The following statistics are provided by our business partner, the Department of State and Regional Development. For more information about small business in NSW visit www.smallbusiness.nsw.gov.au
Small Business - Big Impact 2004
Definition of a Small Business
Small Business Categories
Size of the NSW Small Business Sector
NSW Small Business by Location
NSW Small Business by Industry
Characteristics of NSW Small Business Operators
Small Business Growth in NSW
Significant Developments in Small Business in NSW
Small Business Closures
Sources of Data About Small Business
Small Business - Big Impact 2004
This brochure gives a broad portrait of small business in NSW. It includes the latest small business statistics and information on the number of small businesses in NSW. A PDF of the brochure can be downloaded here
Back to Top
Definition of a Small Business
Small businesses are businesses in the private sector which employ less than 20 people. Nearly half do not employ other people. They are in all industries, but agricultural businesses are not normally included in small business statistics. Small businesses are generally considered to have the following characteristics:
- they are independently owned and operated;
- they are closely controlled by owners/managers;
- decision-making is principally done by the owners/managers;
- the owners/managers contribute most if not all of the operating capital.
(Source: ABS: Small Business in Australia 2001 [Catalogue no. 1321.0])
Back to Top
Small Business Categories
The Australian Bureau of Statistics (ABS) uses the following classifications:
- Small businesses. These are businesses which have less than 20 employees. They include:
- non-employing businesses, in which one person or two or more partners work, but there are no employees. People who work in these businesses are referred to as "own account workers".
- micro businesses, which employ less than five people, including non-employing businesses.
- Medium businesses. These are businesses which have between 20 and 199 employees.
- Small and medium enterprises (SMEs). These are all businesses which have less than 200 employees.
Back to Top
Size of the NSW Small Business Sector
The most recent data available from the Australian Bureau of Statistics providing reliable information on the number and size of businesses in Australia is ABS Catalogue No. 1321.0 for the period 2000-2001.
In 2000-01, there were 372,500 small businesses in NSW. This was 33.2% of all the small businesses in Australia and was more than in any other State.
Small businesses made up 97% of all the businesses in NSW. 183,500 NSW small businesses, or 49.3%, were non-employing, and 84.6% of small firms were micro businesses.
In 2000-01, 1,083,400 people worked in NSW small businesses. This was 33.2% of all the people working in small businesses in Australia and again was more than in any other State.
47.9% of people who work in NSW businesses are in small businesses. 219,600, or 20.3%, of people who worked in NSW small businesses were own account workers (which includes people in non-employing partnerships), 91,000, or 8.4%, were employers and 772,900, or 71.3%, were employees.
(Source: ABS: Small Business in Australia 2001 [Catalogue No. 1321.0])
Back to Top
NSW Small Business by Location
66% of NSW small businesses are in Sydney and the Central Coast (Gosford-Wyong) region, and the remaining 34% are in the other regions of NSW.
Of those in Sydney, 27% are close to the centre of the city (in the Inner Sydney, Inner Western Sydney, Eastern Suburbs and Lower Northern Sydney area) and 30% are in the rest of Western Sydney.
Small businesses in regional NSW are spread widely throughout the State. In 2000, there were over 120,000 of these businesses, an increase of around 34,000 in the five years from 1995, and they provide direct employment for approximately 300,000 people.
20% are in the Hunter-Newcastle region, 20% in the Richmond-Tweed and Mid North Coast area, 19% in the Illawarra-Wollongong region and 18% in the Northern, Far West, North Western and Central West of the State.
Back to Top
NSW Small Business by Industry
Small businesses are prevalent in all industries in NSW. The table below shows the number of small businesses in various industry sectors in 2000-01.
Industry Sector Number of Businesses
Construction 80,500
Property and business services 74,400
Retail trade 51,600
Manufacturing 29,000
Health and community services 28,100
Personal and other services 23,100
Transport and storage 21,800
Wholesale trade 17,700
Cultural and recreational services 12,200
Accommodation, cafes and restaurants 11,800
Communication services 7,700
Education 7,700
Finance and insurance 6,300
Other 600
In 2000-01, the sectors which had the highest employment in small business were property and business services (213,600 people, or 19.7%, of all small business employment), retail trade (185,900, or 17.2%) and construction (179,100, or 16.5%).
In the construction sector 84.3% of all employment was in small businesses. In personal and other services it was 68.3% and in property and business services 54.3%.
Click here for a graph showing the number of people employed in NSW small businesses in various industry sectors in 2000-01.
(Source: ABS: Small Business in Australia 2001 [Catalogue No. 1321.0])
Back to Top
Characteristics of NSW Small Business Operators
In June 2004 there were 411,100 male and 168,000 female small business operators (ie sole owners, partners or working directors of small businesses) in NSW.
This meant that 71% of operators were men and 29% women. 9.9% of NSW small business operators in June 2004 were aged under 30, 59.9% were between 30 and 50 and 30.2% were older than 50.
In June 2001, small business operators in NSW had the following educational qualifications:
• 22.1% had achieved an Advanced Diploma or above;
• 38.6% had gained a post-school Certificate;
• 39.3% had school-level qualifications only.
31% of NSW small business operators in June 2004 were born overseas. Over the previous 12 months the number of overseas-born operators decreased by 2.3%.
In June 2004, 30.1% of small business operators worked less than 35 hours per week in the business. The remaining 69.9% of operators running their business on a full-time basis represents 45% of operators working 35 to 50 hours per week, 20.6% working between 51 and 75 hours per week and 4.3% working over 75 hours per week.
(Source: ABS: Characteristics of Small Business June 2004 [Catalogue No. 8127.0])
Back to Top
Small Business Growth in NSW
The number of small businesses in NSW grew by 65,500, or 21.3%, between 1994-95 and 2000-01. This was 3% more than in the rest of Australia.
Moreover, 99.4% of the growth in the number of businesses of all sizes in NSW was in small business. During the same period, the number of people working in small businesses in NSW grew by 149,600, or 16.0%.
Small businesses provided 70.4% of the increase in employment in all NSW businesses between 1994-95 and 2000-01, whereas for the whole of Australia the figure was only 45.3%.
The growth in the number of small businesses in NSW in the period from 1994-95 to 2000-01 was greatest in the following industry sectors: construction (which had a 41% increase in the number of small businesses); health and community services (33.8%); transport and storage (31.3%); education (28.3%); and property and business services (28.1%).
Communication services was a new category in 2000-01 with 7,700 small firms. The increase in employment by NSW small businesses in the same period was highest in construction (which saw a 41.4% growth in employment), property and business services (29.3%), health and community services (26.4%), transport and storage (25.8%), and personal and other services (22.1%).
In 2000-01, there were 10,900 people working in the new category of communication services.
(Source: ABS: Small Business in Australia 2001 [Catalogue No. 1321.0])
Back to Top
Significant Developments in Small Business in NSW
Home-based Business
Home-based businesses are a strongly growing group within the small business sector. The ABS' definition of a home-based business encompasses all those businesses where the operator's home is also the business address.
Business owners working in their business from a home office, such as graphic designers, as well as those who deliver their service at the customer's premises, such as builders, are captured by this definition.
In June 2004, there were 282,400 businesses in the State which operated from or at a home address, representing a significant increase of 8.8% from the previous year. This involved a total of 343,800 operators.
Just over 26% of the State's home-based businesses are run by women and 57.8% of women business operators work less than 20 hours per week in their business. This result reflects a trend towards self-employment as an option for financial independence in dual-income households, or in situations where a family is being cared for by the home-based parent.
Small Business
The widespread use by small firms of computers and the Internet continues. In June 2004, 70.7% of NSW small businesses used a computer and 61.6% had access to the Internet. Computer use is more prevalent amongst employing business. 83% of businesses with employees made use of computers, in contrast to 60.3% of non-employing businesses.
In June 2004, the most common uses of the Internet by NSW small businesses were for communication by email (54% of businesses connected to the Internet) and for research (51.1%).
Although only a minority of small businesses in NSW use the Internet for e-commerce, an increasing proportion are doing so. For example, in June 2004 32.7% of small firms were making or receiving payments on the Internet, compared to 17.9% in June 2001 or just 9.8% in November 1999.
(Source: ABS: Characteristics of Small Business June 2004 [Catalogue No. 8127.0])
Exporting
In the year 2002-03, NSW exported merchandise to the value of $20.2 billion. This was 17% of Australia's total merchandise exports (including re-exports) for the year.
In 2002-03, NSW exported services worth $14.5 billion, which was 44.5% of Australia's total services exports in that year. In the five years to 2002-03, Australian goods exports have grown in dollar terms by 3.1% and services exports by 6.4%.
Moreover, in recent times, Australian exports, including those from NSW, have become highly diversified according to both country of destination and industry sector. For example, in 2002-03, 41.8% of exports from NSW were services, 17% were manufactured goods, 28% were primary products (agricultural and mining products) and 8% were other goods.
While export revenue is dominated by large businesses, most exporters, around 80%, are small firms and they are expected to be the main source of future growth in exporter numbers. A Federal Government report released in April 2002 by the Australian Trade Commission has found that: "micro and small businesses are now starting to enter the world market more aggressively ... (and) are growing faster in numbers and their overall revenue contribution is increasing."
The Austrade report forecasts that, in the future, new exporters will be small in size, knowledge-based, have been in business only a few years and will be located in both small towns and capital cities.
(Source: Department of Foreign Affairs and Trade: Australia's Trade by State and Territory 2002'03 (2004))
Back to Top
Small Business Closures
Despite what is commonly thought, relatively few small businesses fail. Over the two-year period 1994-95 and 1995-96, an average of 23,200 small businesses, or 6.1%, ceased operating in Australia.
Less than 10% of these closures was due to bankruptcy proceedings (in the case of unincorporated businesses) or companies being liquidated. The other businesses closed down for reasons such as the owner retiring, seeking a different lifestyle or dying.
Moreover, as some small businesses cease, others start up. The failure rate of Australian businesses fell significantly during the 1990s. It is estimated that in 1999-2000, there were 3.6 failures per 1,000 enterprises, which was one-third of the rate in 1991-92. This decline was primarily the result of fewer company liquidations.
(Source: Productivity Commission: Business Failure and Change; An Australian Perspective (2000))
Although the first few years of a small business' life are inevitably the most risky, most exist for a considerable length of time. The June 2003 "Characteristics of Small Business" survey indicated that 36.5% of small businesses had been in operation with the current owner for 10 or more years and another 19.8% for at least five but less than 10 years.
Back to Top
Sources of Data About Small Business
The best source of data about small business in Australia is the Australian Bureau of Statistics (ABS). Its website is www.abs.gov.au
Two particularly useful ABS publications are Small Business in Australia (Catalogue no. 1321.0) and Characteristics of Small Business (Catalogue No. 8127.0).
Back to Top
