Due to the effects of the economic recession, the average revenue per business site for small business owners in the first quarter of this year (January to March) has decreased by nearly 13% compared to the previous quarter. During the same period, it was reported that 500,000 of the 3.62 million establishments with personal business loans nationwide have shut down.
Korea Credit Data (KCD) released the '2025 First Quarter Korea Credit Data Small Business Trends Report' on the 22nd, analyzing the management data of small business owners nationwide for the first quarter of this year (January to March).
According to the report, the average revenue per business site for small business owners in the first quarter was 41.79 million won, which is a decrease of 12.89% compared to the previous quarter and 0.72% compared to the same period last year. This decline in revenue is analyzed to be the result of a combination of factors such as consumer contraction due to high inflation, delays in domestic recovery, and seasonal factors following the end of year-end special sales.
In the midst of continuous revenue decline, small business owners have started to endure by reducing expenditures. The average expenditure per establishment was 31.53 million won, which marks a decrease of 13.4% compared to the previous quarter and 1.9% compared to the previous year. As a result, the average profit per business site was 10.26 million won, which reflects an 11.4% decrease compared to the previous quarter but a 3.05% increase compared to the same period last year. This indicates a management strategy aimed at maintaining profitability through cost reduction.
Although both revenue and expenditure have declined, the decrease in expenditures was greater, leading to improved profit margins. The profit margin for small business owners increased by 0.41 percentage points (P) compared to the previous quarter and by 0.9% P compared to the previous year. It is analyzed that small business owners are focusing on cost efficiency centered on profitability.
By sector, the food service industry was hit hardest. Revenue in the food service sector decreased by up to 13.6% compared to the previous quarter and by up to 11.1% compared to the previous year. Among the food service sectors, the industries with the largest revenue declines compared to the previous year were pubs, snack bars, bakeries and desserts, fast food, and cafes. In the service sector, the accommodation and travel services experienced the largest drop at 11.8% compared to the previous year, followed by arts, sports, and leisure-related services at 6.8%.
Meanwhile, the number of small business owners who closed their businesses due to the economic recession increased by 13.8%. Out of 3,619,000 establishments holding personal business loans, the number of establishments in a state of business closure was tallied at 499,000. Particularly, the non-bank closure rate was 16.6%, higher than the bank closure rate of 9.4%. This indicates that small business owners exposed to high interest rates closed their businesses at a higher rate. The closed establishments left an average of 6.4 million won in arrears.