enterprises. In fact, of the 2.6 million businesses in Australia, over 99% of these are SMEs. This report (using data from the Australian Government and peripheral non-governmental organizations) shines a light on this vital sector, providing an update on the small business and family enterprise community in Australia and the role they play in the economy.

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Australian small business and family enterprise report for 2022 overview

The Australian small business and family enterprise sector operates as the ‘brain box’ of the nation, and, according to the latest data from the Australian Bureau of Statistics, it accounts for 97.5% of the total number of businesses in the country. In 2020/2021, the total Gross Domestic Product (GDP) contributed by small businesses and family enterprises was about $438 billion (over 32% of the nation’s economy). In terms of jobs created, the SME sector of Australia employed about 5 million people including sole traders in 2020/2021 (with and without the help of small business loans in Australia). And so, it made Australia one of the biggest employing SME nations of the world. Though, their survival rate is still reasonably lower than medium and large businesses combined.

Size

As of August 2022, there were 2,506,012 small businesses in Australia (defined as having between 1 – 19 employees). There were a total of 59,355 small businesses (between 20 – 199 employees) and 4,533 large businesses (200+ employees).

Of those deemed small business and family businesses, sole traders (businesses that are non-employing) account for 60.3% of all businesses. Micro businesses ( with 1 – 4 employees) account for 28.4% of all businesses. The rest (that employ between 5 – 19 people) accounts for 8.8%. Interestingly, there has been a fairly noticeable shift across all three of these categories in recent years. Non-employing businesses increased by 9.9% in 2021-22 compared to the previous year. Whilst there was a 2.4% rise in businesses with 1 – 4 employees and a 3.0% rise in businesses with 5 – 19 employees.

Small businesses and family enterprises with a fewer number of employees continue to dominate the business market. 

By Employment

In terms of jobs created, small businesses hired just over 5 million people, accounting for 42% of all Australian employment. Medium businesses hired just over 2.8 million people and large businesses hired just over 4 million (representing 24% and 34% of total employment respectively).

This makes small businesses the largest employer by quite some way – creating over a million more jobs than large businesses. The number of people employed by small businesses also increased from 4.66 million in 2019-20 to 5.01 million in 2020-21. Though the proportion of people employed by small businesses only increased from 41% to 42% as there was an increase in employment across the board. 

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)

GDP is the value of all the final goods and services submitted to a country’s economy. 

Australian businesses contributed a total $1,338 billion in 2020-21 ($1,338,839).

Australian small businesses and family enterprises contributed 32.7% of Australia’s total GDP (which is about $438 billion). Medium-scale enterprises contributed $283 billion which21.2% of the nation’s total GDP. And large businesses contributed the most. A total of 46% ($616 billion) of the entire chart.

Based on sectors

Some sectors contribute significantly more 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 $216 billion, small businesses contribute about 9% which equals a total of approximately $19.5 billion
• Professional, scientific, and technical services: Second highest contributing industry with $145 billion has a share of 40% from Australian small businesses
• Construction: A total of $130 billion is birthed from this sector, and small businesses share fifty-six percent (57%) of the total value.
• Health care and social assistance (private): Fourth highest is that of the private health and social care market, contributing about $110 billion, with a 39% share from small businesses.
• Manufacturing: Small businesses share 21% of the total value of about $107billion in this industrial sector.

The sectors that contributed >$50 billion and <$100 billion  had an aggregate value of about $386 billion. 

The industry which had the greatest proportion of GDP contributed by small business was fishing (which had a 78% SME business share contributing about $31.5 billion), followed by rental, hiring and real estate services (which had a 74% SME business share contributing about $64.3 billion) and then construction (which had a 57% SME business share contributing about $74.2 billion). 

By dollar value, the $74.2 billion generated by SMEs in the construction industry had the biggest contribution, followed by the $64.3 billion contributed by SMEs in rental, hiring and real estate services, with the $57.8 billion contributed by SMEs in professional, scientific and technical services being the third highest contribution.

Update on Employment

As we’ve already stated, SMEs control about 42% of the nation’s workforce. But let’s see how this breaks down by industry.

Based on sector

Below is a list of the sectors that Australian small businesses employ the most:;

• Construction: This sector employs a total of about 793,000 people. The number indicates that they have a 66% share of employment of the sector
• Professional, scientific and technical services: This sector employs a total of about 571,000 people. The number indicates that they have a 48% representation of the sector.
• Accommodation and food services: This sector employs a total of about 508,000 people. Indicating a 48% representation of employment in the sector.

Apprentice and trainee employment

As of the end of 2021, small businesses employed 151,728 apprentices and trainees, which represents the highest proportion of trainees and apprentices in Australia (43% of the total). The construction sector contributed to the overwhelming majority of this with 51% of all SME employment of apprentices and trainees.  

Survival

Unfortunately, the survival of small businesses remains a problem. And, as one might expect, the smaller the business, the more likely it is to fail. 

However, when you consider the tumultuous times faced over the last few years, the survival rate of SMEs in 2022 largely held up to that of previous years, even those prior to the COVID-19 outbreak. Though,it has to be said, much of the resulting impacts are still to be felt.

Of the 2,149,640 small businesses operating in 2018 there were 1,384,271 who survived until June 2022. A survival rate of 64.4%. Self-employed businesses had a survival rate over the same period of 58.7% (1,333,723 falling to 782,248). Those with 1 – 4 employees had a 71.6% survival rate (435,696 survived out of 608,125 businesses). And businesses with 5 to 19 employees had the highest survival rate at 80% (166,327 survived out of a total of 207,792 businesses).

Women in the game

The Australian Bureau of statistics labor force provides data on the number of Australian businesses owned or managed by the females. Though the data provided was not exclusive to small business, the result is still approximately correct since small business takes up 97.5% of the total Australian business market. As of 2000, women led about 31% of Australian small businesses. 20 years later (2020), the charts have risen to about 35% (both full-time and part-time).

Challenges

It goes without saying the major challenge faced by businesses in recent times was the COVID-19 outbreak and the resulting economically disastrous lockdowns that followed. SMEs also happen to operate in the industries that were most impacted too. During the outbreak, Australia witnessed its first recession in thirty years and a drastic drop in the total economy’s GDP. What’s more, many industries have since faced a continuous decline in operating conditions with negative outcomes such as late payment times and insolvency. Therefore many businesses have looked for alternative Australian business lending services to deal with these challenges. 

New challenges lie ahead. Australian inflation is at its highest since 1990 and interest rates have risen sharply following historic lows. Consumer spending is down and the economy is slowing. We surveyed over 250 small business owners to understand how they will be impacted by rising inflation and rising interest rates.