Australian small business and family enterprise report for 2021

Australia is known for its vast number of small businesses and family enterprises. Therefore, this report (backed up by both the Australian Government and peripheral non-governmental organizations) is to provide an updated report on the small businesses and family enterprises in Australia and its economy.

This year, the report is particularly interesting because of the vast impact that covid-19 had, but part of the data we present here is still not up to date. We will keep

Overview

Australian small business and family enterprise operates as the ‘brain box’ of the nation, and it counts for more than ninety-five percent (95%) of the total number of businesses in the Country. In 2018/2019, the total Gross Domestic Product (GDP) contributed by small businesses, and family enterprises were about $418 billion (over 32% of the nation’s economy). In terms of employment, Australia has created employment for about 5 million people (with and without the help of small business loans in Australia). And so, it made Australia one of the biggest employing nations of the world. Though, their survival rate is still reasonably lower than medium and large businesses combined.

Size

Small businesses and family enterprises take about 97% of the total number of businesses set up in Australia. 2.5% are medium scale enterprises, and 0.2% are large. Among the total 97%, non employing businesses take about 65.5% while 31.8% employ less than 20 employees. In numbers, there are approximately 2,361,778 (about 2.4 million) businesses in the country. In a year (June 2018 to June 2019), the number increased by over 50,000 set-ups.

By Employment

Small businesses have less than 20 people employed and this is the data used to measure the size by employment. Sole Traders (businesses that are non-employing) account for 62.8% of all businesses. Micro businesses (also under small business and family businesses), with 1 to 4 employees account for 25.7% of all business. The rest (that employs about 5 to 19 people) accounts for 8.9%. Therefore, small businesses and family enterprises with the smallest number of employees are more in the business market.

Medium-scale enterprises are about 56,835 in number (employing about 20 to 199 people), and large-scale enterprises are a total of 4,271 (employing over 200 people).

By turnover

Australian SMEs are measured with the turnover of higher or less than $10 million. By this, Small businesses are about 98.4% (turning over less than $10 million) while large businesses are the remaining 1.6%. In numbers, this is a total of 37,464 businesses out of a total of 2,375,753 businesses. About 592,896 businesses (25%) turnover less than $50,000 to the Australian economy. 810,470 small businesses (34.1%) turnover between >$50k to <$200k. 806,248 businesses (33.9%) turnover between >$200k to <$2m. Majority of small businesses turnover less than two million dollars ($2,000,000) into the Australian economy. However, businesses that are not registered with GST are excluded from this data (which means the numbers could be underestimated).

Gross Domestic Product (GDP)

The contribution of small businesses to the country’s GDP is the value-added (the value of all the final goods and services submitted to the country’s economy). Australia sits on an aggregate of over $1,289 billion ($1,289,280 million) as of May 2020. In total, Australian small businesses and family enterprises contributed over 32% of Australia’s total GDP (which is about $418 billion). Medium-scale enterprises contributed $287 billion which is about 22% of the total nation’s GDP. Large businesses contributed the largest percentage taking about 54% ($584 billion) of the entire chart.

Based on sectors

Some sectors contribute more significantly than others to the total value (GDP) of the Australian economy. Below is the outlined detail of the sectors with above $100 billion total value, and how much small businesses share in percentage:

  • Mining: With the highest value of about $187 billion, small businesses contribute about 11% which equals a total of approximately $20 billion
  • Professional, scientific, and technical services: Second highest contributing industry with $136 billion has a share of 42% from Australian small businesses
  • Construction:A total of $128 billion is birthed from this sector, and small businesses share fifty-six percent (56%) of the total value.
  • Manufacturing:Small businesses share 22% of the total value of about $112billion in this industrial sector.

The sectors that contributed between <$100 billion and >$50 billion aggregated a value of about $528 billion, and small businesses in Australia made up about 33% ($173 billion). Small business and family enterprises from the Agriculture, forestry, and fishing sector contributed the highest value to the country’s economy. With a total value of $31 billion, Australian SMEs contribute about $24 billion (76%).

Update on Employment

Though a setback during 2017/18, SMEs have taken back their place as the nation’s top employer. And they still control about 41% of the nation’s business workforce.

Based on sector

Employing over a 4.7million people in the country, they aren’t at the top of all the lists. Below is the list of the sectors that Australian small business has taken over;

  • Agriculture, forestry, and fishing: Small businesses employed about 359,000 people, indicating that 80% of the sector is being represented.
  • Rental, hiring, and real estate services: This sector employs a total of about 314,000 people. The number indicates that they have a 75% representation of the sector.
  • Construction: This sector employs a total of about 748,000 people. The number indicates that they have a 67% representation of the sector
  • Other Services: This sector employs a total of about 321,000 people. The number indicates that they have a 62% representation of the sector.

Apprentice and trainee employment

As of the end of 2019, small businesses employed the highest number of trainees and apprentices (61% of the total). And based on the proportions by the Australian government, about 61,000 new apprentices and trainees would be employed in the next year.

Survival

Report on how many Australian SMEs have survived the test five years was scored averagely. Of about 1.3 million businesses opened 5 years back from 2019, only about 772,711 (60%) survived. And although this is more than half, it is less than the average 65% rate of survival. Those with about 1 to 4 employees had a 69% survival rate (405,838 survived out of 584,744 businesses). Businesses with 5 to 19 employees had the highest survival rate at 78% (152,968 survived out of a total of 197,164 businesses).

Women in the game

The Australian Bureau of statistics labor force provided data providing the number of Australian businesses owned or managed by the female gender. Though the data provided was not exclusive to small business, the result can as well be approximately correct since small business takes more than 98% of the total Australian business market. As of 2000, women dominated about 31% of the business world. 20 years later (2020), the charts have risen to about 35% (both full-time and part-time).

Challenges

The major challenge faced by small businesses (as well as other businesses) is the COVID-19 and the one-year lockdown that followed. As a result, the country’s economy witnessed its first recession in thirty years and a drastic drop in the total economy’s GDP. Also, many industries faced a continuous decline in operating conditions since March 2020 with negative situations such as late payment times, and insolvency. Therefore many businesses looked for alternative Australian business lending services to deal with these challenges.

The other challenge faced by Australian businesses was the 2019/2020 bushfire that destroyed both the regional and rural areas of the country. Claiming lives, and millions of properties, the economy suffered another decline. According to the small business financial counseling support line, the damage done to small businesses rose to about 54%, costing the country’s economy over $100 billion.