According to IBISWorld founder and director Phil Ruthven, the veteran analyst of the Australian business scene, while some businesses inevitably close it isn’t always because they fail – and in fact most founders which shut down their operations do so “without losing their shirt”.
"There are not many that really fail in the sense it's often made out to be.” – Ruthven
I’ve known Phil for many, many years and we’ve banked his business for decades. He is extremely insightful about what is happening in the small-to–medium-sized business sector and his observations here gel completely with what we see as a banker to business: this is a vibrant sector which is constantly reinventing itself.
Australia Bureau of Statistics show around 260,000 businesses a year close down in Australia - a little over 10 per cent of the total 2.2 million businesses in the country.
There're two sorts of failures,” the veteran business analyst and founder of the Ruthven Institute tells bluenotes on video and podcast. “The failure rate of incorporated businesses is something like… one and a quarter per cent a year right now. It's very low.
“If you're an unincorporated business like a sole trader or a partnership the failure rate is exactly the same - about one and a quarter per cent a year.”