Number of businesses in Australia 2007

The Australian Bureau of Statistics published an interesting report on the number of businesses in Australia.

“There were 2,011,770 actively trading businesses in Australia as at June 2007.

While growth in the number of businesses slowed slightly between 2003-04 and 2005-06, there was a significant increase in the growth rate of businesses in 2006-07. Overall, growth rates for the past four financial years were 2.2% during 2003-04; 1.5% during 2004-05; 1.3% during 2005-06; and 2.4% in 2006-07.

In comparison, GDP (in chain volume terms) over the corresponding periods grew by 4.0%, 2.8%, 3.0%, and 3.2%, respectively, while Australia’s population grew by 1.1%, 1.2%,1.3% and 1.5% over the same periods.

The growth in the number of businesses during the financial year to June 2007 was mainly due to increasing entry rates coupled with slightly decreasing exit rates. The entry rate for new businesses during 2006-07 was 17.0%, up from the 16.2% entry rate recorded in 2005-06. The business exit rate during 2006-07 was 14.6%, down from 14.9% in 2005-06. This exit rate was the lowest rate recorded over the four year period to June 2007.

Of the 1,868,969 businesses operating in June 2003 (which is when this data series commenced), 58% were still operating in June 2007. Of the 777,106 businesses which exited, 37% exited during 2003-04, 28% during 2004-05, 20% during 2005-06 and the remaining 16% during 2006-07.

Of the 325,935 business entries during 2003-04, 49% were still operating in June 2007. Of the 167,434 which exited, 48% had exited during 2004-05, 33% during 2005-06 and the remaining 19% during 2006-07.

In combination, the above two points indicate that, over the short to medium term, business survival is related to the age of a business. That is, the longer a business survives, the greater its chances of continuing survival.

Survival rates are also heavily influenced by non-employing businesses, which have significantly lower survival rates than employing businesses but contribute the greatest proportion of both the stock of existing businesses and business entries (67% of businesses operating in June 2003 and 72% of business entries in 2003-04 were non-employers). For example, while 49% of all entries in 2003-04 were still operating in June 2007, 71% of new employing businesses were still operating compared to 40% of new non-employers. “

Read the full report