Entrepreneurship Among Youth Under 35: Average Survival of 2.3 Years... Shorter Than Seniors Over 65

Statistics Korea 'Journal of Statistical Research' Paper

Prospective entrepreneurs participating in the "63rd Franchise Startup Expo" held on the 4th at SETEC in Gangnam-gu, Seoul, are obtaining information related to startups. Photo by Jinhyung Kang aymsdream@

[Sejong=Asia Economy Reporter Kim Hyun-jung] It has been revealed that the survival time of businesses started by young people under the age of 35 is only 2.3 years. This is even shorter than the survival time of startups by the elderly aged 65 and over (2.9 years), highlighting concerns about the effectiveness of youth startup support policies.

According to the Statistics Korea 'Journal of Statistical Research' on the 18th, Im Seong-hee, a Statistics Korea officer, and Kim Jin-ok, a Statistics Development Institute official, stated this in their paper titled "Survival Analysis of Individual Startup Businesses: Focusing on Administrative Data from 2010 to 2018." The paper analyzed the survival time and survival factors of individual startup businesses by industry and characteristics using data from the Statistical Business Register (SBR), which combines survey and administrative data from 2010 to 2018.

The median survival time of individual businesses started between 2010 and 2018 was 2.6 years. The one-year survival rate of individual startups was as high as 78.9%, but the three-year survival rate dropped to 45.6%, and the five-year survival rate fell to 31.4%. This means that 7 out of 10 individual businesses close within five years of starting. The risk of closure was highest up to 1.5 years after startup and gradually decreased thereafter.

By age group, it was analyzed that businesses started by young people (under 35) had the highest risk of closure. The median survival time of businesses started by the youth was 2.3 years, the shortest among all age groups. The middle-aged group (35?49 years) and the elderly group (65 years and older) both had a median survival time of 2.9 years. The longest survival time was observed in the mature age group (50?64 years), at 3.1 years. The paper pointed out that this suggests the need for changes due to the low effectiveness of existing youth startup support policies.

By industry, retail and finance/insurance had the shortest median survival time of 1.9 years. The food service industry and business support services also had survival times of only 2.0 years. The median survival time in the Seoul metropolitan area and six major metropolitan cities was 2.6 years, while other regions showed 2.7 years.

By gender, businesses started by men had a survival time of 2.8 years, while those started by women had 2.3 years, showing a difference in survival time.

The risk of closure was lower for businesses with partners (co-entrepreneurs), franchise affiliates, or employees. Businesses with co-entrepreneurs who share capital, technology, and management skills had a median survival time of 5.8 years, compared to 2.5 years for those without. Franchise-affiliated businesses had a median survival time of 4.3 years, 1.8 years longer than non-affiliated businesses. The paper analyzed that this is because franchises share the headquarters' management know-how and receive management education support. Businesses with employees had a survival time of 3.8 years, 1.3 years longer than those without employees.

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