When in Covid-19 lockdown … start a business

The number of actively trading businesses has jumped by the most in at least 18 years, evidence the Covid-19 pandemic has triggered a burst of entrepreneurialism.

Even as some business owners struggle under the burden of health restrictions, Covid has proved a catalyst for a big jump in business numbers.

The number of actively trading businesses has jumped by the most in at least 18 years, evidence the Covid-19 pandemic has triggered a burst of entrepreneurialism in Australia.

While health restrictions have weighed on firms in customer-facing industries such as shops, tourism, and food and ­accommodation, figures from the Australian Bureau of Statistics show there were about 2.4 million businesses as at June 30. This was an increase of 87,800 businesses over the 12 months and close to twice the pace of the previous financial year.

The 3.8 per cent net increase in trading businesses was the largest in data stretching back to 2003.

The biggest lift in numbers was in the construction sector, where a net 16,600 businesses were added over the year to 410,800 – an increase of 4.8 per cent as building activity boomed.

In percentage terms, the biggest growth in business numbers was in other services, healthcare and social assistance, and retail, ranging from 7.4 per cent to 6.3 per cent.

In contrast, there was a 2.8 per cent drop in the number of transport, postal and warehousing businesses, reflecting the devastating impact of Covid restriction on industries such as aviation.

IBISWorld senior industry analyst Suzy Oo said the ­increase in actively trading businesses was significantly higher than the pre-Covid pace of about 60,000, and reflected the opportunities as well as challenges facing industries that have suffered repeated rounds of restrictions on their activity as a result of health measures.

About three in five businesses are based in locked-down NSW and Victoria, she said.

Nonetheless, the ABS figures show that the disruption of Covid has provided fertile ground for entrepreneurs, particularly in and around areas such as online retail, Ms Oo said.

“The rise in online shopping is threatening the traditional ­retailers,” she said. “These trends have been in place for a while, but Covid-19 trading restrictions have pushed them forward.”

Ms Oo forecast a further 2 per cent lift in the number of businesses in this financial year, and that there would be 32 per cent fewer bankruptcies over the coming five years as an economic recovery fed through to high business confidence, ­assisted by the opening up of large sectors such as internat­ional travel and study.

The number of employing businesses increased by a massive 14 per cent, as 58,200 businesses took on their first staff members in the 2020-21 financial year. Small business numbers – those with between one and four employees – jumped 15 per cent to nearly 700,000, once again suggesting the hardships for some small operators was more than matched by ­opportunities for new firms.

The ABS data also revealed a 7.6 per cent increase in businesses with five to 19 employees, to 230,633. There was a 20 per cent jump in businesses with 20-199 staff members, and an 8 per cent lift in the number of firms ­employing 200 or more.

The figures also showed a 2.2 per cent decrease in non-­employing businesses, by 31,000 to 1.4 million.