More than Half of Small Business Owners Expect Worsened Business Environment Next Year... Funding Difficulties This Year

Korea Federation of SMEs to Announce Survey Results on the 25th
"Only 10.3% Expect Improvement in Business Environment Next Year"
"Prepare Support Measures to Ease 'Loan Repayment Burden'"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] More than half of small business owners expect the business environment next year to worsen compared to this year. Additionally, small business owners reported that securing funds was the biggest challenge they faced this year.

The Korea Federation of SMEs announced on the 25th the results of a survey on next year's business environment outlook and management difficulties, conducted with 300 small business owners engaged in wholesale and retail, accommodation and food services, and arts, sports, and leisure-related services.

56.0% of small business owners anticipated that the business environment next year would deteriorate compared to this year. Among them, 8.3% said it would "significantly worsen," and 47.7% said it would "somewhat worsen."

The reasons for concerns about deterioration were ranked as follows: rising costs and reduced profits due to high inflation (52.4%), increased loan repayment burdens due to base interest rate hikes (38.7%), and lack of ability to respond to rapidly changing industrial environments such as online and digitalization (8.9%).

Only 10.3% of small business owners expected the business environment to improve next year compared to this year. Factors contributing to this optimism included the lifting of social distancing measures and the end of COVID-19 (77.4%), the introduction of various support measures for small business owners and self-employed by the new government (12.9%), and reduced management costs due to easing trends in high interest rates and inflation (9.7%).

Small business owners rated their business performance this year, including sales and operating profit, at an average of 5.36 out of 10. The biggest management difficulties experienced this year were securing funds (40.0%), securing sales channels (36.0%), and securing manpower (16.0%).

The most prioritized support measure for small business owners next year was easing management costs and loan repayment burdens (52.7%).

This was followed by expanding the social safety net for small enterprises and small business owners (28.3%), supporting sales channel expansion due to the spread of non-face-to-face consumption (8.7%), and strengthening regulations on large corporations to establish a fair trade foundation (5.7%).

Choo Moon-gap, head of the Economic Policy Division at the Korea Federation of SMEs, diagnosed, "Following the prolonged COVID-19 pandemic, the complex economic crisis has intensified management difficulties for small and medium-sized business owners, with self-employed loans exceeding 1,000 trillion won, reaching an all-time high."

He added, "Various policy supports are needed to help alleviate the management burdens of small business owners and to strengthen their ability to respond to digital transformation and other challenges."

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