The much quoted ‘one in five businesses fail’ does not hold true…….
entrepreneurship and sustainable small business is alive and well in Australia. A Government Report ‘Business Failure & Change’ gives some enlightening stats on business failure, acknowledging that failing can have its ‘good side’ with the learning experience helping entrepreneurs do things differently another time.
It is a concern though that start up businesses and the smaller end of business are more likely to fail – undoubtedly due to the fact that the Micro/Home-based Business sector is often under resourced and are not properly prepared with skills and procedures needed to ‘survive and thrive’.
Here is an overview of the main points as provided by Navigator News www.micronavigator.com.au 21.3.05.
– The turnover (or exit/entry) of businesses is natural and can have
significant positive effects
– Entry rate into business is around 2/3rds higher than those exiting
– 7.5% of businesses exit each year
– Failure of business is comparatively rare (only 1 in 13 businesses fail)
LENGTH OF TIME IN BUSINESS
– 2/3rd of businesses are still operating after 5 years
– 1/2 of businesses are still operating after 10 years
– 1/3rd of businesses are still operating after 15 years
TYPES OF BUSINESSES EXITING
– Newly formed businesses are more likely to exit than older businesses
– Small businesses are more likely to exit than larger ones
– Direct job losses resulting from businesses exiting account for 9-10% of
total job losses annually
SOLVENT BUSINESS EXITS
– The majority of exits involve solvent businesses closing for reasons
unrelated to their financial position
– Solvent failures account for the majority of exits
INSOLVENT BUSINESS EXITS
– The insolvent businesses is dramatically declining
– In 1999-00 failure was 1/3rd of the rate in 1991-92
– The major reason for this decline is sustained economic growth since the
downturn of the economy in the early 1990s
– Insolvent failures represent 1 in 5 business failures
– Less than 1% of businesses exit due to bankruptcy or liquidation
NB Micro Biz Navigator supplies a procedural manual that helps micro/HBB operators build on existing business skills, increasing image and professionalism. It recognises the systems and processes already in place and highlights skills needed to ‘further excel’ with a star rating. Founder Barbara Gabogrecan heads this successful business skills accreditation program. Providing a voice for the sector, Barbara has sat on a number of government committees including the Micro Business Consultative Group, Business Entry Point Consultative Group, National Small Business Forum and the ATO Task Force. She was a Sunday Herald Sun business columnist and wrote the best-selling guide ‘How to Run a Business from the Kitchen Table’.