Home » Economy » ‘Life-sustaining’ with 300 trillion won in debt on half of operating profit… Small businesses hit directly by Corona

‘Life-sustaining’ with 300 trillion won in debt on half of operating profit… Small businesses hit directly by Corona

National Statistical Office/Ministry of SMEs and Startups 2020 Small Business Survey
870,000 seed companies leave due to deteriorating business conditions

On the 27th, when the application for the quarantine subsidy for small businesses began, a notice about the quarantine pass was posted at a restaurant in downtown Seoul. News 1

It was found that the operating profit of small businesses last year shrank by half compared to the previous year due to the corona cold wave. Due to the lack of business, the debt of small business owners increased by nearly 50 trillion won, and the number of employees decreased by 870,000 in one year.

The Ministry of SMEs and Startups and the National Statistical Office released the preliminary results of the 2020 small business situation survey on the 28th.

Last year, the sales per business of small businesses was 224 million won, down 11 million won (4.5%) from 2019. The wholesale/retail industry (12 million won) and the arts/sports/leisure industry (-8 million won), which belong to the service industry, led the decline in sales.

The decline in operating profit is even worse. Operating profit per business fell 14 million won (43.1%) from 33 million won in 2019 to 19 million won in 2020, and the decline in the face-to-face service business was also remarkable.

The wholesale/retail business’s operating profit halved from 40 million won in 2019 to 20 million won in 2020, △Accommodation/restaurant business (-56.8%) △Education/service industry (-66.4%) △Arts/sports/leisure industry (-85.2%) ) profit shrank even more.

Sales and operating profit per small business entity. Provided by Statistics Korea

As the number of small business owners trying to fill their reduced operating profit with debt increased, their debt reached 294.4 trillion won, an increase of 47.7 trillion won from the previous year. The proportion of businesses with debt also jumped from 51.9% in 2019 to 60.0% in 2020.

The number of employees working in small businesses decreased by 871,000 (13.5%) from the previous year. This is due to the rapid increase in the number of employees who lose their jobs due to the lack of business.

Again, the number of employees in the face-to-face service industry decreased significantly, 313,000 (16.7%) in the wholesale/retail industry and 252,000 (16.2%) in the lodging/restaurant industry. The number of workers in the arts, sports and leisure industries also decreased by 39,000, which is equivalent to 20% of the total workforce.

Although the business conditions of small business owners continued to deteriorate, the number of new founders entering the market rather increased. The total number of businesses increased by 131,000, of which 49,000 were in the lodging/restaurant industry and 24,000 in the wholesale/retail industry. It is interpreted that this is because, as the demand for non-face-to-face transactions such as delivery restaurants increased due to the corona virus, the number of founders who took advantage of this gap increased significantly.

Only 19.5% of small business owners owned their workplaces. 85.9% of small business owners who pay rent set up their business by paying a fixed deposit and then paying monthly rent. The average deposit is 21.38 million won and the monthly rent is 1.19 million won. The government’s 1 million won in quarantine subsidy is less than a month’s rent.

Sejong = Park Se-in reporter




Balance to see the world, Hankook Ilbo Copyright © Hankookilbo

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