firms accounted for $12 billion (or 4.4 per cent). Large mining companies were the biggest contributor, accounting for 56.0 per cent of the value of all exports in 2013–14[3].

•        small business exporters engaged in wholesale trade accounted for 39.5 per cent of the total value of exports by small businesses in 2013–14, while small manufacturing exporting firms contributed 18.8 per cent[4].

Figure 3: Small business exports—2013–14

Contribution to number of exporting firms (%)

Contribution to value of total exports (%)

Source: ABS, Characteristics of Australian Exporters, 2013–14, Cat. No. 5368.0.55.006, Table 5.1.

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[1].              GDP Is the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital.

[2].               Includes small, medium and large sized businesses who supplied and did not supply an ABN number. Businesses who did not supply an ABN number accounted for 12.6 per cent of all exporting firms.

[3].               Includes value of exports for small, medium and large sized businesses who supplied and did not supply an ABN number. Businesses that did not supply an ABN number only accounted for 0.4 per cent of the total value of all exports

[4].               Industry shares refer to the share of total value of exports of small business operators who supplied an ABN number. Note that the industry of small business exporters could only be determined for those providing an ABN number. Small business exporters that did not supply an ABN accounted for 14.6 per cent of the total value of exports by small businesses.