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Entrepreneurship2.1 Business Demography

2.1.1 Businesses in operation by industry

The number of firms operating in a given industry gives an indication of the market structure and level of competition, which in turn determines how firms might innovate. At the end of June 2018, there were 2,313,291 actively trading businesses in the Australian market sector. This represents an increase of 3.4 per cent from 2,238,299 at the end June 2017. The Transport, Postal and Warehousing industry grew by 16.8 per cent, whilst the Agriculture, Forestry and Fishing and the Mining industries decreased by 0.9 per cent and 0.5 per cent, respectively. All other industries reported single digit growth. As at 30 June 2018, the highest number of firms were in Construction (383,326 firms or 17.1 per cent of total) and in Professional, Scientific and Technical Services (280,425 firms or 12.5 per cent of total).[39]

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2.1.2 Business entries and exits by industry

Firm entries and exits reflect business dynamism, and may be used as proxy indicators for the prevailing conditions for entrepreneurial activity. During 2017-18, the number of new Australian firms entering the market sector (Entries) was 354,520 — an increase of 8.0 per cent (26,315 firms) from 2016-17 (328,205 firms). The number of firms exiting the market sector (Exits) in 2017-18 was 279,528, an increase of 6.9 per cent (18,078) from 2016-17 (261,450 firms). Industries with the highest number entries in 2017-18 include Construction (63,731 firms), Transport, Postal and Warehousing (50,486 firms) and Professional, Scientific and Technical Services (45,452 firms). The Transport, Postal and Warehousing industry has seen the most dramatic growth in business entries over the last three years, rising from 18.9 per cent in 2015-16 to 26.9 per cent in 2016-17 and reaching 33.6 per cent in 2017-18. The industry average rate of exits for 2017-18 was 12.5 per cent, an increase of 0.5 percentage points from 2016-17.[40]

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2.1.3 Survival of business entries by industry

The aggregate rate of business survival, while determined by many factors, provides a simple summary measure of the likelihood of entrepreneurial success. Survival rates have been relatively constant, with a similar number of entries observed in the last two cohorts. Overall, the number of businesses surviving for three years has slightly decreased. Of the 281,553 businesses that entered during 2014-15, some 78.2 per cent (220,245 businesses) survived to June 2016, and 63.7 per cent (179,466 businesses) were still operating two years later in June 2017. The proportion of this cohort that survived the three years to June 2018 was 54.1 per cent. Within this cohort, businesses in the Financial and Insurance Services industry had the highest survival rate (66.3 per cent) at the end of 2017-18, followed by those in Health Care and Social Assistance (65.4 per cent), whilst businesses in the Public Administration and Safety industry had the lowest survival rate (38.5 per cent). (NOTE: The calculated totals shown in the chart differ from the totals published by the ABS and referred to above).[41]

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