in this analysis. The question to nascent and young firm was phrased slightly differently and the results should therefore be interpreted with care. What is most striking about the data in Table 2 is the limited use of many sources. Only one source—personal savings—is used by more than 50 per cent of all start-ups. Despite frequent references to the ‘3 Fs’—friends, family and fools—most firms do not rely on such sources. Apart from credit card debt, even a major source such as bank funding is used only by a minority. In a random sample, funding by business angels and venture capital firms is close to non-existent. This is quite different from the picture of “typical” start-ups from the business press or business school textbooks. The similarity in the patterns for nascent and young firms also suggests that there is usually no radical change in the funding pattern from inception through early life. This again underscores the modest nature of the majority of start-ups. However, this is not the only reason. Just over half of the firms are started by individuals or teams who have previous experience from starting businesses, and some of these may have accumulated sufficient resources to fund the early stages of a more ambitious start-up. Further, doing much with seemingly little, and letting revenue from the market fund the development of the business, are hallmarks of skilled entrepreneurs. 2: Per cent of nascent and young firms using different sources of funding Source Not used Minor source Major source NF YF NF YF NF YF Personal savings 13 25 15 24 72 51 Personal credit card 55 53 25 28 21 19 Money from another business that the founders’ also own 85 96 6 2 9 2 Government grants 93 94 5 5 2 1 Delayed payment terms from suppliers 87 78 8 13 5 9 Advance payment from customers 86 78 9 14 5 8 Loans from family members 86 91 9 6 5 2 Loans from friends, employers or colleagues 95 96 4 3 1 1 Founders’ personal secured-bank loans 83 84 4 6 12 Founders’ other personal loans, overdraft or other credit facilities from a bank 85 84 9 9 6 6 Secured bank loans to the business itself 92 91 3 4 5 6 Other loans, overdraft or other credit facilities from a bank to the business itself 94 92 5 6 1 2 from any other organisation to the business itself 96 94 3 3 1 2 Equity from family members 95 91 4 6 1 2
Table 5: Business numbers by industry sector, as at June 2011 Industry sector Number of businesses (% of all businesses) Number of small businesses (% of total small businesses) Small business share of industry sector (%) Agriculture, forestry and fishing 198 163 (9.3) 193 961 (9.5) 97.9 Mining 8155 (0.4) 7509 (0.4) 92.1 Manufacturing 90 228 (4.2) 80 284 (3.9) 89.0 Services 1 788 775 (83.9) 1 717 009 (83.9) 96.0 Financial and insurance services 164 438 (7.7) 162 459 (7.9) 98.8 Rental, hiring and real estate services 226 157 (10.6) 223 100 (10.9) 98.6 Construction 351 890 (16.5) 344 238 (16.8) 97.8 Transport, postal and warehousing 132 065 (6.2) 128 770 (6.3) 97.5 Other services 89 491 (4.2) 87 106 (4.3) 97.3 Professional, scientific and technical services 250 613 (11.8) 243 605 (11.9) 97.2 Health care and social assistance (private) 101 011 (4.7) 96 092 (4.7) 95.1 Arts and recreation services 27 697 (1.3) 26 338 (1.3) 95.1 Information media and telecommunications 18 854 (0.9) 17 831 (0.9) 94.6 Administrative and support services 82 119 (3.9) 76 155 (3.7) 92.7 Retail trade 143 679 (6.7) 133 028 (6.5) 92.6 Wholesale trade 79 247 (3.7) 73 366 (3.6) 92.6 Electricity, gas, water and waste services 5862 (0.3) 5406 (0.3) 92.2 Education and training (private) 26 130 (1.2) 23 979 (1.2) 91.8 Public administration and safety (private) 7782 (0.4) 6973 (0.3) 89.6 Accommodation and food services 81 740 (3.8) 68 563 (3.4) 83.9 Not classified 47 091 46 543 98.8