Australia’s net rate of business creation grew by 0.4 per cent in 2013, with 9,000 new Australian businesses started last year, according to a global survey of official data by RSM.
According to the Australian Bureau of Statistics, enterprise births and deaths in Australia diverged in 2008-09, producing net company formation of over 74,000 companies. Rates then converged on a downward trend, with new company entries marginally surpassing exits between 2010 and 2012.
Construction was the leading source of business churn in Australia from 2008-2012, with more than 400,000 company births and deaths. Manufacturing registered the lowest aggregate business churn with 83,000 births and deaths. Financial services accounted for the highest level of net business formation (nearly 18,500 organisations) from 2008-2012, a noteworthy achievement given the weak performance of financial start-ups in other OECD countries.
Measured by company size, micro enterprises (one to four employees) exhibited the highest level of new business formation in Australia in 2008-2012. Sole proprietorships (no employees) and small enterprises (20-199 employees) incurred net company losses during the period.
New company survival rates in Australia show considerable differences between industries. One-year survival rates of Australian companies founded in 2008 ranged from 89.3 per cent in agriculture to 81.9 per cent in hospitality. Industry survival rates then diverged. By 2012, only 53.6 per cent of hospitality companies formed in 2008 had survived against 73.1 per cent of health care companies.
To put these figures in international perspective, in 2011-2012, France exhibited a 16.7 per cent growth rate (588,000 new companies), the fastest of the 38 countries RSM reviewed. RSM said a major contributor to this success was France’s “Auto Entrepreneur” programme, launched in 2009 to stimulate company start-ups.
The USA, Japan, Germany and the UK all showed modest growth rates of 0.6 per cent, 0.8 per cent, 1.1 per cent and 1.2 per cent respectively, while Italy declined by 0.3 per cent and Canada dropped by 13.6 per cent, the worst performance all 38 countries.
“Entrepreneurs all over the world are continuing to start businesses, the most active sectors being wholesale and retail trade, and professional services, which have relatively low barriers to entry,” RSM CEO Jean Stephens said. “However, nearly a third of the countries we reviewed exhibited a decline in the number of active enterprises. Creative destruction and the reallocation of capital to more efficient existing and new businesses will have a large part to play in this process, but the global economy remains fragile. The watch phrase for the next year must be no more than cautious optimism as individuals and companies respond carefully to government actions and macro indicators.”
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