Plenty of risks for business as construction phase ends
THE construction phase of the mining industry is coming to a close and many thousands of people will be put out of work in Australia.
Some will have the requisite skills to return to the improving residential building sector probably as contractors working on ABNs.
Others will look to set themselves up in other forms of small business.
Either way, they will join the 61% of businesses employing no staff or the 97% employing fewer than 20 staff.
Thirty-four percent of businesses turned over between $50,000 and $200,000 in 2012-13 according to the Australian Bureau of Statistics, 27% less than $50,000.
To keep things in perspective just 6.4% turned over more than $2 million.
Some pretty sobering stats for people used to earning the big dough in the mining construction phase.
More frightening still are statistics that 62,000 actively trading businesses (of just over two million) closed their doors in 2012-13, 22% of those turning over less than $50,000, 15% of those turning over between $50,000-$200,000.
Yet there is apparently strength in size. Of those turning over more than $2 million, just 3% closed down.
I feel these stats from the ABS can be interpreted to mean two things.
Small business conditions last financial year were really tough and/or the mining boom dragged skilled people operating as contractors away from the population centres, predominantly in the capital cities and provincial towns.
Forewarned is forearmed as they say.
Entering into a small business, whether it be a one-person show or something a bit more exciting, is fraught with the ever-present risk of failure.
Financial risk walks hand in hand with running a small business.
If you're thinking of putting your toe in the water, you should seek to build a wall between the financial risks facing your new business and your personal assets.