[The Tragedy of Small Businesses] Half of Small Business Owners Earned Less Than 60 Million Won Last Year

Analysis of the '2021 KB Self-Employment Report'
'Solo Bosses' Hit Hardest... Sales Down 31%
Actual Profit Less Than 20% of Sales
41% of Small Business Owners in the Seoul Metropolitan Area Experience Sharp Sales Decline

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] About half of small business owners in the Seoul metropolitan area earned less than 60 million KRW last year. Hit hard by COVID-19, the actual money they took home was less than 20% of their sales. In particular, 'solo owners' suffered the biggest blow with a 31% decrease in sales. There are criticisms that the government's complacency, believing "if we just hold on a little longer, things will get better," has led to the tragedy of self-employed businesses.

According to the '2021 KB Self-Employment Report - Survey on the Impact of COVID-19 on Small Business Owners in the Seoul Metropolitan Area' published by KB Financial Management Research Institute on the 22nd, the total sales volume of small business owners last year was 209.98 million KRW, a 24% decrease compared to 274.28 million KRW in 2019 before COVID-19.

In particular, due to the overall decline in sales, the number of micro self-employed businesses with annual sales under 60 million KRW significantly increased. It rose by 17 percentage points in one year, from 24% in 2019 to 41% last year. More than half (56%) of those working in the service industry had sales under 60 million KRW. Especially, retail and food service sectors experienced the largest drops in earnings. During the same period, their shares increased sharply from 20% and 16% to 35% and 27%, respectively.

Sales of self-employed 'solo owners' decreased by 31%, marking the largest decline. However, companies employing six or more people saw only a 10% decrease in sales last year. This indicates that the more employees a business has, the lower the relative sales decline, showing that micro self-employed businesses with fewer employees were hit harder by COVID-19.

By industry, the service sector (-35%) was hit hardest by the COVID-19 crisis. Due to social distancing and travel restrictions, sales plummeted especially in performance and event agencies (-81%) and travel agencies (-68%).

Retail and food service sales also recorded declines of -20% and -23%, respectively. In retail, sales at stationery stores and watch and jewelry shops fell by 70% and 50%, respectively, due to reduced classes and fewer wedding ceremonies.

Due to strengthened social distancing measures, food service businesses not using delivery and ordering platforms (-24%) experienced a larger sales decline than those using related services (-19%).

By region, small business owners in Incheon (-33%) saw the largest sales decrease, followed by Seoul (-26%) and Gyeonggi (-17%).

Small business owners cited 'decrease in visiting customers (40%)' and 'operating hour restrictions (32%)' as factors affecting sales and profits due to COVID-19. 88% of small business owners said COVID-19 impacted their sales and profits, with 57% stating it had a very significant effect. Especially in the food service sector, 'operating hour restrictions' directly affected sales and profits.

Meanwhile, this survey targeted the Seoul metropolitan area, where 51% of the nation's small business owners are concentrated. The number of small business establishments in the metropolitan area was 3.279 million, accounting for 51% of the national total (6.442 million), and the number of small business workers was 4.674 million, also 51% of the national total (9.219 million).

This content was produced with the assistance of AI translation services.