A new report found that survival rates of Australian small businesses – particularly sole proprietors, total partnerships and trusts with sole proprietors – plummetted to an all-time low at 50.4 percent between 2011 and 2015, down from 81. 4 percent four years prior. The new finding raises an alarm on how the growing trend of closures coming from the segment of unincorporated entities can significantly cause harm in the Australian economy in the long run.
The findings, that correlate with data reported by the Australian Bureau of Statistics, were revealed in the latest Small Business Risk Review by CreditorWatch, an Australian credit reporting bureau that reviewed registered payment defaults and trade payment data from over 40,000 members to conduct the quarterly analysis.
Colin Porter, Managing Director of CreditorWatch said “unincorporated entities have often been an overlooked segment of the economy with traditional statistics widely focusing on the number of companies entering administration.”
“These results however, reveal an increasing level of distress in the SME market and it’s important to note that these are grassroot businesses that make up a large portion of operating entities in Australia, which should be taken seriously by businesses.”
“It’s important to know who you are trading with and to double check the entity status is still active,” added Porter.
Other results from the December 2016 quarter analysis reveal payment defaults across Australia remain consistently high (+67 per cent) and Victoria experiencing a sudden increase in court actions (+17 per cent) after continuous drops following Q3 2015. Queensland and South Australia have seen decreases in court actions for all quarters of 2016.
This infographic summarises the key take-outs from the research.
Inside Small Business
