Small business bankruptcy jumps


According to Dun and Bradstreet in their latest Business Failures and Start-ups Analysis (full report at bottom of post), the number of small businesses that went bankrupt over the last 12 months has jumped by 48%, although the December quarter of last year did improve slightly from the September quarter.

However, the main trend in the last 3 years has been a 30% growth in business failures, more from Dun & Bradstreet CEO, Christine Christian:

There is an increasing risk that the global economic slowdown will intensify the upward trend in insolvencies.

Despite recent rate cuts, there is a palpable lack of confidence in the current operating environment. This is obviously one of the side effects of long standing global uncertainty and can often be enough to deter businesses from entering the market, irrespective of actual conditions.

Outside the mining sector, sentiment is generally still poor and the strong Australian dollar is straining profits. This could lead to an increase in business failures in 2012.


One of the most startling findings within the report is that during the December quarter, “Start-ups during the December quarter in the manufacturing, service and finance sectors fell by nearly 100 per cent.

That’s a shocking indictment of the viability of future SME (small and medium enterprises) in this country or an eternal optimist might say a great opportunity for others. A curmudgeon might say its just an “adjustment”.

Another key finding within the report was that Australia is now classified alongside the so-called “PIIGS” and the United Kingdom in terms of high insolvency risk, due to the increase in bankruptcies. Maybe it’s more than our mood Mr Parkinson?


And the worst sector in terms of business failure? Retailing – up 11% for the quarter and 115% for the year. No surprises there, nor in the listed retailing stocks as well.

And the best? Mining. Almost nil insolvencies, with failures falling by 20% over the last 3 years. Thank Dog for that century long mining boom then.


Small Business Failures Up 48 Per Cent