53% of Small Business Owners Say "Last Year's Business Environment Was Bad"... 42% Expect "Worse This Year"

Cited "declining consumption due to sluggish domestic demand" as the main reason
58.2% report monthly average operating profit below 3 million won

More than half of small business owners assessed last year's business environment as "bad," according to a recent survey. Nearly half of all respondents expect the business environment to deteriorate further this year compared to last year.

According to the results of the "2026 Small Business Owners' New Year Business Survey" released by the Korea Federation of Micro Enterprises on January 13, 53.3% of respondents rated last year's business environment as "bad" (29.5% "somewhat bad," 23.8% "very bad"). The proportions who answered "average" and "good" were 33.6% and 13.0%, respectively. Although this is a slight decrease compared to the 69.2% who responded "bad" in the 2024 business survey, more than half are still experiencing operational difficulties.

The most frequently cited reason for last year's poor business environment (multiple responses allowed) was "declining consumption due to sluggish domestic demand" at 77.4%. This was followed by "burden of financial costs due to rising interest rates and increased debt" (33.4%), "rising costs of raw and subsidiary materials" (28.3%), and "burden of labor costs and difficulties in securing manpower" (26.4%).

Last year, the most common monthly average operating profit for small business owners was in the range of "1 million to less than 2 million won" (20.5%). "0 to less than 1 million won" accounted for 17.9%, and "2 million to less than 3 million won" made up 17.1%. The proportion of those with monthly average operating profit below 3 million won was 58.2%. Compared to the 64.5% recorded in the 2024 business survey, this figure has declined slightly.

A total of 42.7% expect the business environment this year to worsen compared to last year. The proportions who responded "maintain current level" and "improve" were 29.7% and 27.6%, respectively. The item expected to be the greatest burden this year was "financial costs (interest)" at 48.7%. This was followed by "labor costs" (38.1%), "cost of raw and subsidiary materials" (36.7%), and "rent" (33.5%).

Regarding employment plans for this year, the majority (57.3%) answered that they would "maintain the current level." The proportion who said they would "reduce staff" was 11.8%. As for employment-related challenges, more than half (51.8%) cited the "burden of rising labor costs."

The issue expected to have the greatest impact on this year's business environment was overwhelmingly "domestic market stagnation due to low growth" at 77.7%. Other concerns included "rising consumer prices due to exchange rate increases and higher import prices" (36.7%) and "minimum wage increases" (31.9%).

The vast majority of small business owners agreed that "financial support" (71.9%) is the most needed measure this year. There were also calls for "tax support" (39.0%) and "marketing and sales channel support" (22.9%).