One-person businesses most likely to fail, according to report

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One-person businesses most likely to fail, according to report

Despite the massive number of small businesses operating in Australia - there's one for every ten of us - about half fail within four years.

Everyone knows small business can be the tough.

Still, it's hard to believe that despite the massive number of small businesses operating in Australia - there's one for every ten of us - about half fail within four years.

That's according to a report from McCrindle Research, which bases these conclusions on its interpretation of data from the Australian Bureau of Statistics (ABS).

You'd think that being a one-person business would be the safest, as your overheads are lower and the amount of revenue you need to generate is lower. 

But the data doesn’t tell that story, at least according to the interpretation by McCrindle.

Of the new businesses started four years ago, only 43.3% of non-employing businesses are still in operation, compared with the overall 60.0% of employing businesses.

In other words, according to the report, it would seem businesses that employ have a higher survival rate.

One of the key indicators of business longevity is turnover. 

When turnover is over $200,000 per year the survival rate is 57.5% with more than two-thirds of businesses surviving if they achieve turnover in excess of $2 million. At under $200,000, survival drops to 48.2%.

However, it seems that if you can get revenues up and employ staff during the early years that you can build a viable, long-term business.

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