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Are there really 2.3m small businesses in Australia?

James Mitchell
28 August 2021 1 minute readShare
Kate Carnell

It’s a big number. One that gets thrown into every speech or sales pitch concerning small business. But a closer look at the data reveals a very different picture.

When we hear the Prime Minister or Treasurer speak of 2.3 million small businesses in Australia, what they are really talking about is a nation of sole traders: 1,491,973 of them to be precise. 

That’s according to the December 2020 Small Business Count from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). The report uses data from June 2019.

The first page of the document contains a foreword by Kate Carnell which begins: “2020 has been a year like no other in living memory. It has also been a year that most of Australia’s 2.3 million small businesses would prefer to forget.” There’s that 2.3 million figure again.

The report breaks down SMEs into three categories: small (0 to 19 employees), medium (20-199 employees) and large (200+ employees).

As of June 2019, there were 2,314,647 small businesses, 56,835 medium businesses and 4,271 businesses in Australia. Most businesses in Australia (62.8 per cent) don’t employ anyone.

Filtering the data

Sydney-based Beau Loughhead is a small business owner and employer. As the co-founder of data planning agency Tedirex, a business that relies on quality information, he is always quick to question headline figures.

“In our business, we regularly meet misconceptions and exaggerated estimates from clients around the number of businesses in the country,” Mr Loughhead told MyBusiness.

“Often information from ASIC, the ATO, the ABS and others can create confusion and false expectations around the number of businesses that are actually ‘out there’.”

Tedirex clears up the definition of a “business” before it begins counting, limiting the scope to those businesses that have a phone number, employees (or an owner operator) and a business premises (which may be a home office).

“What we find is that the quantity of businesses reduces from millions of records to under 700,000,” he said.

Those entities that don’t fit Tedirex’s definition of a business fall into a series of categories, including holding companies, shelf companies, dormant businesses and investment vehicles.

Using this method, a clearer picture of the number of SMEs in Australia emerges: 666,393 businesses that have a phone number, a premises and employees.

The following table, provided by Tedirex, gives the total business numbers for each industry:

Industry

Total

Agriculture Forestry and Fishing

9,271

Mining

1,551

Manufacturing

36,632

Electricity Gas Water and Waste Services

2,883

Construction

69,572

Wholesale Trade

12,997

Retail Trade

107,610

Accommodation and Food Services

45,283

Transport Postal and Warehousing

16,245

Information Media and Telecommunications

5,031

Financial and Insurance Services

14,055

Rental Hiring and Real Estate Services

18,778

Professional Scientific and Technical Services

74,884

Administrative and Support Services

22,023

Public Administration and Safety

4,553

Education and Training

55,642

Healthcare and Social Assistance

32,483

Arts and Recreation Services

13,880

Other Services

72,212

Non-Classified

50,808

Total

666,393

Are there really 2.3m small businesses in Australia?
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James Mitchell

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