Australia saw a record high proportion of businesses close in 2024 amid a challenging operating environment, according to a report by Money.com.au.
The report found 88 businesses closed for every 100 that opened last year. While a record 505,474 new businesses were registered, a high of 443,395 businesses also shuttered operations.
“While new businesses continue to launch, more are shutting down than ever before. Rising costs of living, higher interest rates on commercial loans and mortgages, and economic uncertainty are making it harder for businesses to survive,” said Money.com.au's Data and Research Expert Peter Drennan.
New business entries declined by 7% in December, the first decline since March 2023. The number of closures increased by 4% that month.
The number of sole traders rose by 1% in 2024, with new registrations for sole traders dropping by 13% in December. Partnerships fell by 4% last year.
“Some closures may simply be business owners restructuring or re-registering under different models,” said Drennan. “Sole trader and partnership entries are declining, while companies grew by 5%, which suggests a shift in how people structure their businesses.”
Small businesses represented 97.2% of all businesses in Australia, as of June 2024. Growth in demand for these businesses has slowed, but input costs have remained high.
December saw a rise in financial turnover in seven of 13 industry divisions, according to the Australian Bureau of Statistics. Electricity, gas, water, and waste saw the highest increase at 12.9%, while administrative services, manufacturing, and arts/recreation posted the largest declines.
