New data released by credit bureau illion, as part of its Commercial Risk Barometer in Australia, has indicated a possible light at the end of the economic tunnel as business failure risk figures have improved slightly. However, thus far, it is the larger businesses that are experiencing relief; younger and smaller businesses continue to struggle.
illion’s Commercial Risk Barometer shows that the general improvement in business failure risk has been mainly led by larger and mature businesses, with these organisations improving at 10 times the rate of small businesses in 2024’s second quarter.
While all businesses’ failure risk dropped in the three months to June, that of small businesses improved by a meagre one percent. In comparison, businesses with more than 100 employees saw a ten percent improvement.
“While this is positive news for commerce generally, the small re-trace (one per cent in the six months to June 2024) still has a long way to go, given the significant deterioration since the start of 2023 of 7 per cent. This means that business risk is only back to where it was in October 2023,” said Barrett Hasseldine, illion’s Head of Modelling.
“Australian business owners are looking for positive signals, and while this is one, we will still need to be cautious with our forecasts. While the trend may ultimately point to a long-term improvement in business risk, our optimism is slightly muted when considering the outlook for certain industries and business segments, as the risk trend is not uniform,” he added.
For instance, according to Barret, the risk of young businesses deteriorated by seven percent in the last quarter; only businesses operating for more than 20 years saw their risk improve below the level seen 18 months ago. Startups and small businesses continue to suffer the most under the sluggish economic conditions.
