Number of Australian businesses on the rise


13th September, 2021

The number of Australian businesses continues to rise

Despite the pandemic gloom, the entrepreneurial dream is alive and well according to recent numbers from the ABS, writes Nina Hendy.

Australia has proven to be a nation of entrepreneurs in the face of the pandemic, picking themselves up and building new businesses in the past year.

New business registrations are on the rise. According to the Bureau of Statistics, the number of small businesses jumped by 15.2 percent over the past financial year. In the June quarter alone, the number of businesses rose by 1.4 percent, with 34,000 new businesses launching into the market.

In early 2020, the Federal Government temporarily made changes to insolvent trading laws. This involved abolishing the office of directors, allowing their companies to trade while insolvent. This law expired at the start of this year, meaning that once again, it’s an offence for a company to trade while insolvent.

There has since been additional support offered to businesses impacted by lockdowns. It all seems to be adding up to an environment that’s more conducive to starting a business, resulting in Australia’s total current population of more than 2.4 million businesses.

Business numbers are growing, but is the economy?

There’s been a general increase in company registrations taking place over the past two decades.

Now, while better access to information about launching a business and digital technology to streamline elements of business ownership is one reason, it’s also likely that the current gloomy economic climate has spurred many locked down individuals into action.

It was feared that the pandemic would lead to mass business failures. But the fact is that the number of businesses has actually grown.

According to the Australian Securities and Investments Commission, around 8,000 businesses wind up in our nation each year, but last financial year, that number fell to just 4,200.

At June 30, 2021, there were 2,402,254 actively trading businesses operating in the nation’s economy.

The ABS also records that, over the course of FY20/21, there was a:

  • 3.8%, or 87,806 increase in the number of businesses trading
  • 15.8% entry rate, with 365,480 entries
  • 12% exit rate, with 277,674 exits

According to Deloitte Access Economics, the National Accounts, highlight the rollercoaster that has been the pandemic to date. The economy grew 0.7 percent through the June quarter, to now be 1.6 percent larger than pre-pandemic levels.

Deloitte Access Economics partner, Stephen Smith said the data suggests that the economy could shrink in the September quarter by more than four percent.

“The June quarter was the eye of the storm, with just seven percent of the population locked down on any given day across the period.

“Since then, that share has averaged close to 45 percent, and we’re seeing the impacts of that flow through to businesses and jobs,” Smith said.

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Deloitte senior economist Harry Murphy Cruise said there is some good news.

“Green shoots are appearing for businesses, with actual planned investment rising. But there’s no guarantee this will continue, with lockdowns stifling investment.

“And so encouraging businesses to keep spending will be vital over the next 12 months.”

However, attention needs to turn to how the nation recovers from the latest lockdowns, he said.

“We need to think about how we drive recovery from lockdown. While our bounce back last year was driven by an injection of dollars, this recovery will be driven by injections of vaccines.

“And with supply finally catching up to demand, the pace of vaccinations is ramping up quickly.

“That should see us reaching 80 percent of the 16+ population vaccinated in the coming months,” he said.