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• Entry and Exit

• Small & Medium Enterprises

• Structure and Dynamics

• Archive

• Structure and Dynamics - 2007
• Structure and Dynamics - 2006
• Structure and Dynamics - 2005
• Structure and Dynamics - 2004
• Structure and Dynamics - 2003
• Structure and Dynamics - 2002
• Structure and Dynamics - 2001
• Structure and Dynamics - 2000
• Structure and Dynamics - 1999

SMEs account for the majority of all entries and exits.

In previous reports we have used the terms "births" and "deaths" to indicate entry and exit from the Statistics New Zealand Business Demographic Statistics (BDS). In these reports it appears that the terms births and deaths have been interpreted by many as company incorporations and business failures - this is not the case.

The population for the BDS is "economically significant enterprises". An enterprise will enter the BDS if it meets one or more of the following criteria:

• has greater than $30,000 annual GST expenses or sales¹¹
• has more than two full-time equivalent paid employees
• is in a GST exempt industry (except for residential property leasing and rental)
• is part of a group of enterprises
• is registered for GST and involved in agriculture or forestry.

Enterprise exits can also occur in the BDS due to:

• Geographic transfers (location is changed but activity, means of production and market are not)
• Changes of ownership (there is a new owner but no change in activity or location)
• Temporary closures (such as for seasonal activities)
• Closure due to health or personal reasons.

To ensure that readers can easily interpret this report, we have changed the terms to Entries and Exits.

Enterprise entries and exits are dominated by firms employing less than 5 FTEs, accounting for over 90 percent of total number of entries and exits to 2003, as well as in previous years.

Figure 11: Enterprise Entries, 2003

→ Full size version of Figure 11 [31KB GIF file]

Figure 12: Enterprise Exits, 2003

→ Full size version of Figure 12 [32KB GIF file]

Enterprise entries outnumbered exits in 2003.

The period 1999-2003 was a time of unusual activity for enterprise entries and exits. In 1999, the number of entries fell, almost matching the number of exits, before increasing sharply in 2000 when exits fell slightly. In 2001, the number entries fell again as exits increased, resulting in a net decrease in the number of enterprises operating. In 2002 and 2003 the series diverged resulting in a net increase in the number of enterprises.

Figure 13: Enterprise Entries and Exits, February 1998-2003

→ Full size version of Figure 13 [23KB GIF file]

¹¹The GST threshold is maintained by continually monitoring all GST-registered enterprises recorded on the IRD client registration file to determine if they meet the "economic significance" requirements for "birth" onto the Business Frame.
A buffer zone of $25,000 to $35,000 has been established to prevent enterprises switching excessively between "economically significant" and "economically insignificant". For example, an economically significant enterprise whose annual GST turnover drops to $27,000 would not be reclassified as economically insignificant, but one whose annual GST turnover drops to $23,000 would be reclassified. All non-trading and dormant companies are excluded from these statistics.