The Korea Federation of Small and Medium Enterprises announced the results of the '2025 Small Business Closure Survey' conducted on 820 small business owners who received yellow umbrella (small business mutual aid) closure compensation since 2021.
According to the survey, the average liability of the closed small business owners was 103.6 million won. The average operating period was 6.5 years, and the percentage of short-term business closures lasting less than three years was about 40%.
Closed small business owners answered regarding the reasons for starting a business: ▲Maintaining livelihood (65.4%) ▲To earn more revenue than working for someone else (45%) ▲To utilize abilities and experience (40.7%) in that order.
As for the reasons for closure, ▲86.7% of respondents cited deteriorating revenue and poor sales as the highest. This was followed by ▲personal circumstances such as ability and family (28.7%) ▲new business startup and preparation (26%) ▲inevitable reasons such as expiration of lease or administrative action (21.8%).
As for the causes of deteriorating revenue, the following were presented: ▲decrease in customers due to sluggish domestic demand (52.2%) ▲rising labor costs (49.4%) ▲increased burden of materials and supplies due to rising prices (46.0%) ▲increase in fixed costs, such as rent (44.6%).
However, among these, the percentage of those who utilized government support programs during the closure process was only 11.8% of all respondents. The reasons for not utilizing it included ▲not knowing the contents of government support (66.9%) ▲the application process or requirements being difficult (21.4%).
The government policies that are most needed and should be expanded at the time of closure include ▲deferral of loan repayments and interest reductions (52.6%) ▲support for closure expenses (51.0%) ▲support for career paths after closure (46.6%) ▲expansion of self-employed person employment insurance and the yellow umbrella mutual aid (22.8%).
The priorities for government policies needed for the development of small businesses were: ▲63.9% chose debt burden relief policies such as converting to long-term loan products and reducing interest. Other policies included ▲reducing fixed costs such as rent and electricity (51.0%) ▲strengthening the yellow umbrella system for recovery and maintaining livelihoods during closures (44.4%), which also showed high response rates.
Chumoon-gap, head of the economic policy department at KBIZ, noted, “We will encourage the reemployment of closed small business owners through enhanced retraining and expanded job transition incentives.”