Australian Small Business - Key Statistics and Analysis

Australian Small Business Key Statistics and Analysis

DECEMBER 2012

Commonwealth of Australia 2012

ISBN 978-1-922125-91-0

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Department of Industry, Innovation, Science, Research and Tertiary Education, GPO Box 9839, Canberra ACT 2601.

This publication has been prepared by the Industry Policy and Analysis Branch in the DepartmentofIndustry, Innovation, Science, Research and Tertiary Education. It is available onthedepartments website.

ACKNOWLEDGEMENTS

The Department of Industry, Innovation, Science, Research and Tertiary Education would like to thank Professor Per Davidsson, Dr. Scott Gordon, Associate Professor Paul Steffens and their colleagues from the Australian Centre for Entrepreneurship Research for their contribution to this publication. For more information on CAUSEE, related research, or the Australian Centre for Entrepreneurship Research visit: www.bus.qut.edu.au/research/ace

This report was prepared by Megan Clark, Melissa Eaton, David Meek, Emily Pye and Razib Tuhin. Assistance was provided by Richard Snabel, Nils de Jager, Arthur Lau, Ronesh Chandra, Anthony Scoble and Damien Ellwood. Also, a special thank you to everyone who commented and/or provided feedback.

CONTACT

For inquiries about this report or to obtain a copy, contact the Manager, Economic Conditions Section, economics@innovation.gov.au

DISCLAIMER

The material in this publication is collected by the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) from various external sources, for information purposes only. This material is made available on the understanding that DIISRTE is not engaged in rendering professional advice. This material contains no warranties or representations. DIISRTE does not guarantee and accepts no liability whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of any material contained in this publication. This material may include the views or recommendations of third parties, which do not necessarily reflect the views of DIISRTE.

CONTENTS

Definitions10

Introduction11

Chapter 113

Early Stage Start-Ups: Evidence from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE)13

Numbers and types of start-up attempts13

Survival, employment and growth15

Characteristics of new venture founders18

Exports and other international activities20

Business confidence and the global financial crisis21

Finance22

Innovation and e-commerce24

Chapter 227

Small businesses in the economy27

Industry value addedprivate sector27

How many people do small businesses employ in the private sector?30

Small business exports32

Chapter 335

Number of small businesses in Australia35

Business numbers by size35

Small business numbers by industry sector36

Chapter 438

Selected business characteristics38

Business structure and arrangements38

Business markets and competition40

Business finance41

Skills41

Business performance42

Chapter 543

Number of small businesses by region43

Business numbers by state43

Chapter 647

Business entries and exits47

Small business entries and exits48

Survival rates50

Chapter 752

Independent contractors and other business operators52

Demographics52

Work pattern53

Industry and occupation of main job55

Chapter 857

Business conditions and confidence57

Small and medium business conditions57

Small and medium business confidence60

Employment61

Profits62

Chapter 963

Small business bank lending63

Trends in small business access to finance64

Trends in interest rates on business loans68

Chapter 1070

Innovation, Collaboration, Research and development70

Innovative activity70

Barriers to innovation71

Business performance where collaboration agreements are in place71

Research & development73

Chapter 11 e-commerce76

Business use of the internet76

SME investment in e-commerce78

Social media79

Appendix A80

Statistical definitions and explanatorynotes80

Appendix B86

Actively trading small businesses by region86

Actively trading small businesses by electoral division86

Actively trading small businesses by local government area88

Appendix C98

Text descriptions of figures98

Bibliography110

FIGURES

Figure 1: Cumulative firm outcomes after 36 months16

Figure 2: Outcome distribution by type of nascent firm (Product/Service) after 36 months17

Figure 3: Employment in nascent and young firms18

Figure 4: Founder gender distribution from a firm-level perspective19

Figure 5: Nascent and young firms participation in imports and exports over time20

Figure 6: Seeking and receiving external funding (nascent firms only)24

Figure 7: Estimated total novelty of nascent and young firms over time25

Figure 8: Actual/expected share of sales generated online26

Figure 9: Contribution to private sector industry value added by business size, 20101128

Figure 10: Industry contribution to small business private sector industry value added, 20101128

Figure 11: Share of private sector employment by business size, at end June 201130

Figure 12: Share of small business employment by industry, at end June 201130

Figure 13: Number of goods exporters by business size, 200607 to 20101132

Figure 14: Share and annual change in the number of small business goods exporters by industry, 20101133

Figure 15: Share and annual change in the value of small business goods exports byindustry, 20101134

Figure 16: Distribution of total business numbers by business size, June 201135

Figure 17: Distribution of businesses, including small business sub-categories, bysize, June 201136

Figure 18: Small business numbers by state, 20101144

Figure 19: Breakdown of small businesses within each industry by state, 20101145

Figure 20: Small business survival rates by state/territory between june 2007 to June201151

Figure 21: Survival rates by industry and business size between june 2007 to June201151

Figure 22: gender distribution of independent contractors and other business operators, November 201152

Figure 23: Business conditions, five years to the June quarter 201259

Figure 24: Business confidence, five years to the June quarter 201260

Figure 25: Business employment conditions, five years to the June quarter 201261

Figure 26: Business profits, five years to the June quarter 201262

Figure 27: Selected financial aggregates65

Figure 28: Value of outstanding bank lending by size of business loan66

Figure 29: New bank credit approvals by size of business loan67

Figure 30: value of outstanding bank loans that were less than $2 million, by industry68

Figure 31: Spread between business lending rates68

Figure 32: RBA small business indicator rate vs. The RBA cash rate target69

Figure 33: Barriers to innovation, 20101171

Figure 34: Business expenditure on research and development by business size (current prices)74

Figure 35: Annual growth in business expenditure on research and development by business size, 200708 to 20101175

Figure 36: Value of BERD by business size in selected industries, 200910 and 20101175

Figure 37: Geographic locations of customers of small and medium businesses77

Figure 38: When will investment be recovered?78

TABLES

Table 1: Location of start-ups15

Table 2: Per cent of nascent and young firms using different sources of funding23

Table 3: Industry value added by sector and business size, 20101129

Table 4: Employment by sector and business size, at end June 201131

Table 5: Business numbers by industry sector, as at June 201137

Table 6: Percentage of foreign ownership, by employment size, as at 30 june 201138

Table 7: Collaborative arrangements, by employment size, 20101139

Table 8: Employee working arrangements, by employment size, 20101139

Table 9: Geographic markets in which businesses sold goods or services, byemployment size40

Table 10: Business performance assessment, by extent of focus, by type of measure, 20101142

Table 11: Estimated number of small businesses by main state of operation andindustry43

Table 12: Percentage of small businesses within each state by industry, 20101146

Table 13: Business entries and exits by employment size, 20101149

Table 14: Business survival rates by employment size between June 2007 to June201150

Table 15: Distribution of independent contractors and other business operators by age groups and country of birth, November 201153

Table 16: Distribution of independent contractors and other business operators by work patterns, November 201154

Table 17: Distribution of independent contractors and other business operators by industry and occupation, November 201155

Table 18: dDstribution of independent contractors and other busin