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1321.0 - Small Business in Australia, 2001  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 23/10/2002   
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INTRODUCTION

This publication is the seventh edition of Small Business in Australia since 1988 and draws together data to meet the demand from policy makers, business analysts and other users interested in the growth and performance of the small business sector. The interest in, and significance of this sector, continues to be recognised along with an increasing interest in other business size categories. This publication presents data from a number of different Australian Bureau of Statistics (ABS) and external sources to provide a range of information with a focus on small business but also, where possible, providing comparisons with other business size categories.

It is estimated that there were 1,233,200 private sector small businesses in Australia during 2000-01 which represented 97% of all private sector businesses (see definition of small business below). These small businesses employed almost 3.6 million people, 49% of all private sector employment.

Users should note, when comparing results from the data in this edition of Small Business in Australia with data in previous Small Business in Australia publications, as the ABS statistical series are being affected to varying degrees by The New Tax System (TNTS) introduced in Australia from 1 July 2000. It is likely that TNTS may have impacted on the number of small businesses reported for the June 2001 collection, as business operators previously not registered with the Australian taxation Office (ATO) as a business complied with the new regulations.


DEFINING SMALL BUSINESS

For the purposes of this publication a small business is defined as a business employing less than 20 people. Categories of small businesses include:

  • non-employing businesses - sole proprietorships and partnerships without employees;
  • micro businesses - businesses employing less than 5 people, including non-employing businesses;
  • other small businesses - businesses employing 5 or more people, but less than 20 people;

Small businesses tend to have the following management or organisational characteristics:
  • independent ownership and operations;
  • close control by owners/managers who also contribute most, if not all the operating capital; and
  • principal decision-making by the owners/managers.

In this publication, statistics are also presented for the following categories:
  • medium businesses - businesses employing 20 or more people, but less than 200 people; and
  • large businesses - businesses employing 200 or more people.

A size definition based on employment is not used for the agricultural statistics presented in this publication. Agricultural businesses can have large scale operations with relatively few or no permanent employees, using large numbers of seasonal and itinerant workers to satisfy short term labour needs.

To provide a size classification the ABS has developed, for statistical purposes, a measure of the Estimated Value of Agricultural Operations (EVAO) based on:
  • the area of crops sown;
  • the number of livestock; and
  • crops produced and livestock turn-off (mainly sales) during the year.

A small agricultural business is defined as one having an EVAO of between $22,500 and $400,000. Businesses with an EVAO of less than $22,500 are excluded from ABS statistics because they are not generally operated as a business venture and their contribution to commodity aggregates are generally insignificant.

Unless otherwise specified, the definition of small business used in this publication is as outlined above. Due to a lack of comparable data, agricultural statistics are excluded from most tables in this publication. However, in Chapter 2, Agriculture is included in summary statistics and in Chapter 7, a profile of the industry is presented.


CONTENTS OF THE PUBLICATION

This publication provides a range of statistics relating to small businesses sourced mainly from ABS collections that present statistics classified by employer size.

Chapter 2 provides a statistical overview of the structure of Australian business in 2000-01. Numbers of businesses and their employment are provided by business size and industry sector.

Chapter 3 describes growth trends in the small business sector since 1983-84, with year-to-year changes from 1997-98, 1998-99, 1999-2000 and 2000-01.

Chapter 4 provides summary data, for selected years for each State and Territory, on numbers of small business and their employment.

Chapter 5 presents selected characteristics of non-employing businesses from the ABS Characteristics of Small Business survey.

Chapter 6 details business operations by industry sourced from the ABS Economic Activity Survey for both small and other than small businesses, as well as data from the Attorney-General's Department on business bankruptcies.

Chapter 7 provides a detailed profile of selected goods producing industries drawn from the ABS program of economic surveys.

Chapter 8 provides a detailed profile of selected service providing industries drawn from the ABS program of economic surveys.


STATISTICAL UNITS

Some of the most important statistics presented in this publication are counts of businesses by size. The term ‘business’ can have a variety of meanings.

For many purposes ‘business’ is a single legal entity such as a registered company, partnership, trust, sole proprietor, religious organisation, government department or any other legally recognised organisation which provides goods or services. At other times all legal entities that come under common ownership or control are regarded as a single business.

Unless otherwise specified, the term ‘business’ in this publication refers to the management unit. The management unit is the highest-level accounting unit within a business or organisation for which accounts are maintained. In nearly all cases it coincides with the legal entity owning the business.

However, in some ABS collections, such as the Survey of Employment and Earnings (SEE), large businesses with significant operations in more than one state or territory are further broken down with a statistical unit established for each state or territory in which the business operates. In some situations a number of management units can be owned or controlled by a single company and therefore it is possible that in a small number of cases a ‘small business’ is actually part of a larger company. These circumstances impact only slightly on the ‘small business’ data contained in this publication.


EMPLOYING BUSINESSES

Counts of employing businesses presented in Chapters 2-4 of this publication are drawn from the SEE. The SEE frame is drawn from the ABS Business Register and is primarily designed to measure the number of employees in Australia and their earnings. It also provides, as a by-product, a reliable estimate of the number of employing businesses.


NON- EMPLOYING BUSINESSES

Estimating numbers of non-employing businesses is more difficult as there was no comprehensive up-to-date business register or listing available for the period for which statistics were compiled.

As in previous editions of this publication, the estimates of non-employing businesses provided in Chapters 2-4 are derived from ABS Labour Force Survey (LFS) estimates of numbers of own account workers (i.e. people working in their own business without employees).

As many non-employing businesses involve a number of partners, estimates of the number of non-employing businesses have had to be indirectly derived. Statistics on the number of partners per partnership, from the ABS Characteristics of Small Businesses in Australia collection have been used to derive factors which have then been applied to the LFS estimates for own account workers to estimate numbers of non-employing businesses by industry.

This estimate of non-employing businesses is an estimate of the number of businesses operated by own account workers.


EMPLOYMENT STATISTICS

In Chapters 2, 3 and 4, counts of private sector employees (wage and salary earners) are derived from SEE data, while the estimates of the number of persons operating their own business are derived from the LFS. Persons operating their own business comprise: own account workers, i.e. those working in their own unincorporated business without employees; and employers, i.e. those working in their own unincorporated business with employees.

In Chapters 6, 7 and 8 counts of employment based on the ABS economic surveys are provided. These counts include employees as well as employers, but exclude own account workers.

It should be noted that data presented from the LFS includes estimates for Private Households Employing Staff (Australian and New Zealand Standard Industrial Classification (ANZSIC) group 970) in the division Personal and Other Services. However, estimates from SEE data do not include this group. The inclusion of these data in the LFS estimates should not affect direct comparisons between LFS data and SEE data as the estimates for group 970, Private Households Employing Staff, are insignificant.


EMPLOYER SIZE STATISTICS

In most tables, statistics are classified by ‘employer size’. The derivation of employer size, however, differs depending on the source of the statistics. Where SEE data are used, employer size is based on the number of employees (wage and salary earners). In Chapters 6, 7 and 8, the employer size classification is based on total employment of the business (i.e. employees plus working proprietors and partners).

All industry estimates within the publication have been classified on the basis of the ANZSIC.


REVISIONS TO PREVIOUSLY PUBLISHED SERIES

A number of minor revisions may have been made to estimates of numbers of employing businesses and numbers of employees published in this publication compared to the estimates released in the previous edition. While these revisions may impact the level of the estimates, the relative significance of the data is unchanged.


NOTIFICATION OF FUTURE BREAK IN SERIES

Counts of private sector employing businesses presented in Chapters 2-4 of this publication have been sourced from the SEE. The private sector component of the SEE collection was discontinued after the December quarter 2001 survey.

Therefore the December quarter 2001 issue of Wage and Salary Earners, Australia (cat. no. 6248.0) was the last in which estimates of wage and salary earners and quarterly earnings for the private sector were presented. From March quarter 2002 this publication is called Wage and Salary Earners, Public Sector - Australia (cat. no. 6248.0).

Estimates of wages and salaries for the private sector are now collected in the Quarterly Economic Activity Survey, to be published in Business Indicators, Australia (cat. no. 5676.0) and will be the source of earnings data required for input into the gross domestic product component of the National Accounts.

Further information about changes to this and other ABS business surveys and details of alternative sources of employment and earnings statistics are provided in: Information Paper: Improvements to the Australian Bureau of Statistics Quarterly Business Indicators, 2001 (cat. no. 5677.0) - issued 6 July 2001. Future issues of the Small Business publication will therefore be sourcing data for Chapters 2-4 from an alternate source. The ABS is currently investigating what alternate sources of data will be the most appropriate.


COMPARISON WITH OTHER DATA

The ABS has compiled business counts on a number of different bases for inclusion in a range of publications. These include:

Experimental Estimates, Regional Small Business Statistics (cat. no. 5675.0), Small Business in Australia (cat. no. 1321.0) and Australian Industry (cat. no. 8155.0).

Each publication provides a profile of business demographics from different perspective. Differences in scope, coverage, timing and business definitions mean the estimates of counts of businesses in these publications are not directly comparable. The ABS is working to ensure greater integration of businesses demographic information in the future.

The definition of a small business in Experimental Estimates, Regional Small Business Statistics is based on a combination of income and expenses. Businesses with total income and/or expenses between $10 000 and $5m are classified as small. Data in this publication are sourced from the ATO Business Income Tax file. The ATO Business Income Tax file includes all businesses who have traded at any point during the year. The statistical unit is the legal entity.

In Small Business in Australia,a small business is defined as one with fewer than 20 employees. Counts of small businesses in this publication are sourced from a combination of ABS household survey data and Survey of Employment and Earnings data, a collection which is based on the ABS Business Register. The ABS monthly labour force survey which is household-based, is used to produce estimates of the number of non-employing businesses These are based on estimates of own account workers (i.e. persons working in their own business without employees) from the survey. The ABS Business Register includes employing businesses registered with the Australian Taxation Office at a point in time. The statistical unit is the management unit, which may include more than one legal entity.

Australian Industry provides counts of businesses by industry at national and state level. Estimates of the number of small businesses are not separately identified in this publication. Data in this publication are sourced from the ATO Business Income Tax file and the ABS Economic Activity Survey (EAS). The ATO Business Income Tax file contains all businesses (legal entities) which traded at any point during the financial year. The statistical unit for the EAS is the management unit.

For more information, please refer to the Explanatory Notes in each publication.


STRUCTURE OF AUSTRALIAN BUSINESS - 2000-01

Image - Flowchart - Structure of Australian Business - 2000-01



(a) Generally, the number of businesses (management units) and persons employed have been obtained by averaging the estimates for the middle months of each quarter for the 2000-2001 financial year.
(b) Includes ANZSIC Subdivisions 01 - Agriculture, 02 - Services to Agriculture; Hunting and Trapping, 03 - Forestry and Logging and 04 - Commercial fishing.
(c) Estimates are based on data from two different sources; ANZSIC Subdivision 01 data are drawn from the 1999-2000 Agricultural Finance survey, while ANZSIC Subdivisions 02, 03 and 04 estimates are drawn from the 1999-2000 Economic Activity Survey. Excludes management units in ANZSIC Subdivision with an estimated annual value of agricultural operations (EVAO) of less than $22,500. Employment estimates exclude unpaid family helpers.
(d) Agricultural small businesses include those management units coded to ANZSIC Subdivision 01 with an EVAO of more than $22,500 but less than $400,000, and those management units coded to ANZSIC Subdivisions 02, 03 and 04 which employ less than 20 persons.
(e) Small business (except in agriculture) are defined as those management units which employ less than 20 persons.
Source: (Cat. no. 6203.0), (Cat.no. 6248.0), (Cat. no. 7507.0), (Cat. no. 8140.0)] Labour Force, Australia Employed Wage and Salary Earners, Australia Agricultural Industries Financial Statistics, Australia Business Operations and Industry Performance, Australia



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