BUSINESS FAILURES, START-UPS DOWN IN Q4

The number of failed businesses in Australia fell by 10.6 per cent in the fourth quarter of 2015, down from a two-year high in the previous quarter. Compared to Q3, all states and territories experienced a decrease in the number of firms that sought legal relief from creditors or ceased operations without paying their creditors in full.

According to the latest analysis by Dun & Bradstreet (D&B), there were 12,170 failed businesses in the three months to December 2015, down from 12,509 a year earlier and 13,615 in the September quarter.

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.

During the three-month period to December, 55,746 new businesses were created, down 12.2 per cent from the 63,502 new businesses created during the previous quarter, but representing an increase of 5.6 per cent compared with figures from the same period last year.

All states and the ACT experienced a decrease in the number of new businesses started in Q4 compared to Q3: only the Northern Territory experienced an increase in new business numbers. On a year-by-year basis, however, all states and territories except Tasmania recorded an increase in the number of new businesses started. The new market entrants have increased the overall number of businesses in operation in Australia during Q4 2015 to approximately 2.25 million.

The ratio of total number of businesses to failed businesses improved during the quarter. For Q4 2015, there were 185 businesses for each failed business, compared to 163:1 Q3 2015 and 170:1 for the previous corresponding period. The ratio of new businesses to failed businesses remained largely flat at 5:1 for the past two quarters. The current figure compares to a ratio of 4:1 in the previous corresponding quarter.

State-by-state comparison

New South Wales

New South Wales reported 4,069 business failures over Q4 2015, down 12.9 per cent compared with Q3 2015, and representing a decrease of 2.9 per cent from the previous corresponding quarter. New business start-ups for Q4 2015 increased by 0.8 per cent year-on-year, but fell 21.1 per cent compared to Q3, dropping from 22,188 to 18,324.

Victoria

Victoria’s business failures increased 5.6 per cent between Q4 2014 and Q4 2015, from 3,046 to 3,227. On a quarter-to-quarter basis, the latest result represents a decrease of 2.1 per cent. Meanwhile, new business start-ups increased 6.3 per cent year-on-year, but fell 12.9 per cent from 19,915 to 17,635 since Q3 2015.

Queensland

Queensland recorded a 1.3 per cent increase in business failures between Q4 2014 and Q4 2015, but a 9.6 cent decrease on a quarter-to-quarter basis. New business start-ups in Q4 2015 increased by 3.3 per cent compared with Q4 2014. However, the figure represents a decline of 16.9 per cent compared with the previous quarter, dropping from 11,934 to 1,208.

Western Australia

Western Australia recorded a 1.5 per cent drop in business failures on a year-on-year basis, and a 24.8 per cent decrease compared to the previous quarter. New business start-ups increased 1.0 per cent compared to Q4 2014, but fell 11 per cent compared to Q3, with the number of new businesses dropping from 5,176 to 4,664.

South Australia

Business failures in South Australia decreased 8.5 per cent between Q4 2014 and Q4 2015. Since Q3 2015, the number of failed businesses has fallen 15.0 per cent from 528 to 459. Meanwhile, new business start-ups increased by 13.6 per cent between Q4 2014 and Q4 2015, from 1,954 to 2,262, although the latest figure represents a 1.5 per cent decrease on the previous quarter.

Northern Territory

The Northern Territory recorded a 15.1 per cent increase in business failures between Q4 2014 and Q4 2015, from 73 to 86. On a quarter-to-quarter basis, failures dropped 3.5 per cent. Meanwhile, new business start-ups increased 10.3 per cent year-on-year, while the latest figure represents a 19.8 per cent decline compared with the previous quarter, with the figure rising from 211 to 263.

Tasmania

Business failures in Tasmania decreased by 24.7 per cent between Q4 2014 and Q4 2015, and 3.5 per cent on the previous quarter, from 88 to 85. New business start-ups dropped 4.1 per cent on a year-to-year basis, although the figure represents a decrease of 15.2 per cent when compared with the previous quarter, with the figure falling from 500 to 434.

ACT

The Australian Capital Territory saw a 12.6 per cent decrease in business failures in Q4 2015 compared to Q4 2014. On a quarter-to-quarter basis, the number failed businesses fell 33.3 per cent from 212 to 159. Meanwhile, new business start-ups increased 16.4 per cent in Q4 2015 compared with the prior corresponding period, moving from 782 to 935. However, the figure represents a decrease of 12 per cent compared to the previous quarter.