Business Failure and Change: An Australian Perspective

„h Contrary to common perceptions, most Australian businesses survive for a considerable time iV for example, around twoiVthirds of businesses are still operating after five years and almost oneiVhalf are still operating after ten years. „h Around 7.5 per cent of businesses exit each year iV cessations account for around 80 per cent of exits (changes in ownership account for the remainder) iV but most exits are not firm failures. „h Each year, cessations account for, at most, between 9iV10 per cent of total job losses and 3iV4 per cent of GDP iV however, in net terms, these impacts are outweighed by the corresponding gains from new business startiVups. „h Less than 0.5 per cent of businesses exit each year due to i¥catastrophici¦ failure (bankruptcy or liquidation). The failure rate has fallen significantly in the past decade iV the estimated failure rate was 3.6 failures per 1000 enterprises in 1999-00, oneiVthird of the rate in 1991-92 iV the decline is attributable to fewer company liquidations, rather than any fall off in unincorporated business bankruptcies.