The blood and tears of small business
Do you sometimes get cravings for fried chicken late at night? Granting that wish is not so hard — all you have to do is call a number, and even if it is 3 in the morning, the delivery-man will be at your door in no time. Did you just have a fight with your spouse and want to take some time away from him or her? No worries; you can always head to one of the many jjimjil-bang, or public bathhouse, that operate around the clock. You can even go to a neighborhood pub at any hour of the night. So what is the secret to such convenience? The blood, sweat and tears of small business owners.
As of 2010, 29 percent of the total working population in Korea is comprised of small business owners. That means three out of 10 workers are operating mom-and-pop stores, restaurants, bars, barbershops, beauty salons, motels, bath houses and real estate agencies. In the United States, only seven out of 100 working people are employed by small businesses. Korea has 12.2 restaurants per 1,000 people compared to 1.8 in the United States. When there are too many restaurants, owners desperately compete to survive. However, their average monthly net profit is only 1.41 million won ($1,246).
Baby boomers retire or are laid off when they are still spry, but finding a job or second career is nearly impossible, so they start their own businesses. According to the Small and Medium Business Administration, a record-breaking number of 19,048 new companies have been registered in the first quarter. Eighty-four percent of them have less than 100 million won in capital, and 60 percent of the owners are over age 50. And yet the possibility of success is very low for these startups. They all begin with great ambitions, but many end up losing their investments. Every year, one million people open up new businesses and 800,000 have to close. The high rate of startup failure is one of the major causes of mushrooming household debt. This is the inconvenient truth behind the conveniences that Korea enjoys.
There were seven million baby boomers born between 1955 and 1963. Running a business based on one’s efforts and abilities is a wonderful vision, and many salarymen dream of being successful business owners. The strategy is to focus on a niche market, but these are not easy to find. The vicious cycle of startups failing is not an individual problem; it is a serious issue that the government and society need to address before it brings unhappiness to the country.
* The author is an editorial writer for the JoongAng Ilbo.
by Bae Myung-bok
with the Korea JoongAng Daily
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