[2021 National Audit] Increase in Dropouts from New Business Startup Academy

Already 23.8% Quit This Year

Assemblyman Shin Jeong-hoon

[Asia Economy Reporter Kim Cheol-hyun] There have been calls to enhance the effectiveness of the New Business Startup Academy to promote well-prepared entrepreneurship among small business owners, focusing on promising items with high growth potential such as new businesses. The New Business Startup Academy supports prospective entrepreneurs with a package that includes startup education, store practice, and commercialization funds to nurture creative small business owners based on innovative ideas.

On the 14th, according to an analysis of data submitted by the Small Enterprise and Market Service to Democratic Party lawmaker Shin Jeong-hoon, the dropout rate during the New Business Startup Academy training has been rapidly increasing. The dropout rate among trainees appeared to improve significantly from 26.7% in 2017 to 12% in 2018, but then rose again to 17.9% in 2019, 20.4% in 2020, and has already exceeded 23.8% in the first half of this year.

It has also been pointed out that entrepreneurs are still concentrated in the wholesale and retail sectors, which is problematic. According to the most recent statistics from the first half of 2020, the startup rate in wholesale and retail increased sharply from 36.8% in 2019 to 59.1% in 2020. Wholesale and retail have lower entry barriers compared to other industries, which likely leads to a higher frequency of business closures. In fact, an analysis of the distribution of closures by industry among New Business Startup Academy entrepreneurs from 2017 to 2020 shows that the closure rate in wholesale and retail was 56.3%, higher than in other sectors.

Overall satisfaction with the program was high at 89.1%, but when broken down by stage, satisfaction with support for practice expenses was the lowest at 29.3%, and satisfaction with the activation of experiential stores was also low at 32.6%. Lawmaker Shin proposed, "Since the policy goal is to encourage startups centered on promising items with high growth potential, it is necessary to induce small business owners to differentiate their startups into other industries rather than those already saturated, thereby resolving excessive competition among small business owners and driving innovation and diversification in entrepreneurship."