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 Department of Industry, Innovation, Science, Research and Tertiary Education. It is available on the department's 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: 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@.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

Definitions

vii

Introduction

1

Chapter 1: Early Stage Start-Ups: Evidence from the

Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE)

4

Numbers and types of start-up attempts

4

Survival, employment and growth

6

Characteristics of new venture founders

9

Exports and other international activities

11

Business confidence and the global financial crisis

12

Finance

13

Innovation and e-commerce

15

Chapter 2: Small businesses in the economy

20

Industry value added--private sector

20

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

23

Small business exports

25

Chapter 3: Number of small businesses in Australia

28

Business numbers by size

28

Small business numbers by industry sector

29

Chapter 4: Selected business characteristics

31

Business structure and arrangements

31

Business markets and competition

33

Business finance

34

Skills

34

Business performance

35

Chapter 5: Number of small businesses by region

36

Business numbers by state

36

Chapter 6: Business entries and exits

40

Small business entries and exits

40

"Survival" rates

42

Chapter 7: Independent contractors and other business operators

44

Demographics

44

Work pattern

45

Industry and occupation of main job

47

AUSTRALIAN SMALL BUSINESS KEY STATISTICS AND ANALYSIS n Contents

iii

Chapter 8: Business conditions and confidence

49

Small and medium business conditions

49

Small and medium business confidence

52

Employment

53

Profits

54

Chapter 9: Small business bank lending

56

Trends in small business access to finance

57

Trends in interest rates on business loans

61

Chapter 10: Innovation, collaboration, research and development

63

Innovative activity

63

Barriers to innovation

64

Business performance where collaboration agreements are in place

64

Research & development

66

Chapter 11: e-commerce

68

Business use of the internet

68

SME investment in e-commerce

70

Social media

71

Appendix A--Statistical definitions and explanatory notes

72

Appendix B--Actively trading small businesses by region

76

Actively trading small businesses by electoral division

76

Actively trading small businesses by local government area

78

Appendix C--Text descriptions of figures

86

Bibliography

98

FIGURES

Figure 1: Cumulative firm outcomes after 36 months

7

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

after 36 months

8

Figure 3: Employment in nascent and young firms

9

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

10

Figure 5: Nascent and young firms' participation in imports and exports over time 11

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

14

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

16

Figure 8: Actual/expected share of sales generated online

17

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

2010?11

20

Figure 10: Industry contribution to small business private sector industry

value added, 2010?11

21

iv

AUSTRALIAN SMALL BUSINESS KEY STATISTICS AND ANALYSIS n Contents

Figure 11: Share of private sector employment by business size, at end June 2011 23

Figure 12: Share of small business employment by industry, at end June 2011

23

Figure 13: Number of goods exporters by business size, 2006?07 to 2010?11

25

Figure 14: Share and annual change in the number of small business goods

exporters by industry, 2010?11

26

Figure 15: Share and annual change in the value of small business goods

exports by industry, 2010?11

27

Figure 16: Distribution of total business numbers by business size, June 2011

28

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

by size, June 2011

29

Figure 18: Small business numbers by state, 2010?11

37

Figure 19: Breakdown of small businesses within each industry by state, 2010?11 38

Figure 20: Small business survival rates by state/territory, between June 2007 to

June 2011

43

Figure 21: Survival rates by industry and business size, between June 2007 to

June 2011

43

Figure 22: Gender distribution of independent contractors and other business

operators, November 2011

44

Figure 23: Business conditions, five years to the June quarter 2012

51

Figure 24: Business confidence, five years to the June quarter 2012

52

Figure 25: Business employment conditions, five years to the June quarter 2012

54

Figure 26: Business profits, five years to the June quarter 2012

55

Figure 27: Selected financial aggregates

58

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

59

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

60

Figure 30: Value of outstanding bank loans that were less than $2 million, by industry 61

Figure 31: Spread between business lending rates

61

Figure 32: RBA small business indicator rate vs. the RBA cash rate target

62

Figure 33: Barriers to innovation, 2010?11

64

Figure 34: Business expenditure on research and development by business size

(current prices)

66

Figure 35: Annual growth in business expenditure on research and development by

business size, 2007?08 to 2010?11

67

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

2009?10 and 2010?11

67

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

69

Figure 38: When will investment be recovered?

70

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