SEOUL, Feb. 27 (Korea Bizwire) — The average monthly operating profit among micro business owners in South Korea was 2.69 million won (US$2,407) in 2017. The average profit margin was 15.8 percent per month.
Seven out of 10 micro business owners said sales had shrunk over the past year, while 4 out of 10 said they were in debt.
Three out of 10 micro business owners said they had past experience starting a business, and 3 out of 4 said they had experienced going out of business in the past.
The Ministry of SMEs and Startups conducted a survey of 9,546 micro businesses throughout the country from August 27 to September 14 last year, asking 108 questions to business owners about their experiences in starting and running a business, and receiving various subsidies.
Among the respondents, 31.8 percent said they had prior experience with starting a business, with an average of 2.5 times.
Among them, 73.5 percent said they had also experienced going out of business. Respondents were an average of 39.8 years old when they started their first business.
As for the reason behind starting up businesses, 67.6 percent said they had no other choice, 25 percent said they wanted to succeed, and 2.3 percent said they wanted to continue their family business. It took average of 10.2 months to prepare for starting up a business.
The biggest difficulty when starting a business was fundraising (66.1 percent), followed by choosing a location (44.8 percent), selecting a type of business (17.5 percent), and hiring workers (16.9 percent).
The average cost of starting a business was 110 million won (US$98,470), 37.9 percent of which was spent on facilities and equipment, 17.3 percent on interior design, and 16.2 percent on security deposits.
In 2017, micro business owners reported average annual sales of 203 million won, with operating profits of 32.2 million won, for an average of roughly 2.7 million won per month.
Operating costs amounted to 171 million won per year, or 14 million won per month.
At 44.4 percent, close to half of the respondents said they were in debt. In 2017, the average amount of debt per business was 122 million won, with 81.9 coming from bank loans, 8.8 percent from the government, 8 percent from private entities, and 1.3 percent from other lenders.
“We will strengthen our policies to help micro businesses based on the results of the survey,” said the Ministry of SMEs and Startups.
Ashley Song (email@example.com)