Nine out of 10 small business owners expect the management environment in 2025 to be similar to or worse than last year.
The Korea Federation of Small and Medium Enterprises announced the results of a survey on the management conditions and policy issues for small business owners, conducted with 800 small business owners in closely related industries (retail, accommodation and restaurant businesses) and manufacturing from Nov. 12 to Dec. 6 last year.
The survey results showed that 95% of small business owners expect this year's management environment to worsen (55.6%) or remain similar (39.4%) compared to last year. Only 5% expressed a positive outlook.
This year, the biggest business burden factor (multiple responses allowed) was high prices such as rising raw material and material costs, which accounted for 52.8%. It was followed by decreased sales due to domestic stagnation (43.1%), loan repayment burden (36.4%), and rising labor costs and difficulties in securing personnel (35.5%).
However, 93.5% of small business owners responded that they are not considering closing their businesses. This is analyzed to be due to the fact that livelihood-based startups account for 78.5% of the total, driven by difficulties in obtaining employment and preparing for retirement.
It was found that 73.8% of small business owners are receiving loans from financial institutions for business purposes. Among them, 34.9% reported that their loan amounts have increased compared to the previous year.
Of the small business owners with loans, 93.7% felt burdened by principal and interest repayments. The average loan interest rate among small business owners was 4.99%, and 65.9% had rates exceeding 5%.
The most needed support policies for small business owners on the ground were financial support (80.8%), sales channel support (9.9%), fostering entrepreneurial small business owners (2.4%), and spreading a culture of cooperation (1.9%).
For this year, the top priority issues that the National Assembly or the government needs to address (multiple responses allowed) are relief from loan burdens due to high interest rates (63.4%), resolving rising labor costs and labor shortages (63%), expanding income tax deduction benefits for small business owners (29.6%), and alleviating energy cost burdens (28.3%).
Choo Mun-kap, head of the economic policy division at the Korea Federation of Small and Medium Enterprises, noted that 'the long-lasting consumption contraction due to political instability following complex economic crises such as high exchange rates, high prices, and high interest rates is causing significant difficulties for small business owners who are absolutely dependent on the domestic market.' He emphasized that it is essential to establish policies for domestic activation as well as reducing interest rates for small business owners.