Self-employed need helpA recent survey of 10,490 small businesses by the Small and Medium Business Administration underscored the dark side of Korea’s self-employed business sector. More and more people over the age of 40 are opening businesses because they have no other option. Eight out of 10 small-business entrepreneurs said they opened up their own business to “earn a living.” This year, the proportion hit 82.6 percent, up from 80.2 percent in 2010 and 79.2 percent in 2007.
Entrepreneurs are also aging. The share of self-employed people over the age of 40 reached 87 percent this year compared with 81.7 percent in 2007. The increase suggests that more middle-aged and older people are being thrown out of the corporate sector and the job market. Baby boomers born between 1955 and 1963 are forced to seek loans or use their savings to open up their own businesses.
These types of start-ups are not motivated by enterprise, but rather to put food on the table. They are not opening businesses to fulfill any kind of dream. Because few of these type of entrepreneurs are fully prepared, many businesses fail. According to the latest data released by Statistics Korea, one out of two start-ups closes within two years. Only three out of 10 survive for five years. Despite such lousy odds, people who retire at a relatively young age have no other option.
On average, newly self-employed people prepare for less than nine months to open up a business. They commonly start with diners, cafes or karaoke bars. Such entries into the simple service sector do little to diversify and expand Korea’s start-up sector. These mom-and-pop stores usually cite competition within the same neighborhood (46 percent) as their biggest problem instead of bigger rivals (19 percent).
Still, when the government wants to help small-business entrepreneurs, it usually slaps regulations on large companies. And small merchants and businesses continue to suffer amid poor competition. The government must set its targets right for a change. It must come up with tailored programs for entrepreneurs of different ages and in different industries. It should increase training programs for retirees and diversify its financial assistance and start-up support programs. It must act fast to save the sinking fortunes of our brave self-employed.