Small businesses in Australia have contributed over half a trillion dollars to the country's GDP, according to a government report.

A review released by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) titled ‘Small Business Matters’ (PDF) reveals that the value of small businesses to the economy rose by 15 per cent in 2021-22, reaching $506 billion, which accounts for one-third of Australia's GDP.

The report also highlights the crucial role played by small businesses in employment, with 2.5 million SMEs providing jobs for 5.1 million people. 

Furthermore, 42 per cent of apprentices and trainees work for small businesses. 

Despite their contributions, the report sheds light on the challenges faced by small business owners. 

It reveals that three-quarters of self-employed business owners earn less than the adult full-time wage when accounting for total hours worked. 

Additionally, 55 per cent of small business owners with 1 to 19 employees earn less than the adult full-time wage, indicating financial difficulties faced by entrepreneurs.

The report also examines the changing demographics within the small business sector. 

While the average small business owner is a self-employed man aged 50 or older, female ownership is growing rapidly, accounting for 35 per cent of all small business owners. 

However, only 8 per cent of small business owners are under 30, a considerable decline from the peak of 17 per cent in the 1970s. This decline raises concerns about the attractiveness of small business ownership for younger Australians.

Ombudsman Bruce Billson says there is a need to understand why younger Australians are not as inclined to own small businesses and stressed the importance of nurturing the next generation of entrepreneurs. 

The report also highlighted the rich cultural diversity within the small business community, with one-third of businesses owned by entrepreneurs born outside of Australia.

While small business owners face financial challenges, the report acknowledges their dedication to their communities. 

Small business owners are more likely than the general population to perform unpaid childcare and have caring responsibilities. They also contribute significantly to community organisations through volunteering.