8165.0 - Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2009 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/10/2010   
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This document was added or updated on 21/12/2010.

SUMMARY OF FINDINGS

        There were 2,051,085 actively trading businesses in Australia as at June 2009.

        The growth rate in the number of businesses declined slightly from 2007-08 (-0.1%) to 2008-09 (-1.0%).

        In comparison, GDP (in chain volume terms) over the corresponding periods grew by 3.7% and 1.2% respectively, while Australia's population grew by 1.7% and 2.1% over the same periods.

        The negative growth rate in the number of businesses during the financial year to June 2009 was mainly due to a decrease in entry rates. The entry rate for new businesses during 2008-09 was 14.4%, down from the 15.3% entry rate recorded in 2007-08. The business exit rate remained steady during the same period, recorded at 15.4% for both the 2007-08 and 2008-09 financial years.

        Of the 2,074,247 businesses operating in June 2007, 84.6% were still operating in June 2008 and 73.6% were still operating in June 2009. Of the 548,713 businesses which exited to June 2009, 58.0% exited during 2007-08 and the remaining 42.0% exited during 2008-09.

        Of the 316,867 business entries during 2007-08, 71.5% were still operating in June 2009. In addition, the survival rate for business entries during 2007-08 was higher for new employing businesses (81.9%) compared to new non-employing businesses (66.6%). Further, survival rates for business entries were highest for those businesses with annual turnover of $2m or more (85.3%) and lowest for those businesses with annual turnover of zero to less than $50k (65.6%).

INDUSTRY
        At June 2009, the distribution of the Australian business population by industry was similar to the distribution recorded in June 2008. Construction had the greatest number of businesses with 342,436 (16.7% of the total). This was followed by Professional, scientific and technical services and Rental, hiring and real estate services with 232,559 and 216,853 respectively (or 11.3% and 10.6%), and Agriculture, forestry and fishing with 203,643 (9.9%).

        During 2008-09, Public administration and safety had the highest entry rate (19.4%), followed by Administrative and support services (18.9%), Accommodation and food services (16.8%) and Information media and telecommunications (also at 16.8%).

        Over the same period, exit rates were highest for Public administration and safety (21.3%), followed by Administrative and support services (19.5%) and Accommodation and food services (18.1%). With the Public administration and safety, Administrative and support services and Accommodation and food services industries experiencing relatively high entry and exit rates, these industries have been subject to a significant amount of churn over 2008-09.

        The survival rates at June 2009 for businesses operating in June 2007 were highest for Health care and social assistance (81.2%) and Agriculture, forestry and fishing (80.9%), followed by Rental, hiring and real estate services (78.9%). Over the period June 2007 - 2009, the survival rates attributed to these industries were consistently higher than compared with other industries.

        Survival rates over the same period were lowest for businesses operating in Public administration and safety (65.3%), followed by Administrative and support services (67.4%) and Accommodation and food services (67.9%).

        The survival rates for business entries during 2007-08 was slightly different in terms of their industry breakdown to those for the stock of businesses at June 2007. The industries with the highest business entry survival rates were Health care and social assistance (79.0%), Mining (77.2%) and Retail trade (75.7%), all with survival rates well above the national rate of 71.5%.

        Users should be aware that the analysis provided above is based on those businesses that were coded to an ANZSIC 2006 industry category. It does not take into account those businesses that had not passed through the ATO's new business registration process during the publication's reference period and were not allocated to an ANZSIC 2006 category. As such, all counts by industry (including entries and exits) included in this publication are likely to contain a small degree of undercount (as seen in the "currently unknown" categories in publication tables). Users should therefore exercise care when using this publication's industry-based tables.

MAIN STATE OF OPERATION
        At June 2009, the proportion of businesses by State (as defined by the main State of operation) was broadly aligned with the proportion of Australia's population by State. New South Wales, Victoria and Western Australia were the only States which contained a higher proportion of businesses than people.

        For the smaller States (Tasmania, Northern Territory and the Australian Capital Territory), the proportion of the population continued to outweigh the proportion of businesses (for example, Tasmania had 2.3% of the population and 1.8% of businesses). The Northern Territory had the lowest populations in terms of both people and businesses (1.0% and 0.7% respectively).

        In the year to June 2009, all States recorded a decline in the number of businesses, with the Australian Capital Territory (-2.3%) Tasmania (-1.7%) and New South Wales (-1.4%) recording the lowest net growth. Of the larger States (New South Wales, Victoria, Queensland, South Australia and Western Australia), New South Wales continued to record the lowest net growth (-1.2% in 2007-08 and -1.4% in 2008-09) and Western Australia recorded the highest net growth (1.3% in 2007-08 and -0.6% in 2008-09). The Northern Territory (16.4%), Queensland (15.5%) and Western Australia (15.2%) continued to experience the highest entry rates, with the lowest entry rate being Tasmania (11.5%). Further, exit rates were highest for the Northern Territory (17.0%), the Australian Capital Territory (16.8%) and Queensland (16.3%), while Tasmania (13.2%) and South Australia (14.0%) recorded the lowest exit rates.

        Of those businesses operating in June 2007, the survival rates at June 2009 were highest in Tasmania (76.3%) and South Australia (75.7%) and lowest in the Northern Territory (70.5%) and the Australian Capital Territory (71.7%). The survival rates for business entries during 2007-08 were highest for Tasmania (75.7%) and lowest for the Northern Territory (70.3%) and the Australian Capital Territory (70.4%).

INSTITUTIONAL SECTOR
        At June 2009, 1,240,942, (60.5%) of businesses were classified to the Household sector (which includes most unincorporated businesses), while 615,586 (30.0%) were classified to the Non-financial corporations sector, and 148,353 (7.2%) to the Financial corporations sector. The remaining businesses were yet to be coded to an Institutional Sector.

        During 2008-09, the Financial corporations sector recorded modest growth (0.7%), where as the Non-financial corporation sector and Household sector contracted - 0.4% and - 2.1% respectively. Entry rates fluctuated between sectors: 16.4% for the Financial corporations sector; 14.1% for the Household sector; and 11.7% for the Non-financial corporations sector. In comparison, exit rates were 16.1% for the Household sector, 15.7% for the Financial corporations sectors and 12.1% for the Non-financial corporations sector. Each entry rate decreased from the previous year, while exit rates remained comparatively stable.

        Continuing an overall trend, the survival to June 2009 of businesses that were operating in June 2007 was higher for businesses in the Non-financial corporations sector (79.0%) than for those in the Financial corporations (73.4%) and Households sectors (71.9%). Survival rates for Non-financial corporations which entered in 2007-08 were also higher (77.9%) than for the other sectors (Financial Corporations and Households at 72.0% and 71.2% respectively).

        Users should be aware that the analysis provided above is based on those businesses that were coded to a SISCA 2006 institutional sector category. It does not take into account those businesses that had not passed through the ATO's new business registration process during the publication's reference period and were not allocated to a SISCA 2006 category. As such, all counts by sector (including entries and exits) included in this publication are likely to contain a small degree of undercount (as seen in the "currently unknown" categories in publication tables). Users should therefore exercise care when using this publication's sector-based tables.

TYPE OF LEGAL ORGANISATION
        At June 2009, there were 670,951 (32.7%) Companies in Australia, followed by 605,015 (29.5%) Sole proprietors, 414,020 (20.2%) Trusts and 360,228 (17.6%) Partnerships. There were a relatively small number of businesses (<1%) operating in the Public sector. However, the scope and definitions used to define a business in this publication should be taken into account when using the public sector data.

        Over the past two years, there was a sharp decline in the number of Partnerships (-4.0% in 2007-08 and -4.9% in 2008-09) and a moderate decline in the number of Sole Proprietors (-3.3% and -2.5% respectively), both forms of unincorporated businesses. In contrast, there was an increase in the number of Trusts over the same period (6.8% and 3.3% respectively). The number of Companies was stable, moving from 670,956 in June 2008 to just 670,951 in June 2009. As a result of these movements, for the first time in June 2008, Partnerships became the least common form of private sector legal organisation for Australian businesses.

        Out of all private sector businesses in the period June 2008-09, entry rates were highest for Sole proprietors (19.0%) and Trusts (15.2%), followed by Companies (12.8%) and Partnerships (8.9%). Conversely, exit rates were highest for Sole proprietors (21.5%) and were noticeably lower across the other private sector categories. Across the past two financial years, entry rates have decreased in all private sectors, with the exception of Sole proprietors where a small increase was evident. Exit rates have remained relatively stable for all private sector categories.

        For both the stock of businesses and for business entries, survival rates have been consistently higher for Trusts and Companies, while they have been lower for Sole Proprietors and Partnerships.

EMPLOYMENT SIZE RANGES
        At June 2009, there were 820,803 (40.0%) employing businesses and 1,230,282 (60.0%) non-employing businesses.

        Most employing businesses, 731,055 (89.1%) employed less than 20 employees. This comprised 497,098 (68.0%) businesses with 1-4 employees and 233,957 (32.0%) businesses with 5-19 employees. There were also 83,399 (10.2%) businesses with 20-199 employees and 6,349 (<1%) businesses with 200 or more employees.

        In 2008-09, entry rates were lower for most employment size ranges compared with the previous year. The exceptions were the 20-199 employment size category (stable entry rate of 4.0%) and the 200+ employment size category, where the entry rate grew slightly, from 7.3% in 2007-08 to 8.4% in 2008-09. However, most business entries (93.5%) continued to occur in the micro business population, which comprises non-employing businesses and businesses employing between 1-4 employees.

        Exit rates over the same period were highest for non-employing businesses (19.5%), while being lowest for businesses employing 20-199 employees (7.1%).

        Of those businesses that survived from June 2008 to 2009, 88.3% were classified to the same employment size range at the end of the year as they were at the start of the year, 6.1% were classified to a smaller size range, and the remaining 5.6% were classified to a larger size range (grew). Of those businesses that grew, 98,784 moved up at least one size range over the course of the year, of which, 6,234 moved up two or more size ranges. In comparison, 106,228 experienced negative growth (i.e. moved down at least one size range) over the course of the year, of which, 15,194 moved down two or more size ranges.

        In addition, of those businesses that survived from June 2008 to 2009, inflow was highest for the non-employing category (68,289) while outflow was highest for businesses employing between 1-4 employees (99,578). The relatively high outflow for businesses employing 1-4 employees resulted in a net movement (outflow) of 35,098 businesses which contributed to the overall decrease of 16,056 businesses in this category over the financial year. Further, the net inflow of 192 that was recorded for businesses employing 200 employees or more was a large contributor to the overall increase of 236 businesses in this category. All other employment size categories recorded net inflows and were led by non-employing businesses.

        The survival rates for businesses operating since June 2007 showed some variance between the employing (82.1%) and the non-employing (67.8%) populations. In addition, survival rates for the stock of businesses were also lower for businesses employing between 1-4 employees (79.9%). However, the survival rate was slightly different for those businesses that entered in 2007-08, being lowest for non-employing businesses (66.6%), and for businesses employing 200 employees or more (78.4%), followed by those employing 1-4 employees (81.2%).

ANNUAL TURNOVER SIZE RANGES
        At June 2009, there were 694,254 (33.8%) businesses with turnover from $50k to less than $200k. This was followed by 637,182 (31.1%) businesses with turnover from $200k to less than $2m, 596,418 (29.1%) businesses with turnover between zero and $50k, and 123,231 (6.0%) businesses with turnover above $2m per annum.

        In the period 2008-09, entry rates were highest for businesses with turnover between zero to less than $50k (19.2%). Exit rates over the same period were also highest for businesses with turnover between zero to less than $50k (25.0%), signifying the high amount of churn in this category. Both entry and exit rates were lowest for businesses with turnover above $2m per annum (4.6% and 5.5% respectively).

        Of those businesses that survived from June 2008 to 2009, 77.8% were classified to the same turnover size range at the end of the year as they were at the start of the year, 11.4% were classified to a larger size range (grew), and the remaining 10.8% were classified to a smaller size range. Of those businesses that grew, 199,608 moved up at least one size range over the course of the year, of which, 15,530 moved up two or more size ranges. In comparison, 188,908 experienced negative growth (i.e. moved down at least one size range) over the course of the year, of which, 28,060 moved down two or more size ranges.

        In addition, of those businesses that survived from June 2008 to 2009, inflow and outflow was highest for businesses with turnover between $50k to less than $200k. The relatively high outflow for businesses in this category resulted in a net movement (outflow) of 19,550 businesses. In contrast, the net movement for those businesses with turnover between $200k to less than $2m was quite stable, with a net inflow of just 8 businesses. All other turnover size categories recorded net inflows and were led by businesses with turnover between zero to less than $50k.

        The survival rates for businesses operating since June 2007 were generally higher for businesses with higher annual turnover. The survival rates of business entries were similarly distributed.