Small-medium enterprise (SME) in Australia

Australian SMEs:

	account for 50% of private sector employment
	accounts for 80% of Australia's employment gains during the last 10 years
	produce approx. 40% of all products each year
	generate an increasing amount of our total exports
	account for 20% of all money spent on R & D (research & Development)
	produce a wide range of products used by large businesses
	earn more profits and pay more taxes than do large businesses
	have a high failure rate with up to 75% of new SMEs failing within 5 years

According to the Corporate Law Simplification Act 1995 a SME has:

	fewer than 50 employees
	a turnover of less than $10 million
	an asset value of less than $5 million

From a qualitative point of view a business is a SME if:

	most management decisions are made by the owner
	the owner's provide most of the capital
	it has little control within its market

A small business has:

	1 or 2 people making all the critical decisions
	no internal specialist personnel
	relies on external support services
	fewer than 100 employees
	turnover definition depends on the industry, e.g. an agricultural business is small if its turnover is between $22,500 & $400, 000
	Asset Value definition depend on industry

A medium business is one in which:

	there is between 100 & 500 employees (for a manufacturing firm) or
	there is between 20 & 500 employees (for a non-manufacturing firm)

A micro business:

employs fewer than 5 people (including the owner)

Critical success factors for small businesses include:

	some management training
	a written business plan
	a high-quality product
	use of external support services

	1998: small business accounted for 95% of all private sector business
	1998/99: approx. 1, 004, 200 small business & 22, 000 medium businesses in Australia

	Small business contributes to 40% of Austrlia's GDP
	Small business accounts for 51% of all private sector employment- approx. 3 million people
	The Balance of Payments may be improved through small business engaging in more exporting since they tend to be more flexible and responsive to changes in overseas markets.
	1996/97: small business spending on R & D (research & development) accounted for 17% of all private sector R&D

5 keys to success:

Entrepreneurial abilities

Access to information

Flexibility

Focus on Market Niche

Reputation

A small business fails when it is:

	unincorporated and declared bankrupt
	incorporated and either forced into liquidation or voluntarily closes down

Small business failure rates:

The two main reasons for small business failure:

	undercapitalisation- lack of capital
	lack of management expertise (failure to plan)

	High-Technology is the most notable trend.
	Service sector continues to increase in importance
	Aged services will continue to increase in importance
	Small office home office (SOHO) is becoming more popular
	Franchising continues to be important
	Outsourcing provides opportunities for small businesses