Australia’s small business sector contributes more than half a billion to the national GDP and provides jobs for 5.1 million people, according to a new snapshot of the local business landscape.
Released Monday by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), the report compiles data from the Australian Bureau of Statistics and the Australian Taxation Office to outline the SME sector’s footprint in 2021-22.
Small businesses contributed $506 billion to the economy, equivalent to a third of the nation’s GDP, the report states.
That figure rose 15% year-on-year, suggesting a strong bounce-back from COVID-19 restrictions in the SME sector.
Australia’s 2.5 million SMEs — which include self-employed entrepreneurs — also provide more than two jobs each on average.
Those SMEs are massively significant for early-career workers, as some 42% of apprentices and trainees work for an SME.
Ombudsman Bruce Billson said the report, released one day before the United Nations’ Micro-, Small and Medium-sized Enterprises Day, serves as an opportunity to celebrate Australia’s hard-working entrepreneurs.
“This is a terrific opportunity to say thank you and show support to the small businesses who matter in our lives,” Billson said in a statement.
While SME contributions rose as a proportion of national GDP, the report also highlights the challenges of running an independent enterprise.
When accounting for total hours worked, three-quarters of self-employed business owners earn less than the adult full-time wage, the report says.
Some 55% of small business owners with between 1 and 19 employees earn less than the adult full-time wage, mirroring recent research which suggests entrepreneurs are paying themselves last — if at all.
SME owners put in hard graft, too.
Around 61% of SME owners with between one and 19 employees work 39 hours a week or more, surpassing the Australian median of 38 hours per week.
Notably, the report also delves into the changing demographic makeup of the Australian entrepreneurial community.
Small business owners, on the whole, are ageing: 47% are aged 50 or over, a figure which has risen in each Census since 1996.
At the bottom end of the scale, 8% of small business owners are aged 30 or below, a marked decrease from the peak of 17% in 1976.
Backdropped by separate research which suggests Australia presents a tougher environment for new entrepreneurs than neighbouring economies, Billson said the causes of that disparity deserve investigation.
“We need to replenish and nurture the next generation of entrepreneurs, value self-employment and encourage and enable smaller enterprises and the livelihoods they make possible,” he said.
“We need to understand why it is not as appealing as it perhaps should be for younger Australians to own a small business.”
While entrepreneurs are getting older, gender diversity is improving.
Women now comprise 35% of business owners, and since 2006, the number of women to own a business has increased at three times the pace of male business ownership.
Those figures are worth celebrating, Billson added, “But we know there is a glass ceiling in women’s entrepreneurship, especially around accessing finance.”
The rich cultural background of Australia’s SME community is also on display in the figures.
A third of small businesses are owned by entrepreneurs born outside of Australia, surpassing the 29% of the general population to be born overseas.
However, only 1% of small business owners self-identified as First Nations Australians.
“More research is underway, including by the Centre for Indigenous Business Leadership at the University of Melbourne to deepen the understanding of the Indigenous business sector,” the report states.
“Additional research, supportive Government procurement measures and reports of vibrancy in the indigenous business sector are welcomed and encouraging.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
