NSW Entrepreneurship at 35-Year Low | Economic Impact & Job Data

A Sharp Decline in NSW Entrepreneurship

The number of entrepreneurs starting and scaling businesses in New South Wales has fallen to its lowest level in 35 years. Data from Business NSW and the University of Sydney Business School shows a dramatic shift in the state's workforce. In the year 2000, entrepreneurs made up 8 percent of the total workforce. Today, that figure sits below 5 percent. This drop represents a fundamental change in the state's economic landscape, with the report describing the current trend as disturbing.

Business NSW President Joseph Carrozzi AM notes that the state is not necessarily lacking in entrepreneurs, but rather failing to produce business owners who take the step to hire their first employee. The report indicates that if the 8 percent rate of entrepreneurship remained in effect today, the state would likely host 135,000 additional businesses capable of creating jobs. These missing entities represent significant lost opportunities for investment, wage growth, and long-term economic productivity within the state.

The Employment Gap

Statistics highlight a growing divide between business formation and job creation. Between 2016 and 2025, the total number of businesses in NSW grew by 22 percent. However, non-employing businesses increased by 27 percent, while businesses with staff grew by only 15 percent. Even more concerning is the drop in new ventures that successfully hire within their first year, falling from roughly 35 percent in 2011 to 27 percent in 2025.

Small business owners are feeling this pressure directly. Debbie Hatumale-Uy, who operates an e-commerce craft business in north-western Sydney, describes the current environment as a squeeze. Her venture thrived during the pandemic, requiring four contractors to manage volume. As the cost of living has risen over the past two years, she has reduced her staff to two. She notes that households are tightening budgets, which has a direct effect on sales. Like many others, she has had to diversify her work by launching a marketing agency to stay afloat, as relying on one source of income has become too risky.

Future Implications and Policy Needs

Mr. Carrozzi attributes this decline to a loss of confidence caused by rising operational costs. Energy prices, regulatory compliance, and general business costs have all moved upward, making the startup process difficult. He argues that the government must reduce spending and encourage activity, as the private sector remains the primary engine for job creation. The current lack of scale indicates that small businesses are struggling to turn initial ideas into sustainable employers.

To address this, Business NSW is advocating for a Future Entrepreneurs Strategy. The goal is to make NSW a more attractive environment for founders to start, grow, and maintain their operations. Without intervention, the state risks a continued decline in its entrepreneurial culture. Observers should monitor the upcoming federal budget to see if specific measures aimed at lowering barriers for small business employers are introduced. The path toward reversing these trends will require sustained cooperation between the government and the broader business community to restore the confidence needed for owners to hire again.