Small business owners in South Korea are shutting down after an average of 6 years and 6 months, with debts soaring past 100 million won ($100,000+), a shocking survey reveals!
The Korea Federation of SMEs (KBIZ) surveyed 820 small businesses that closed since 2021. A staggering 39.9% didn’t even make it past 3 years.
The top reason for closure? “Profit decline and sluggish sales” (86.7%)! Owners cited shrinking domestic demand, rising labor and material costs, and soaring rent as key culprits.
Hospitality and food sectors especially struggled, with 35.6% blaming hefty fees from delivery and booking apps—way above the overall average of 16.3%.
Debt at closure averaged 102.36 million won ($102,360). Manufacturing businesses topped out at 144.41 million won, 1.5 times higher than hospitality’s 90.46 million won.
Closure costs weren’t cheap either—averaging 21.88 million won ($21,880). Think demolition (5.18M), restoration (3.79M), severance (5.63M), and taxes (4.2M). Manufacturing faced triple the burden at 38.59 million won.
Biggest headaches? Securing a livelihood (31.1%), recovering lease rights (24.3%), and repaying loans (22.9%).
The “Yellow Umbrella” mutual aid fund helped 71.1%, with 58.9% using it for living expenses. Yet, 78.2% didn’t tap government programs like Hope Return Package.
What do they need? Loan repayment grace periods, closure cost aid, and career support topped the list.
Of 400 who didn’t restart, 59.3% preferred jobs over re if income matched. They want better job incentives and local opportunities, while re hopefuls seek funding and debt relief.
When will real support for small businesses arrive?
