TLDR
Australia's business count hit 2.73 million at June 2025, but four-year survival slipped to 63% for the 2021-25 cohort, meaning roughly one in three that started the period did not make it through. Employment size shifts the odds dramatically, with sole operators surviving at roughly half the rate of large firms.
KEY TAKEAWAYS
What it costs to start the clock
Open a business in Australia in 2021 and still be trading today, and you have already beaten the odds by more than most people realise. The four-year survival rate for the 2021-25 cohort fell to 63%, down from 64% for the 2020-24 cohort, according to the Australian Bureau of Statistics Counts of Australian Businesses release. One percentage point sounds modest, but it represents tens of thousands of operators who ran out of road before June 2025.
The ABS published the release in December 2025. It tracks every actively trading business on the ABS Business Register across entries, exits and year-on-year survival. This is not a survey of sentiment or a trade-body estimate; it is the register itself, updated annually, which makes the survival numbers as close to a ground truth as Australian business statistics get.
The count at June 2025
At 30 June 2025, the ABS Business Register recorded 2,729,648 actively trading businesses in Australia, of which 994,178, or 36.4%, were employing at least one person. The remaining 63.6% were non-employing: the freelancers, sole traders and owner-operators who make up the backbone of the small-business economy but face the steepest survival gradient of any size bracket.
Net growth was positive. The 2024-25 financial year recorded an entry rate of 16.4%, representing 437,150 new businesses, against an exit rate of 13.9%, representing 370,500 departures, leaving a net addition of roughly 66,600 businesses to the register. Growth on paper, then, but the churn underneath that headline figure is what the aggregate obscures.
What the ABS actually means by survival
Before reading the survival curves, it helps to understand what the ABS is counting. The methodology defines a surviving business as one that appears on the Business Register as active at 30 June of the reference year and was also active at 30 June of the prior year. A business that entered after 30 June one year and exited before the following 30 June is excluded from survival tables entirely, so the figures capture only businesses with at least a full year of operation behind them.
Exit does not equal failure. The ABS count of 370,500 exits in 2024-25 lumps together genuine closures with businesses sold to new owners, operators who retired, and corporate restructures that changed the legal entity without ending the underlying trade. A founder who sells a cafe at a profit and walks away is counted the same way as one whose landlord locked them out, a distinction that matters when politicians or industry groups reach for the exit figure as a proxy for economic distress.
Where the survival curve bends
The sharpest attrition happens early. Roughly three-quarters of businesses active at the start of 2022 were still trading by mid-2023, and around two-thirds made it through to mid-2025. A business that survives its second year has already absorbed the worst of the risk curve, but year one and year two are precisely when cash is tightest and the business model is still being tested by actual customers rather than projected ones.
The ABS publishes two types of survival tables: one tracking all businesses that were active in the first year of the reference period, the other tracking only those that entered in that year and survived through to consecutive years. A business already active in 2021 carries different characteristics, more established supplier relationships, an existing customer base, possibly banked equity, than one that opened its doors that same year. Combining the two groups in a single number would understate how tough it is for a genuine new entrant.
Size changes everything
The ABS data shows a stark divergence by employment size. Businesses with 200 or more employees recorded near-90% four-year survival, while sole operators without any staff survived at roughly half that rate over the same period. That gap reflects access to capital, the ability to absorb a bad quarter without a personal mortgage on the line, and the institutional knowledge that accumulates once a business has enough people to share the load of running it.
The employment data for 2024-25 sharpens that picture further. Non-employing businesses grew by 4.9% over the year, the fastest-growing size bracket by percentage. Businesses with one to four employees fell 0.7%. Businesses with five to nineteen employees were flat. Those with 20 to 199 staff fell 0.5%, while the largest tier, 200-plus employees, grew 2.6%. Sole operators are multiplying, quite possibly driven by redundancies, platform-economy gig work and the permanent shift toward remote contracting accelerated by the pandemic, while the small-employer tier is quietly contracting.
The hiring decision at year two
For a founder at the twelve-to-twenty-four month mark, the employment data carries a practical implication the aggregate survival rate does not. Taking on a first employee converts a variable cost, your own labour, into a fixed one, and triggers payroll tax obligations, superannuation, workers' compensation insurance and the administrative overhead of being an employer. The ABS data suggests that transition is happening less often in the small bracket, which may be a rational response to an environment where wages growth has outpaced revenue growth in many service sectors.
Staying non-employing and outsourcing through contractors or digital platforms keeps overheads flexible and preserves the sole trader's ability to wind down without redundancy costs. The tradeoff is a ceiling on scale, and the businesses recording near-90% four-year survival did not get there by staying solo.
Industry variation matters too
Survival odds shift with employment size and, by implication, with industry sector, since some industries structurally favour sole operators and others require staffing to function at all. Construction, professional services and retail sit at very different points on the churn spectrum. A sole-trader bookkeeper and a family-run building firm both appear in the non-employing count at some stage of their lives, but their risk profiles and their reasons for exiting the register look nothing alike.
The aggregate 63% four-year survival rate does not tell you which industry you are in, what stage of that industry's cycle the four years covered, or whether the exits in your sector were mostly sales, closures or retirements. Those distinctions require the ABS data cubes, which break survival down by industry division and employment size, and they are worth examining before drawing conclusions from the headline figure alone.
Reading the number straight
The 63% four-year survival rate is a real and meaningful figure, but it sits inside a methodology that rewards careful reading. It counts only businesses with a clean annual presence on the register, lumps very different types of exit together, and measures survival as a binary, present or absent at 30 June, rather than as a measure of financial health or owner satisfaction.
For a year-two founder trying to work out whether the odds are against them, the more useful signal from this release is the employment-size split. The transition from non-employing to employing is where the survival curves diverge most sharply, and that transition appears to be stalling in the one-to-four employee bracket.
SOURCES & CITATIONS
FREQUENTLY ASKED QUESTIONS
What does the ABS mean by a surviving business?
Does an exit from the ABS register mean the business failed?
How does hiring staff affect a business's survival odds?
How many new businesses entered the Australian market in 2024-25?
Gavin O'Malley writes about property and housing. He spends his time at auctions and on building sites, and is more interested in what buyers and builders are actually paying than in what the forecasts say.
