Report finds business start-ups on the rise

In signs that trading confidence may be strengthening, the number of business start-ups in Australia has jumped by 23 per cent compared the previous quarter and by eight per cent from a year earlier.

In signs that trading confidence may be strengthening, the number of business start-ups in Australia has jumped by 23 per cent compared the previous quarter and by eight per cent from a year earlier.

On the back of record low borrowing costs and expectations of stronger growth, a newly released review by Dun & Bradstreet of new and failed businesses has found that 62,160 enterprises commenced operations during the second quarter of this year, up from 50,539 in the three months previous and 57,504 in 2013.

With more businesses being created, there has also been an increase in failed businesses, which D&B defined as those that seek legal relief from creditors or cease operations without paying their creditors in full. Year-on-year business failures have increased by 9.6 per cent from 9,056 to 9,927, although the number has declined by 11 per cent from the previous quarter.

The D&B report concludes that the pick-up in new businesses during Q2 2014 reflects a current mood of positivity about the trading environment, with the report also finding that 64 per cent of firms are more optimistic about growth this year compared to 2013.

“Confidence is critical for entrepreneurship and these numbers on business start-ups indicate there is a building mood of positivity about opportunities in the economy,” Gareth Jones, CEO of Dun & Bradstreet–Australia and New Zealand, said. “Significantly, despite more businesses entering the market during the last quarter, D&B has measured a quarterly decline in the number of failures – although there has been an increase on the 2013 level.” 

While the greatest number of new businesses commenced in NSW, the ACT and Victoria experienced the largest percentage increases from last year. In the ACT, during Q2 2014 there were 1,097 new businesses launched (a 23 per cent jump), while in Victoria an additional 19,247 enterprises entered the market (a 15 per cent increase compared to 2013).

At the other end of the scale, in South Australia, where employment and economic growth has been weaker than most other states, the second quarter of the year has seen 8.5 per cent fewer businesses created than a year earlier.

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