BUSINESS FAILURES UP 8.2%
The number of failed businesses in Australia leapt 8.2 per cent in the fourth quarter of the year, with all states and territories experiencing a rise in the number of firms that sought legal relief from creditors or ceased operations without paying their creditors in full.
According to Dun & Bradstreet (D&B), there were 12,509 failed businesses in the three months to September, up substantially from 11,565 during the previous quarter and 11,077 a year earlier. The numbers include businesses which have entered external administration and liquidation – information reported to ASIC – and those operations which were involuntarily deregistered and deemed insolvent at the time of closure.
* D&B defines a business which seeks legal relief from its creditors
or ceases operations without paying all its creditors in full as a Failed Business.
Partly offsetting the increase in failed operations during the three months to December was the creation of 52,779 businesses, down from 58,694 new businesses during the previous quarter, but a significant rise compared to the 48,921 new businesses recorded during the same period last year. The new market entrants have increased the overall number of businesses in operation in Australia during Q4 2014 to more than 2.1 million.
According to D&B’s analysis, the majority of both new and failed businesses during Q4 2014 occurred in the nation’s two most populous states.
New South Wales saw the nation’s largest rate of growth in business start-ups, with 17,906 businesses commencing operations, a 5.4 per cent increase from the 16,996 created during the same period last year. D&B also recorded 4,258 failures in NSW, up 5 per cent from the 4,054 figure recorded in Q4 2013.
Victoria saw the nation’s second-largest rate of growth in business start-ups, with 16,870 entering the market, an 18.7 per cent increase on last year’s 14,212. Across the same period, business failures in Victoria jumped from 2,622 to 3,070.
Tasmania and the ACT experienced the greatest percentage increases in business failures, with 38.0 per cent and 52.8 per cent respectively, although their small business populations makes these locations more vulnerable to volatile movements.
Meanwhile, Western Australia saw an increase of 5.0 per cent in the number of businesses created compared with the same period last year, although business failures increased by 29.8 per cent.
South Australia was the only state to record a decline in new business growth over the period, with a 6.8 per cent reduction in the number of new businesses created, while the state saw a 12.3 per cent increase in business failures. Queensland also encountered a difficult quarter, with a 20.6 per cent increase in business failures and an increase of only 0.6 per cent in new business start-ups.