New figures from the Australian Bureau of Statistics (ABS, 2016) show that the number of Australian businesses is increasing, as fewer businesses ceased trading this financial year compared to last year.
Australia now has more than 2.1 million business trading, as of 2014-2015.
This is an increase of 21,000 businesses to the 2.1 million businesses that were actively trading in 2013-14.
“Although there was actually a small drop in the number of new business registrations, fewer businesses closed, giving a total rise of 1 percent in business numbers,” said Mike Booth from the ABS.
What does this mean for small business owners? Increased competition, but also increased optimism about the rate of businesses who are finding ways to succeed and thrive in the current economy.
Source: Kochie’s Business Builders
New Enterprises Booming in Victoria
Victoria saw the largest number of new businesses in 2014-2015. Their 1.6% increase in the number of businesses operating matches up with their population growth as a state, according to the ABS.
Tasmania was the only state to see a drop in total business numbers this year. This -0.7% decrease is largely due to the prolonged decline of agricultural businesses. Tasmania has the highest proportion of agribusiness of any region in Australia, with 15.5% of their businesses being in the Agriculture, Forestry, and Fishing Industry division.
South Australia and Queensland saw similar drops in business numbers in 2011 thanks to their high proportion of agribusinesses. However, these two states had other types of businesses opening up over the same timeframe to compensate, unlike Tasmania.
Nationally, Australia has seen a decrease of 10% from 2011 to 2015 in the number of agricultural businesses operating. Beef cattle farming saw the largest decrease in the number of businesses actively trading.
Accommodation and food services showed the highest rate of new businesses – the “business entry rate” – in 2014-15.
However, the fastest growing sectors in the total number of business were finance and insurance services. Mike Booth of the ABS says this was almost entirely driven by superannuation funds.
As for our largest industry, construction continues to hold first place with the most businesses operating, at 345,479 construction businesses in operation in 2014-15.
But when it comes to survival of individual businesses, health care and social assistance is the industry of choice. Health care and social assistance businesses have the highest rate of business survival, with around 3 in 4 businesses continuing to operate for at least 4 financial years – nearly a 75% pass rate. Health care and social assistance also had the lowest number of businesses closing down (“business exit rate”) this year.
Electricity, gas, water and waste services had the fewest businesses operating in Australia in June 2015. Public administration and safety businesses were the least likely to survive the 4 financial years from 2011 to 2015.
Is this the end for sole traders?
The ABS data shows that the number of sole proprietors (sole traders) and partnerships continued to decrease this year, by -1% and -4% respectively.
Meanwhile, companies and trusts increased by 10% each. Companies and trusts have always made up a large portion of Australia’s business numbers, and this year they made up over 60% of all businesses.
Small businesses continue to show a good survival rate. Most Australian businesses (61%) listed themselves as having no employees, and most had an annual turnover of less than $200,000 per year. 28% of businesses had 1-4 employees, while 9% had 5-19 employees, 2% had 20-199 employees, and less than 1% had 200 or more employees.
Finding finance for your business
As we reported in 2015, Australian banks and other financial institutions have proven they are more than willing to provide loans and other forms of finance for Aussie businesses.
According to our database, 40% of business owners comparing business loans on our website select a 5-star rated product to provide outstanding value for the needs of their business. Another 31% find a 4-star rated product that will adequately meet their needs.
In 2016, we have researched 90 business loan products from around Australia and given them star ratings according to how much value they provide for business owners. Take a look at our comparison table snapshot below, or try out these comparison tables for yourself here. Please note that this table has been formulated based on the loan being secured by commercial property, for a loan of $250,000 in NSW, and is sorted by our star rating (highest to lowest, A-Z).