Business exit numbers in Australia – Succession planning at work?
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.