Continuation Rates
Continuation rates measure how long enterprises remain in the business demography
dataset. These rates are calculated by matching the business reference numbers for
entries of one year with those of subsequent years. Continuation rates are generally
lower for smaller enterprises.
Continuation rates do not reflect the "survivability" of
SMEs.
The length of time that enterprises remain in the business demography dataset
is not a measure of the "survivability" of firms. Therefore lower continuation rates
for smaller firms do not necessarily indicate that
SMEs are more likely to
cease trading earlier than larger firms.
The fact that, overall, smaller firms experience lower continuation rates and
dominate entry and exit statistics reflects the dynamic nature of these enterprises.
Research suggests this dynamism is a positive attribute of the economy.6
Firm turnover is associated with greater economic efficiency as new, more productive
firms replace older, less productive firms. The government plays a key role in establishing
a regulatory environment in which this rapid change can occur and international
comparisons suggest that New Zealand is achieving world-class standards in this
regard. The World Bank Doing Business study ranked New Zealand the
easiest place in the world to do business out of 155 economies. New Zealand ranked
fourth in the ease of starting a business and 21st for closing a business.7
Larger firms remain longer in the business demography dataset than
SMEs.
Of those enterprises established in 2000, the continuation rates in 2005 were
generally higher for larger firms. Enterprises with zero employees were the least
likely to "continue" in the business demography dataset (36.4 percent).
Figure 17: Continuation Rates of 2000
Enterprise Entries by EC Size Group
| EC Size Group |
2001 |
2002 |
2003 |
2004 |
2005 |
| 0 |
66.96% |
54.14% |
47.11% |
41.24% |
36.40% |
| 1-5 |
85.34% |
72.24% |
63.02% |
56.90% |
50.24% |
| 6-9 |
89.41% |
77.22% |
67.73% |
60.56% |
54.61% |
| 10-19 |
89.29% |
74.55% |
66.07% |
59.73% |
53.75% |
| 20-49 |
86.86% |
77.25% |
68.43% |
62.35% |
56.86% |
| 50-99 |
93.69% |
86.49% |
83.78% |
76.58% |
73.87% |
| 100-499 |
93.33% |
85.00% |
75.00% |
71.67% |
68.33% |
| 500+ |
87.50% |
75.00% |
75.00% |
75.00% |
75.00% |
Continuation rates for enterprises established in 2000 are analysed by industry
sector in Figure 18. Excluding government administration and defence, the industries
in 2000 with the highest continuation rates into 2005 were education (53.6 percent),
health and community services (50.7 percent) and finance and insurance (49.0 percent).
The lowest continuation rates in the same period were in accommodation, cafes and
restaurants (29.0 percent) and communication services (30.6 percent).
Figure 18: Continuation Rates of 2000
Enterprise Entries by
ANZSIC
| ANZSIC |
2001 |
2002 |
2003 |
2004 |
2005 |
| A - Agriculture, Forestry and Fishing |
73.83% |
62.02% |
53.99% |
43.84% |
38.50% |
| B - Mining |
78.46% |
60.00% |
52.31% |
46.15% |
41.54% |
| C - Manufacturing |
75.14% |
62.32% |
54.06% |
48.08% |
42.35% |
| D - Electricity, Gas and Water Supply |
78.05% |
70.73% |
58.54% |
53.66% |
46.34% |
| E - Construction |
73.03% |
59.33% |
51.08% |
45.40% |
39.89% |
| F - Wholesale Trade |
69.19% |
55.95% |
48.53% |
42.99% |
38.05% |
| G - Retail Trade |
72.50% |
57.54% |
48.46% |
42.12% |
36.22% |
| H - Accommodation, Cafes and Restaurants |
71.56% |
54.53% |
43.66% |
35.99% |
29.02% |
| I - Transport and Storage |
73.45% |
59.50% |
51.92% |
46.44% |
41.34% |
| J - Communication Services |
74.54% |
57.28% |
45.63% |
38.94% |
30.64% |
| K - Finance and Insurance |
89.48% |
79.64% |
71.19% |
56.86% |
49.02% |
| L - Property and Business Services |
66.67% |
55.07% |
49.00% |
43.98% |
39.53% |
| M - Government Administration and Defence |
71.43% |
57.14% |
57.14% |
57.14% |
57.14% |
| N - Education |
76.82% |
65.61% |
61.36% |
56.67% |
53.64% |
| O - Health and Community Services |
78.66% |
67.44% |
59.76% |
54.96% |
50.70% |
| P - Cultural and Recreational Services |
70.93% |
56.39% |
49.83% |
45.68% |
39.74% |
| Q - Personal and Other Services |
72.90% |
60.16% |
51.88% |
45.64% |
40.92% |
2003 enterprises show a similar continuation pattern to 2000 enterprises.
The following figures show survival rates by EC
category and
ANZSIC
classification for enterprises born in 2003. The results show a similar trend by
firm size to enterprises that were established in 2000. In contrast, however, enterprise
entries into the Government Administration and Defence industry of 2003 had the
lowest continuation rate to 2005 (40.0 percent),8
followed by the Agriculture, Forestry and Fishing industry (61.1 percent).
Figure 19: Continuation Rates of 2003
Enterprise Entries by EC Size Group
| EC Size Group |
2004 |
2005 |
| 0 |
77.13% |
62.37% |
| 1-5 |
90.59% |
77.75% |
| 6-9 |
90.67% |
78.35% |
| 10-19 |
90.92% |
78.99% |
| 20-49 |
94.22% |
81.91% |
| 50-99 |
88.46% |
83.33% |
| 100-499 |
94.87% |
87.18% |
| 500+ |
100.00% |
100.00% |
Figure 20: Continuation Rates for 2003
Enterprise Entries by
ANZSIC
| ANZSIC |
2004 |
2005 |
| A - Agriculture, Forestry and Fishing |
77.43% |
61.12% |
| B - Mining |
76.60% |
65.96% |
| C - Manufacturing |
85.10% |
72.43% |
| D - Electricity, Gas and Water Supply |
83.33% |
73.33% |
| E - Construction |
85.80% |
71.52% |
| F - Wholesale Trade |
82.78% |
67.30% |
| G - Retail Trade |
84.39% |
68.66% |
| H - Accommodation, Cafes and Restaurants |
80.17% |
61.49% |
| I - Transport and Storage |
81.96% |
66.84% |
| J - Communication Services |
80.52% |
63.65% |
| K - Finance and Insurance |
86.90% |
77.14% |
| L - Property and Business Services |
75.87% |
62.50% |
| M - Government Administration and Defence |
80.00% |
40.00% |
| N - Education |
85.28% |
68.96% |
| O - Health and Community Services |
85.58% |
73.06% |
| P - Cultural and Recreational Services |
81.42% |
65.51% |
| Q - Personal and Other Services |
82.07% |
68.84% |
Back to Top