Survival Rates of SMEs
SMEs have a lower survival rate than larger firms.
Survivors are identified by matching the business reference numbers for entries in one year, with those of future years.
Survival rates are generally perceived to be lower for smaller enterprises. Figures 15 and 16 show that this is true for enterprises that entered the Business Frame in 1998. Of all small businesses started in 1998, 57.4 percent were still on the Business Frame in 2000, 48.6 percent in 2001. By 2003, 37.9 percent of these businesses were still active.
Appendix 2 provides information on the survival rates of enterprises, by FTE category and ANZSIC classification, that entered the Business Frame in 1999 and 2000.
Figure 14: Survival Rates of 1998 Enterprise Births by FTE Category
→ Full size version of Figure 14 [57KB GIF file]
Survival rates for enterprises established in 1998 for each industry sector12 are illustrated in Figure 15.
Figure 15: Survival Rates for 1998 Enterprise Births by ANZSIC
→ Full size version of Figure 15 [66KB GIF file]
(Note: Survival numbers can increase, due to use of random rounding to maintain confidentiality.)
Survival rates do not necessarily reflect the number of enterprise failures.
The 1998 industries with the highest survival rates into 2003 were electricity, gas and water supply; and finance and insurance. The finance and insurance industry also featured when analysing survival rates into 2003 for 2000 businesses, with enterprises in the education industry also having a high rate of survival.
The lowest survival rates were in the sectors of accommodation, cafes and restaurants, and communication services. Both of these sectors have an average sized proportion of SMEs.
However, evidence suggests that these survival statistics present a situation significantly harsher than reality. As noted in the entry and exit statistics, exits from the Business Frame can signify a variety of other events.
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