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What is the success rate of small businesses in Australia?

by Chloe Baird
Posted: September 06, 2021

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**This is an updated post**

A healthy small business sector is a critical element for a growing economy. A strong small business sector also means more job opportunities. Small businesses really are the backbone of the Australian economy.

Have you got a brilliant idea for your own small business? Always dreamed of being your own boss? Read on to find out what the success rate of small business in Australia is. You’ll also find the top mistakes to avoid when starting up your own business, and our top tips on running a successful small business.

Facts about Australian small businesses you DIDN’T know

What do you know about the statistics of the small business sector in Australia? Here’s some interesting facts we’ve pulled from the ‘Small Business Counts: Small business in the Australian economy’ report by the Australian Small Business and Family Enterprise Ombudsman, July 2019. You can read the full report here.

  • Small business account for almost 98% of businesses in Australia.
  • They employ 2.2 million people.
  • They contribute towards 35% of Australia’s gross domestic profit.
  • They employ 44% of Australia’s workforce.
  • 35% of small business owners are women.
  • Micro and small businesses are more likely than large businesses to innovate and bring new goods and services to the market.
  • Agriculture, forestry and fishing have the largest percentage of small businesses compared to large businesses, and they employ 85% of the industries’ workers.
  • Electricity, gas, water and waste have the lowest percentage of small businesses compared to large businesses.

Cafe Small Business OwnerMake sure you’re supporting your local small businesses! They’re an integral part of the Australian economy.

What percentage of small businesses succeed in Australia?

You may have heard differing reports on the actual numbers of Australian small businesses that do not succeed. Some websites report that as much as 97% of Aussie small business fail. Others claim the complete opposite, saying success rates massively outshine the rates of failure. So, if you’re thinking of starting your own business, how can you be sure of the facts?

We’ve taken these figures from government sources on the rates of success for Australian small businesses so you have a better idea of what the actual statistics are.

The July 2019 report from the Australian Small Business and Family Enterprise Ombudsman states that the larger the business, the higher its survival rate. Small businesses employing 0-19 people have a 59.7% rate of success. Businesses employing 20-199 people have a much higher rate of success, at 75.8%.

This fits in with an earlier report from the Australian Bureau of Statistics, which states that the survival rate for small businesses employing zero people was 56% from 2010-14. This figure increased to 68% for businesses that employed 1-4 people.

Now, the rates of success for Australian small businesses are still lower than those of larger corporations. But these figures aren’t so terrifying that they should completely deter entrepreneurial spirits looking to follow their dreams. After all, running your own small business can be a hugely rewarding experience. So, with this in mind, let’s take a look at some of the reasons why small businesses fail and how you can avoid falling in to the same trap.

Reasons small businesses fail in Australia

A study by the University of Technology Sydney suggested that there were a number of common reasons why small business fail.

  • The largest contributor to small business failure was plain, old, financial mismanagement. ‘Financial mismanagement’ is a fairly large broad term, but it encompasses things like a lack of business experience, cashflow issues, starting out with not enough capital, a lack of budget framework or overuse of credit.
  • Among failed businesses, 12% had inadequate, inaccurate or non-existent business records. This is a direct result of poor management.
  • 11% of small businesses fail due to sales and marketing problems. This covers things like insufficient advertising and poor promotion, inability to cope with seasonal factors and little understanding of the competition.
  • General economic conditions account for 12% of failed businesses; while personal issues (such as ill health or a changed personal situation) account for 6%. 

There are other causes as well that can contribute to the failure of a small business, but generally, it’s a combination of a few different problems.

All of this information may seem a little daunting if you’re thinking about starting up your own business. But armed with this knowledge and what not to do, you’ll be much more prepared to begin running a successful small business of your own!

Successful Farmer

Agriculture makes up a huge part of the Australian small business sector. Do you buy local?


Top 7 tips for setting your own small business up for success

1. Research, research, research

You can never underestimate the importance of doing your own thorough research. Research your target audience. Research the market. Research your competitors. Research current trends. You can never do too much research. Information, data and knowledge are key. 

2. Get organised and write a business plan

Now that you’ve done all your research, it’s time to come up with a solid business plan. This is an integral part of building a successful small business. Remember—mismanagement is a large contributing factor to failed small businesses. But if you’re organised, your business plan will help keep you on track. 

3. Set goals

As part of your business plan, you should set realistic, achievable goals. And while these goals should be doable, make sure that you’re not undervaluing yourself or your business. Set goals you can work towards, even if they require a lot of effort and hard work. Believe in yourself and your business!

4. Record everything

Don’t be like all those other failed businesses and forget (or not bother) to keep records. There’s no excuse for it in the modern age, where technology and software can help manage and automate certain processes.

5. Take a reality check

Starting your own business is incredibly exciting and empowering. But just make sure you don’t get too caught up in the moment. Running your own business takes a lot of blood, sweat and tears. You’ll probably be working long hours, and some days will be tougher than others. But if this is truly something you want, those late nights and occasional missed social events will all be worth it.

5. Remember that technology is your friend

As we mentioned briefly above, there are a lot of different software programs out there that are specifically catered towards small business owners, freelancers and entrepreneurs. You don’t have to stay up all night sending out client invoices or tracking inventory. Cloud-based accounting software like Xero will do that for you.

There’s also digital and social media marketing to consider. Don’t be afraid to explore different social media options when it comes to marketing and advertising. Just make sure you do your research first before you launch your social media marketing strategy.  

6. Work on attracting the best talent

The UTS study stated that 9% of small businesses failed because of staffing issues, which included a lack of supervision. When your business grows and you need to hire staff, make sure you’re hiring the best talent out there. And make sure you reward your staff and treat them well so they’ll stick around.

This also counts when talking about hiring contractors or freelancers—like a Graphic Designer to design your new website, or a Cyber Security Professional to bulk up your network security.

7. Never stop learning

Start networking. Follow business and thought leaders you admire on social media. Find LinkedIn groups you can connect with. Study an online course in your spare time. Attend networking events. Go to trade shows. No matter what you do, always keep an open mind and remember that as a small business owner, there’s always something new to learn.

At OC, we have a number of courses perfect for small business owners to help you make your business a roaring success.

If you’re determined not to let your small business become just another statistic, then these courses will help put you on the road to successful small businesses ownership.

And as OC’s courses are delivered online, you can study whenever and wherever it suits you.

What are you waiting for? Take the next big step towards making your dream a reality and enrol with OC today.  


Chloe Baird

Chloe is an Open Colleges alumnus who now works full time for OC as a Content and Copywriting Specialist. She is passionate about encouraging others to pursue their goals through education.

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