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The Health of the Queensland Business Community (The Good and the Bad)

The Australian Bureau of Statistics this week released their annual 'Counts of Australian Businesses', which does precisely that, it counts the number businesses actively trading as at June 30, 2012, 2013, 2014, 2015, 2016 and 2017.  It also provides rates of business entries and exits as well as counts of the survival of businesses.  It represents a very good snapshot in gauging the ‘overall’ health of the Queensland business community and is very comprehensive as it is sourced directly from the Australian Business Register (ABR) comprised of businesses obtaining an Australian Business Number (ABN).

The news for Queensland is excellent with an additional 12,031 businesses operating in 2016-17 compared to a year earlier.  Business numbers in the Sunshine State have consistently been on the rise since 2013-14.  A growth rate of 2.8 per cent in 2016-17 is the highest of the past five years and places Queensland in third position behind only NSW and Victoria.

Of the 437,628 businesses operating in 2016-17, 97.5 per cent or 425,597 are defined as being small business employing less than 20 employees.  Growth in overall numbers has consistently come from this demographic but the percentage proportion of small businesses has remained relatively steady over the past five years.  Medium sized businesses make up 2.4 per cent and large businesses just 0.1 per cent. 

Drilling down into the data there are some very good signs for Queensland.  The number of new entries has consistently been rising over the past five years up from 49,569 in 2012-13 to 64,097 in 2016-17.  The entry rate as a percentage of total businesses has over that period risen from 11.5 per cent to an encouraging 15.1 per cent.

Conversely the number of businesses closing or exiting has fallen from 63,747 in 2012-13 to 52,480 in 2016-17.  The exit rate over this period has fallen from 14.8 per cent to a much better 12.3 per cent. 

Pleasingly both the Queensland entry and exit rates are now starting to come back into the pack compared with other States.  Once upon a time we were the worst performing State and this is no longer the case with Western Australia in that dubious position.

For some excellent analysis on where the growth is coming from in terms of industry sector and geographical location please refer to Gene Tunny’s Queensland Economy Watch post here.

The caveat to this article is of course that in discussing 'overall' numbers, just how tough it is for individual businesses is masked.  Indeed our business survival rate continues to be the lowest in the Country.  Of those Queensland businesses operating in 2013-14,  only 62.5 per cent continue to be in existence in 2016-17, the lowest of all States.  Furthermore of those ‘new’ businesses that set up in 2013-14 only 54.3 per cent continued to operate in 2016-17, again the lowest survival rate of all States.

In summary the recent trend is a very good one for Queensland but decision makers must continue to do everything they can to maximise the likelihood that those persons who make the bold decision to 'hang up their own shingle' are successful in doing so.  

Definitions:

A business entry is defined as a business which is actively trading at 30 June in the reference year but was not actively trading at 30 June the previous year. 
This may occur when 

  • a business registers for an ABN with a GST role
  • a GST role is assigned to an existing ABN that did not previously have this role 
  • a business recommences remitting BAS data after a period where they had become a Long Term Non Remitter
  • a business recommenced its GST role after it had been cancelled
  • a business unit moves between the profiled and the non-profiled populations. 

A business exit is defined as a business which was actively trading at 30 June in the previous year, but was not actively trading as at 30 June in the reference year. It is important to note that a business exit does not necessarily equate to a business failure. A business exit may occur when

  • a business cancels its ABN or GST role
  • when the business ceases to remit GST for at least five consecutive quarters (or 3 consecutive years for annual remitters)
  • a business moves out of or in to the profiled population
  • a business is sold and the ABN changes
  • a business is taken over or involved in a merger

A surviving business is defined as a business that is active at 30 June of the current year and was also active at 30 June of the previous year. 
In this release, two types of survivors are recorded. 

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