When you think of Australia’s construction sector, towering cranes and major contractors often come to mind. However, the real foundation of the industry is built by small businesses, the sole traders, partnerships, and micro firms who work on everything from home renovations to specialised trade work. These operators form the backbone of the nation’s building industry, driving growth and supporting communities in every corner of Australia.
Recent statistics reveal that over 98% of Australia’s construction businesses have fewer than 20 employees. Within this group, most are microbusinesses with fewer than 5 workers. This means the sector is made up largely of small, agile operators rather than large-scale corporations, creating a business environment that is highly diverse and deeply connected to local needs.
The Numbers Tell the Story
Figures from the Australian Bureau of Statistics (ABS) and the Committee for Economic Development of Australia (CEDA) for June 2024 show:
- Total construction businesses in Australia: 452,820
- Small businesses (<20 employees): 98.5% of all construction firms
- Microbusinesses (<5 employees): 91% of all construction firms
That equates to roughly 446,000 small construction businesses nationwide, most of which are run by sole traders or small teams of tradespeople. These businesses are responsible for a wide range of work, from framing new houses and laying tiles to repairing electrical systems and installing plumbing.
Why Are There So Many Small Firms?
- Tax Benefits
Australia’s tax system offers significant incentives for small businesses, encouraging tradespeople to work for themselves rather than as employees. This includes instant asset write-offs for tools and vehicles, simplified GST reporting, and small business income tax concessions. Together, these measures make it financially viable and attractive to run a small, independent construction business. - Subcontracting Culture
The Australian construction industry is built on layers of subcontracting. Large building projects often rely on dozens of specialist trades, such as carpenters, electricians, tilers, plasterers, and plumbers, who operate as independent businesses contracted for specific stages of work. This system allows major contractors to manage large projects without employing all trades in-house, creating steady opportunities for small operators. - Low Barriers to Entry
While some trades require formal licensing, the overall capital needed to start a small construction business is relatively low compared to many industries. For many tradies, all it takes is their trade qualification, the right licenses, a reliable work vehicle, and a set of tools to get started. This accessibility makes self-employment a realistic goal for many skilled workers.
Up Next in Part 2: Opportunities, Challenges, and the Road Ahead
In our next blog, we explore what makes small construction firms so valuable to the industry, the biggest challenges they face in today’s market, and how they can secure long-term success. We also share practical ways Builders Institute supports small businesses in staying competitive, compliant, and profitable.
