The number of entrepreneurs starting their own businesses and scaling them up in NSW has dropped to its lowest level in 35 years, a damning new report reveals.

Entrepreneurs represented 8 per cent of the workforce in 2000, according to analysis produced by Business NSW with research input from the University of Sydney Business School.

Today that figure is less than 5 per cent.

The Future Entrepreneurs report claimed that if the 8 per cent rate of entrepreneurship still held today, NSW would have had an extra 135,000 entrepreneurs potentially running employment-generating businesses.

Business NSW President Joseph Carrozzi AM said NSW isn’t short of entrepreneurs; rather, the state is short on its entrepreneurs taking on that first employee.

“Those missing 135,000 employing businesses represent jobs that were never created, opportunities that never opened up and investment that never happened,” he told news.com.au.

“If we don’t have entrepreneurs in the regions and in the city that feel confident to start businesses, and at the moment we don’t … well that it is not only disappointing, it’s disturbing”.

“The number of businesses in NSW increased by 22 per cent between 2016–17 and 2024–25. However, non-employing businesses grew by 27 per cent, compared with just 15 per cent growth among businesses employing staff.”

He said that the proportion of new businesses employing staff within their first year also fell from about 35 per cent in 2011 to 27 per cent in 2025.

Debbie Hatumale-Uy runs an e-commerce, arts and crafts business, Only The Sweet Stuff, from her north-western Sydney home and said the current statistics “do not surprise” her.

“I feel like founders are being squeezed from both sides, you know, costs are still high, customers are really cautious about spending and I don’t know any other business that isn’t struggling.”

Her small business boomed during the Covid years, as people invested in customisable arts and crafts, with four contractors needed to support her to pack orders once or twice a week, and to keep up to date with customer service queries.

But soaring cost of living in the last two years means she has cut back to two employees with reduced hours, with the small business now facing an ambiguous future.

“It’s a struggle. I haven’t made any decisions on whether I will shut down …. but reading and understanding the information I have, it’s a tough call”.

“The data doesn’t lie; chances are I’ll have to close my doors, depending on how the economics play out”.

The Bella Vista local has poured years of work into building her business and recalls “the buzz” she felt in her community when it was thriving.

“And then, life takes over. The cost of living crisis- if they can’t pay their mortgage, they’re not gonna wanna spend money on craft because they can’t afford it”.

“Ultimately, when households cut back, it has a flow-on effect to people working in small businesses”.

“I grew this business completely organically, and it is still organic. I have a community of nearly 20,000 people across all our social media platforms, but I know they are tightening their belt so that is a reflection of our sales”.

The serial small business owner acted quickly and strategically, pivoting to opening a new small business, The Collab Co, a marketing agency helping other founders and small businesses to grow.

“I have three businesses going at once, instead of only one, because it’s that saying: you can’t have all your eggs in one basket”.

Mr Carrozzi said the story of Ms Hatumale-Uy is a “sad reality” business networks are hearing around the state and nationwide

“There are some economy-wide sentiments that impact confidence in people starting businesses, and in consumers supporting and spending, and at the moment, confidence is down because all costs are going up. Cost of starting a business, cost of running a business, energy costs, regulations, compliance requirements, everything is really difficult, particularly for smaller businesses”.

The Business NSW President said the statistics tells a message to the Albanese federal government, “to say, reduce spending, encourage business activity because the business sector does the heavy lifting to create jobs, create economic growth and prosperity and productivity. Everybody wins from that.”

Reversing the decline in entrepreneurship will require government, business and community groups to commit to long-term change, he added.

“That is why Business NSW is calling for the NSW Government to work with businesses and communities to develop a NSW Future Entrepreneurs Strategy, with the aim to make NSW the best place in Australia to start, grow and scale any business.

“We need to make NSW a place where someone can start on their own and see a realistic path to employing five, 10 or 50 people … But our entrepreneurial culture is being stifled right when we need it most”.