8165.0 - Counts of Australian Businesses, including Entries and Exits , Jun 2009 to Jun 2013 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 31/03/2014   
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TECHNICAL NOTE 1 MEASURES OF BUSINESS GROWTH


INTRODUCTION

1 In CABEE, the stock of businesses is updated each year according to a standard equation:

2 Operating at start of financial year + Entries - Exits = Operating at end of financial year

3 In previous releases of CABEE, all data was presented in accordance with this equation at both a national level, and for selected classifications: Industry; Main State; Institutional Sector; Type of Legal Organisation; Employment Size; and Annual Turnover Size.

4 To ensure additivity, the classification values (e.g. industry code, main State, employment size range, etc.) attributed to each business were held constant over the lifetime of the business in previous editions. Specifically, for each business, the latest available data were used to overwrite any periods of conflicting or missing data.

5 The main issue with this approach is that it is possible for businesses to change their characteristics over time, particularly for employment size and annual turnover size. In fact, this change can be of interest in itself as business growth can be considered in terms of whether a business is increasing with respect to that characteristic, remaining stable, or decreasing in size over time. To address this, recent releases of CABEE have extended the standard equation for employment size and annual turnover size to:

  • Operating at start of financial year + Entries - Exits + Inflow - Outflow = Operating at end of financial year, where:
  • Inflow = the number of surviving businesses that have changed their classification to the classification of interest; and
  • Outflow = the number of surviving businesses that have changed their classification from the classification of interest.


EXAMPLE

6 Consider the following example involving a small business which is active during the 2009-10 and 2010-11 financial years. During this two year period, the business:
  • Did not employ any staff at the start of 2009-10 financial year;
  • Took on 2 employees during 2009-10; and
  • Grew to 6 employees over 2010-11.

7 Under previous publications (where classifications were held constant for each business at their latest available value), this business would have been included in the '5-19' employees category for June 2009, June 2010 and June 2011. This can result in some misunderstanding regarding the size of the businesses in earlier time periods.

8 Now, under the new approach, the business would be classified according to its size for the respective year:

Operating at start of financial year
Plus Entries
Minus Exits
Plus Inflows
Minus Outflows
Operating at end of financial year

2009-10

Non-employing business
1
0
0
0
1
0
1-4 employees
0
0
0
1
0
1
5-19 employees
0
0
0
0
0
0

2010-11

Non-employing business
0
0
0
0
0
0
1-4 employees
1
0
0
0
1
0
5-19 employees
0
0
0
1
0
1



9 Using this approach, it is possible to present the change in business numbers (of surviving businesses) for different classifications (of employment size and annual turnover). For example, consider the following partial extract from the publication's Growth of Business Survivals by Employment Size Range table below.

Change in Business Size Over Time for Surviving Businesses(a): June 2011-June 2013

CHANGED BUSINESS SIZE CATEGORY (EMPLOYMENT SIZE RANGES)
Non-employing
1-4(b)
5-19
20-199
200+
Inflow at end of financial year
Outflow at end of financial year
Net movement of surviving businesses(c)
no.
no.
no.
no.
no.
no.
no.
no.

CHANGED BUSINESS SIZE CATEGORY AT JUNE 2012

BUSINESS SIZE CATEGORY AT JUNE 2011
(Employment Size Ranges)(d)
Non employing
1 052 102
39 802
1 775
222
2
62 087
41 801
20 286
1-4(b)
54 511
435 954
37 728
2 315
115
62 160
94 669
-32 509
5-19
6 228
21 357
144 136
7 957
11
44 624
35 553
9 071
20-199
1 328
986
5 111
38 467
359
10 703
7 784
2 919
200+
20
15
10
209
3 039
487
254
233
Total
1 114 189
498 114
188 760
49 170
3 526
180 061
180 061
-

CHANGED BUSINESS SIZE CATEGORY AT JUNE 2013

BUSINESS SIZE CATEGORY AT JUNE 2012
(Employment Size Ranges)(d)
Non employing
1 037 633
38 981
1 650
223
4
65 374
40 858
24 516
1-4(b)
57 206
432 068
32 917
1 022
27
63 290
91 172
-27 882
5-19
6 694
23 410
149 040
7 540
12
39 873
37 656
2 217
20-199
1 461
868
5 293
40 655
284
8 989
7 906
1 083
200+
13
31
13
204
3 188
327
261
66
Total
1 103 007
495 358
188 913
49 644
3 515
177 853
177 853
-

- nil or rounded to zero (including null cells)
(a) Please refer to paragraphs 53-58 in the Explanatory Notes for more information regarding employment size ranges.
(b) A small number of businesses which have ITW roles for purposes other than withholding amounts from wages and salaries (and as such have zero employment), are included in this category.
(c) The net movement of surviving businesses is calculated by subtracting the total outflow at the end of the financial year from the total inflow at the end of the financial year. See Glossary and Technical Note 1 Measures of Business Growth for more information.
(d) The methodology used to derive employment size has changed in this release. Please refer to the Technical Note 2 Improved Employment Range for more information regarding change in methodology.



EXPLANATION OF CONTENTS

Business Size Range Matrix

10 The primary purpose of the table is to quantify the businesses which grow or contract between financial years. The first five columns provide a cross-classified matrix which shows how many businesses were classified to one business size at the start of the financial year, and a different business size at the end of the financial year.

11 Note that the majority of businesses do not change their size category between years, and the counts of these businesses are represented along the main diagonal of the table. For example, 1,037,633 'Non-employing' businesses at the end of June 2012, remained 'Non-employing' at the end of June 2013. Equally, 3,188 businesses in the largest size category at the end of June 2012, remained in the largest size category at the end of June 2013. In the above table, it can be seen that:
  • 57,206 businesses had '1-4' employees at the start of the financial year and contracted to be 'Non-employing' by the end of the financial year (negative growth);
  • 432,068 businesses had '1-4' employees at the start of the financial year and continued to have '1-4' employees at the end of the financial year (stability); and
  • 32,917 businesses had '1-4' employees at the start of the financial year and expanded to have '5-19' employees at the end of the financial year (growth).


Inflow at End of Financial Year

12 The total number of business that moved into a size range from another range. Note that these businesses may have come from larger or smaller size range (depending on the range being analysed).


Outflow at End of Financial Year

13 This column accounts for the total number of business that moved out of a size range into another range. Note that these businesses may have come from larger or smaller size ranges (depending on the range being analysed).


Net Movement of Surviving Businesses

14 The net movement of surviving businesses for each range, i.e. accounting for all businesses that moved into (inflow) and out of (outflow) a particular size range.

15 The net movement of surviving businesses is calculated by taking total inflow at the end of the financial year minus total outflow at the end of the financial year.

16 The above information (particularly the last column) can then be included in the traditional business counts tables. A partial extract from the publication's Businesses by Employment Size Ranges table is included below.

BUSINESSES BY EMPLOYMENT SIZE RANGES(a): June 2011-June 2013

Operating at start of financial year
Entries
Exits
Net movement of surviving businesses(b)
Operating at end of financial year
Change
Percentage change
no.
no.
no.
no.
no.
no.
%

2011-12

Non-employing
1 306 023
191 904
212 120
20 286
1 306 093
70
-
Employing
1-4(c)
584 566
84 605
53 943
-32 509
582 719
-1 847
-0.3
5-19
190 237
9 580
10 548
9 071
198 340
8 103
4.3
20-199
48 170
1 352
1 919
2 919
50 522
2 352
4.9
200+
3 416
80
123
233
3 606
190
5.6
Total employing
826 389
95 617
66 533
-
835 187
8 798
1.1
Total
2 132 412
287 521
278 653
-
2 141 280
8 868
0.4

2012-13

Non-employing
1 306 093
161 291
227 602
24 516
1 264 298
-41 795
-3.2
Employing
1-4(c)
582 719
68 054
59 479
-27 882
563 412
-19 307
-3.3
5-19
198 340
8 499
11 644
2 217
197 412
-928
-0.5
20-199
50 522
1 302
1 961
1 083
50 946
424
0.8
200+
3 606
83
157
66
3 598
-8
-0.2
Total employing
835 187
77 938
73 241
-
815 368
-19 819
-2.4
Total
2 141 280
239 229
300 843
-
2 079 666
-61 614
-2.9

- nil or rounded to zero (including null cells)
(a) Please refer to paragraphs 53-58 in the Explanatory Notes for more information regarding employment size ranges.
(b) The net movement of surviving businesses is calculated by subtracting the total outflow at the end of the financial year from the total inflow at the end of the financial year. See Glossary and Technical Note 1 Measures of Business Growth for more information.
(c) A small number of businesses which have ITW roles for purposes other than withholding amounts from wages and salaries (and as such have zero employment), are included in this category.


17 Including the net movement of surviving businesses column in the employment size ranges table provides more detailed (point in time) information about the movement of businesses within specific business size ranges, whilst maintaining additivity within each business size table. For example, the table above demonstrates that during 2011-12, part of the 190 change recorded for businesses employing 200 employees or more was driven by the 233 net movement of surviving businesses in this employment size range. That is, during 2011-12, there was a positive net movement of 233 existing small or medium businesses which grew to become large businesses.


Application within Other Tables

18 While it is possible to develop similar tables and data cubes for the other classifications (industry, main State of operation, institutional sector and type of legal organisation) used in CABEE, ABS investigations have determined that relatively few businesses tend to change these classifications values from year to year. Thus, allowing for the classifications to change over time appears to offer limited additional information while increasing the complexity of the tables (including introducing a need to confidentialise data for those rare changes in classifications). For these reasons, additional tables for the non-business size range topics have not been created in this version of CABEE.