Source: Australian Bureau of Statistics
Fall in start-ups:
A key measure of economic growth in any country is the start-up and small business economy. The large fall in start-ups, the rise in exits and the fall in the number of businesses operating should have alarm bells ringing all over the country and warrants an immediate investigation into the causes.
That this data has not been more canvassed is alarming in itself. Other countries are focusing on building an enterprise culture and measuring its success. These countries are convinced new start-ups and innovation are the way to avoid low wages by value adding and the best way to do this is to encourage a culture of entrepreneurship with the creation of innovative products and services and skilled employees.
The once in a century technological disruption has created enormous opportunities for enterprising people however the ABS data suggests to date Australian entrepreneurs have not emerged to take advantage of it.
Small business experts note it has never been easier to start a new venture with a range of enabling technology that provides better, cheaper services than large companies could access even five years ago at significant cost. Marketing is also cheaper with powerful reach via social media.
Small business experts such as ANZ’s managing director corporate and commercial Mark Whelan hazards it is possible as economic conditions after the GFC improve, large companies are hiring, taking some of the pool of would be start-ups.
He adds it is possible the recent history of political uncertainty may have dampened people’s enthusiasm for having a go.
“Or perhaps the mining boom moving into second gear has impacted confidence,” he says. “Or the current policy focus on the retiring generation and ‘getting a job’ instead of creating a job has created an unenterprising mindset. At the moment we don’t know.”
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.
However these entry and exit figures are critical and demand further analysis to understand what is affecting people’s appetite to start a business. There is a clear correlation between start up figures and growing economies. While many of the start-ups will not create any jobs, a significant number will. History shows a small number will create a colossal amount of jobs.