Business planning, Finance, Legal

Eastern states’ start-up numbers leap as WA lags: Report

Michelle Hammond /

Almost 6% of all Australian businesses launched during the past 12 months, with the eastern states outshining boom state Western Australia in terms of new enterprises, according to data intelligence company Veda.

 

Veda, a data intelligence and insights company, holds information on more than 19.4 million credit-active people and 4.2 million companies and business in Australia and New Zealand.

 

According to Veda, which compared business openings and closures in every Australian state and territory, SMEs in WA had a higher percentage of closures than other state averages over the past year, with more than 130 businesses closing their doors.

 

Meanwhile, ACT – highest with 115 new businesses – NSW and Queensland had an opening rate higher than the national average, with WA, South Australia, Tasmania and Victoria lagging behind.

 

The finding comes amid reports the mining boom is on its last legs. Last week, Federal Resources Minister Martin Ferguson declared “the resources boom is over”.

 

“We’ve done well – $270 billion in investment, the envy of the world [but] it has got tougher in the last six to 12 months,” Ferguson told ABC Radio.

 

Prime Minister Julia Gillard was quick to contest the claim, insisting “there is a huge investment phase, which still has some way to run”.

 

But the number of small business closures in WA suggests Ferguson could be right.

 

In contrast, NSW, Queensland and the ACT saw more new businesses open over the past year, suggesting there could be some resurgence in these economies or at least a boost in confidence.

 

Overall, approximately 1.86% of Australian businesses closed during the past 12 months. But over the same period, approximately 5.86% of Australian businesses opened.

 

The industries with the highest number of new businesses were healthcare and social assistance; administrative and support services; rental, hiring and real estate services; and construction.

 

While construction has been doing it tough during the past 12 months, it appears there may now be an opportunity for new entrants to make up for recent attrition in the sector.

 

Moses Samaha, head of commercial risk at Veda, says businesses can’t afford to get too comfortable “given the changing nature of the SMB market”.

 

“With businesses opening and closing according to very complex market dynamics, it is even more critical for businesses to continually monitor their risk exposure,” Samaha says.

 

“In general, commercial finance demand peaks one month after a business is established.”

 

“Additionally, while all forms of finance are in high demand leading up to and in the 11 months after opening, we see a second spike in overdraft demand at about the eight-month mark, possibly indicating cashflow challenges.”

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