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Spirit of enterprise alive and well despite high failure rate

Deloitte Access Economics partner Chris Richardson said federal government supports had made the situation far better than it might otherwise have been in terms of closures. The biggest decline in the survival rate for start-ups launched in 2017 was in the 12 months to 2020 when it dipped from 76 per cent to 60 per cent.

“In Australia, small and medium businesses took it on the chin,” Mr Richardson said. However, he warned the data does not reflect the current lockdowns to stop the spread of the Delta coronavirus strain.

“What Delta is doing now is probably killing businesses at a faster rate. The [government] emergency measures … are less than it was and have less of a business focus,” he said.

Australian Small Business and Family Enterprise Ombudsman Bruce Billson said the small business survival rates are sobering.

Australian Small Business and Family Enterprise Ombudsman Bruce Billson said the small business survival rates are sobering.Credit:Dominic Lorrimer

Small Business and Family Enterprise Ombudsman Bruce Billson said more people had become contractors and were taking the opportunity to launch start-ups during the pandemic.

“Entrepreneurs know the success number is a challenge and those survival rates are sobering. That’s why we should always celebrate enterprising men and women who choose this path,” he said.

While optimistic, he warned constraints on small businesses and family enterprises during COVID-19 outbreaks were damaging.

“Small businesses have borne a disproportionate brunt of COVID constraints, many are drawing from depleting reservoirs of financial and emotional resources,” Mr Billson said. “Small businesses aren’t just a light switch you can flick on and off.”

Council of Small Business Organisations of Australia interim chief executive Alexi Boyd said the data changes quickly and long-term predictions are difficult to make.

“What we are hearing is that everything is on hold for small businesses. Without knowing when we are re-opening or trading, business decisions cannot be made,” she said.

Small Business Minister Stuart Robert said the data demonstrated that when borders are open and communities are not locked down small business is resilient.

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He said the federal government had assisted with reforms and support schemes and small businesses had demonstrated a willingness to adapt.

“Times are still tough for small business, which is why we still see a range of support available from the Commonwealth and states, but what would benefit small business right now is certainty and stability … which is why it is critical we stick with the agreed national plan to ease restrictions through vaccination.”

Labor deputy leader Richard Marles and small business spokesman Matt Keogh said in a statement that small businesses and operators are struggling to get by.

“Hard-working Australians who have poured their hearts and dollars into running their businesses are now facing a diabolical situation, losing money and confidence every day this lockdown continues,” they said.

“Just because a business isn’t currently closed doesn’t mean they’re not hurting.”

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