Profiling Small Businesses in Australia

Small Businesses form an important part of the Australian economy. Whilst numerous case studies and practitioners' opinions exist to examine small business characteristics in detail, limited research is available in this important area. Using a structured questionnaire, 721 Australian small business operators from a diverse range of industries were interviewed during an eight-month period. In this paper the predominant characteristics of Australian small business owners and enterprises are reported. In summary, small business operators are motivated to start their small business by the wish to achieve financial gains, the majority of small business operators operate as sole traders, work more than 40 hours per week and started their small business in their mid thirties. Small businesses employ on average 4 full time and 4 part time workers and most rely on owner and owner's family funds rather than borrowing from financial institutions. Most small businesses attend to their own bookkeeping and use external accountants for taxation reporting. Contrary to general advice, most small business enterprises do not engage in budgeting and formal planning practices and rely on financial statements (prepared by external accountants well after the end of the financial year) to evaluate the performance of their businesses. An initial analysis of the results to ascertain potential relationships between characteristics, business management practices and levels of satisfaction indicates that higher degree of satisfaction is associated with longevity, size of the business and use of formal planning and control tools.