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Business exit numbers in Australia – Succession planning at work?

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Business exit numbers in Australia – Succession planning at work?

By , June 17, 2010

Total business numbers and exit rates – based on an ABS survey the total number of 3,015,318 “discrete entities” – Australian private and public businesses needs to reduced as follows:

The total Non-Agricultural private sector number of businesses can be broken down as follows:

Small business ( 1-19 employees ) 686,400

Medium business ( 20 – 199 employees ) 71,791

Large business ( 200 + employees ) 4,646

Approx 7 % of these businesses exit each year ( through all means ) – 53,398 businesses ( this includes failures – bankruptcy, death of the owner etc ) . Importantly there are marked differences in successful exits based on size and business age, with larger and longer established businesses more often able to secure a “successful” exit. Medium and large businesses tend to “fail” at a rate of almost half ( 49.2 % ) that of small businesses ( 3.0 % cessation rate versus 6.1 % for small business ) and if an exit was to occur then there was a better than 45 % chance of that being a business harvest rather than the alternative – business failure ( again more than double that of small business at just 20.8 % ).

A documented business exit strategy ( Succession Plan ) is the first step to ensuring a successful exit and turning these statistics around.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.