Big fall in startups a wake up call

Australian start-up numbers have fallen an alarming 30 per cent over the last three years, crunching the number of operating firms, according to new figures released by the Australian Bureau of Statistics. The alarming fall raises serious questions about whether there is a lack of an enterprise culture in Australia, a threat to long term employment prospects. 

Start-up numbers have fallen from 342,753 in 2009-2010 to 239,229 in 2012-2013, according to the measure of exits and entries of trading businesses. In the 2012-13 year the entry rate of businesses decreased by 2.3 percentage points (-48,292) from 13.5 per cent to 11.2 per cent for the year before. This followed a decrease of 0.4 percentage points (6,689) in the 2011-12 year. 

The exit rate is also up: by 1.0 percentage point from 13.1 per cent to 14.1 per cent or 22,190 for the 2012–13 financial year. This follows a decrease of 7,795 or 0.4 percentage points for the 2011–12 financial year. 

The disturbing bottom line is the entry rate (11.2 per cent) of businesses was lower than the exit rate (14.1 per cent) for the financial year. 

This means that for the first time in four years, there was a decrease in operating firms. Just 2,079,666 were in operation, a decrease of 61,614 (-2.9 per cent) from the previous year.

Importantly, ANZ BlueNotes says the statistics available on this critical part of the economy are scarce. Australia also pulled out of the highly regarded Global Entrepreneurship Monitor research project that tracks start-up activity across the world.

See more at ANZ's BlueNotes

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