Why no one wants to start a small business any more

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Australia’s 2.5 million small businesses are collapsing at a rapid rate – and there are many who say the government is adding to red tape rather than reducing it.

Alessandro Panetta has been hanging out in cafes nearly his whole life. At the age of 12, he started helping out at the family-owned cafe. At 24, Panetta and his brother set up their own venture, a small espresso bar on Sydney’s bustling York Street. When that came to a natural end, he dabbled in consulting for a few years before opening a cafe in Waterloo.

With lower foot traffic, reduced cashflow and mounting bills, small operators are up against the wall. Insolvency figures from ASIC show that businesses with fewer than 20 employees made up 82 per cent of companies that went under in the past year, with hospitality and construction outfits hit hardest.Australia’s 2.5 million small businesses, which contribute a third of national GDP at $506 billion, are making up a smaller part of the economic pie than they did a decade ago.“ feel neglected.

“It was the jam of delighting customers with a passion, a new service, a new option, a new opportunity,” said Billson, who was the minister for small business under the 2013 Abbott government. “That’s what motivates an enterprising man and woman, not the business of running the business.” In its 2024 budget submission, COSBOA commended the federal government on their focus on easing cost of living pressures for households, but called for more attention on the cost of doing business.

Those within government bodies share similar concerns. NSW Small Business Commissioner Chris Lamont also said the ageing cohort of small business owners was a “major and immediate challenge for all levels of government” and pointed directly to the heavy-handed approach to regulation as a key factor. It hasn’t just been the new industrial relations rules that have caused frustration: the federal government has been criticised for the hurried way legislation was “jammed” through parliament. Consultation with some business groups was conducted behind closed doors in a matter of weeks rather than months with the unusual condition of non-disclosure agreements.

 

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Why no one wants to start a small business any moreAustralia’s 2.5 million small businesses are collapsing at a rapid rate – and there are many who say the government is adding to red tape rather than reducing it.
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