Despite making up over 97% of all Australian businesses, small enterprises are the roaring engine of the national economy, employing nearly half of the private sector and creating seven out of every ten new jobs.
Key Takeaways
- As at June 2023, there were 2,663,958 actively trading businesses in Australia with 97.5% being small businesses (0-19 employees)
- Small businesses account for 97.2% of all employer businesses in Australia as of June 2022
- In 2021-22, there were 1,054,000 small incorporated businesses in Australia
- Small businesses employ 44% of the private sector workforce or 5.1 million people in 2022
- 68% of all employed Australians work for small businesses as of 2023
- Micro businesses employ 3.9 million people representing 35% of workforce in 2022
- Small businesses contribute $420 billion to GDP or 35% in 2022
- Total turnover of small businesses was $1.2 trillion in 2021-22
- Average annual turnover for small businesses is $450,000 in 2022
- 28% of small businesses survival rate beyond 10 years as of 2022
- 60% of small businesses survive first 3 years post-2019 cohort
- Entries of new small businesses 350,000 in 2022-23
- 55% inflation challenges
- Labour shortages impact 62% small businesses in 2023
- Regulatory burden costs $25,000 pa average per small business 2023
Small businesses overwhelmingly form Australia's economic backbone, employing millions and generating significant economic activity.
Challenges and Government Support
- 55% inflation challenges
- Labour shortages impact 62% small businesses in 2023
- Regulatory burden costs $25,000 pa average per small business 2023
- 48% cite cash flow as top challenge in 2023 survey
- Cyber threats affected 29% small businesses in 2023
- Skills gaps reported by 57% small businesses 2023
- Government grants accessed by 22% small businesses $5.2 billion total 2022-23
- Instant asset write-off utilised by 52% saving $10 billion 2023
- Energy costs crisis hit 65% small businesses 2023
- Supply chain disruptions affected 41% in 2023
- Mental health issues 39% small business owners 2023 survey
- Compliance costs 12% of revenue for smallest businesses 2022
- JobMaker Hiring Credit supported 150,000 small businesses 2021-22
- R&D tax incentive claimed by 12,000 small businesses $3 billion 2022
- 70% small businesses fear recession impact 2023
- Access to finance denied 28% small business loan applications 2023
- Training subsidies reached 40% small businesses via Skills Checkpoint 2023
- Bushfire recovery aid to 15,000 small businesses $500 million 2020-23
- Flood relief grants 25,000 small businesses $1 billion 2022-23
- Export Market Development Grants 3,500 small businesses $150 million 2023
- Digital Boost program trained 100,000 small business owners 2023
- Fair Work compliance issues for 35% small businesses 2023
- Climate change risks identified by 52% small businesses 2023
Challenges and Government Support Interpretation
In the face of a relentless gauntlet of inflation, labour shortages, and red tape, Australia's small businesses are staggering forward with remarkable tenacity, a modest safety net of government support, and a quiet but growing dread of the next economic punch to the gut.
Employment Impact
- Small businesses employ 44% of the private sector workforce or 5.1 million people in 2022
- 68% of all employed Australians work for small businesses as of 2023
- Micro businesses employ 3.9 million people representing 35% of workforce in 2022
- Small businesses created 70% of new jobs in Australia between 2018-2022
- Average employment per small business is 2.1 employees in 2023
- Construction small businesses employ 12% of total small business workforce in 2022
- Health care small businesses employ 450,000 people (8%) in 2022
- Retail small businesses workforce totals 650,000 (11%) in 2022
- Professional services small businesses employ 1.1 million (19%) in 2022
- 25% of small business employees are part-time as of 2023 survey
- Female employees in small businesses comprise 47% of workforce in 2022
- Youth employment (15-24) in small businesses is 28% of their workforce 2022
- Regional small businesses employ 2.2 million people (43% of small biz workforce) 2022
- Small businesses in NSW employ 1.8 million (35%) nationally in 2022
- Victorian small businesses workforce is 1.3 million (25%) in 2022
- Queensland small business employment totals 900,000 (17%) in 2022
- Small businesses added 250,000 jobs post-COVID by 2023
- Casual employment in small businesses is 32% of their workforce 2023
- Manufacturing small businesses employ 300,000 (5.5%) in 2022
- Accommodation small businesses workforce 400,000 (7%) in 2022
- Transport small businesses employ 350,000 (6%) in 2022
- Education small businesses workforce 250,000 (4.5%) 2022
- Arts and recreation small businesses employ 150,000 (2.7%) 2022
- Indigenous employment in small businesses is 4% of workforce 2021
- Small business apprenticeships account for 55% of total apprentices 2023
- Wage growth in small businesses averaged 3.5% in 2023
- Turnover per small business employee averages $180,000 annually 2022
- Small businesses with 5-19 employees employ 1.2 million (22% workforce) 2022
Employment Impact Interpretation
While often seen as the plucky underdogs of the economy, Australia's small businesses are, in fact, the country's backbone, quietly employing nearly half the private sector, creating most new jobs, and proving that big things really do come in packages averaging 2.1 employees.
Financial Performance
- Small businesses contribute $420 billion to GDP or 35% in 2022
- Total turnover of small businesses was $1.2 trillion in 2021-22
- Average annual turnover for small businesses is $450,000 in 2022
- 45% of small businesses reported profit margins over 10% in 2023 survey
- Small business tax revenue to government $80 billion in 2021-22
- Debt levels average $250,000 per small business in 2022
- Cash flow issues affect 42% of small businesses monthly 2023
- Construction small businesses average turnover $1.2 million 2021-22
- Retail small businesses average profit $120,000 annually 2022
- 35% of small businesses have annual revenue under $100,000 in 2022
- Investment in small businesses totalled $150 billion in loans 2023
- Profitability rate for small businesses 62% in 2023 survey
- Average small business superannuation contributions $25,000 pa 2022
- Export revenue from small businesses $45 billion in 2022
- Cost of living pressures increased expenses 22% for small businesses 2023
- Digital adoption boosted revenue 15% for 40% of small businesses 2023
- Insurance costs average $15,000 pa for small businesses 2023
- Energy costs rose 28% impacting 55% small businesses profitability 2023
- Small business R&D expenditure $12 billion in 2021-22
- Bankruptcy filings for small businesses 8,500 in 2022-23
- Average small business asset value $500,000 in 2022
- 52% small businesses use instant asset write-off averaging $20,000 claim 2023
- Wage costs 32% of total expenses for small businesses 2023
- Marketing spend averages 5% of revenue for small businesses 2022
Financial Performance Interpretation
Small businesses are Australia's economic engine, remarkably humming along at a $1.2 trillion turnover and contributing a third of our GDP, yet they're simultaneously navigating a precarious tightrope where nearly half face monthly cash flow woes while balancing an average debt of a quarter-million dollars and soaring costs.
Prevalence and Demographics
- As at June 2023, there were 2,663,958 actively trading businesses in Australia with 97.5% being small businesses (0-19 employees)
- Small businesses account for 97.2% of all employer businesses in Australia as of June 2022
- In 2021-22, there were 1,054,000 small incorporated businesses in Australia
- 70% of small businesses in Australia are sole traders
- New South Wales hosts 28% of Australia's small businesses with 746,000 as of 2023
- Victoria has 25% of small businesses totaling 665,000 in June 2023
- Construction sector has 18.6% of small businesses (495,000) in 2023
- Professional, scientific and technical services hold 14.3% of small businesses (381,000) as of 2023
- Rental, hiring and real estate services comprise 11.1% or 296,000 small businesses in 2023
- 38% of small businesses are less than 4 years old as of 2022
- Micro businesses (0-4 employees) make up 94.8% of all small businesses in 2023
- Queensland has 306,000 small businesses representing 11.5% nationally in 2023
- Western Australia small businesses number 238,000 or 8.9% in 2023
- South Australia has 126,000 small businesses (4.7%) in 2023
- Tasmania small businesses total 32,000 (1.2%) as of 2023
- Northern Territory has 15,000 small businesses (0.6%) in 2023
- ACT small businesses number 22,000 (0.8%) in 2023
- 2.5 million non-employing small businesses exist in Australia in 2023
- Female-owned small businesses increased by 12% from 2018 to 2022
- Indigenous-owned small businesses number 90,000 as of 2021
- 65% of small businesses are in metropolitan areas in 2022
- Retail trade sector has 210,000 small businesses (7.9%) in 2023
- Administrative services small businesses total 173,000 (6.5%) in 2023
- Health care small businesses number 142,000 (5.3%) in 2023
- Accommodation and food services have 126,000 small businesses (4.7%) in 2023
- Average age of small businesses is 9.5 years as of 2022
- 15% of small businesses are family-owned according to 2021 survey
- Online-only small businesses grew to 12% of total in 2023
- 28% of small businesses are in professional services in NSW 2023
- Exporting small businesses represent 6% nationally in 2022
Prevalence and Demographics Interpretation
Australia's economy is a bustling hive of 2.5 million small businesses, where the heroic solo operator is king, construction is the most popular trade, and the spirit of a fresh start is alive with over a third of them younger than a four-year-old with a business plan.
Survival and Growth
- 28% of small businesses survival rate beyond 10 years as of 2022
- 60% of small businesses survive first 3 years post-2019 cohort
- Entries of new small businesses 350,000 in 2022-23
- Exits of small businesses totalled 280,000 in 2022-23
- Growth rate of small businesses 4.2% annually 2018-2022 average
- High-growth small businesses number 15,000 (0.6%) in 2022
- 22% of small businesses expanded workforce in 2023
- Digital transformation adopted by 65% small businesses boosting growth 12% 2023
- Exporting small businesses grew 8% from 2021-2023
- Franchised small businesses survival 85% after 3 years vs 60% independent 2022
- Regional small business growth 5.1% vs metro 3.8% 2022
- Construction small business growth 6% in entries 2023
- Tech sector small businesses growth 12% employment 2022
- Pandemic resilient small businesses 75% recovered by 2023
- Succession planning in place for 18% small businesses 2023 survey
- Innovation active small businesses 32% filed patents 2022
- E-commerce growth 25% revenue for small retailers 2023
- Female-led small businesses growth 7% faster than male-led 2022
- Green initiatives adopted by 40% small businesses for growth 2023
- M&A activity in small businesses up 15% in 2023
- Survival rate for startups 48% after 5 years 2017 cohort
- Scale-up small businesses 5,000 grew >20% turnover 2022
- Overseas expansion by 4% small businesses in 2023
- Automation investment grew output 18% for 35% small businesses 2023
Survival and Growth Interpretation
The landscape for Australian small businesses is a thrilling yet brutal marathon where nearly a third of starters make it to the ten-year mark, proving that success is less about a flashy start and more about relentless adaptation, digital savvy, and sometimes, the sheer grit to outlast 280,000 annual exits.
Sources & References
- Reference 1ABSabs.gov.auVisit source
- Reference 2ATOato.gov.auVisit source
- Reference 3BUSINESSbusiness.gov.auVisit source
- Reference 4ASBFEOasbfeo.gov.auVisit source
- Reference 5REGIONALAUSTRALIAregionalaustralia.org.auVisit source
- Reference 6COSBOAcosboa.org.auVisit source
- Reference 7AIGROUPaigroup.com.auVisit source
- Reference 8NSWnsw.gov.auVisit source
- Reference 9AUSTRADEaustrade.gov.auVisit source
- Reference 10RBArba.gov.auVisit source
- Reference 11INSURANCECOUNCILinsurancecouncil.com.auVisit source
- Reference 12INDUSTRYindustry.gov.auVisit source
- Reference 13AFSAafsa.gov.auVisit source
- Reference 14FRANCHISEBUSINESSfranchisebusiness.com.auVisit source
- Reference 15IPAUSTRALIAipaustralia.gov.auVisit source
- Reference 16CYBERcyber.gov.auVisit source
- Reference 17BLACKDOGINSTITUTEblackdoginstitute.org.auVisit source
- Reference 18FAIRWORKfairwork.gov.auVisit source
- Reference 19CLIMATECHANGEAUTHORITYclimatechangeauthority.gov.auVisit source