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 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 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).

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

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

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.

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[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.