Businesses given second chance show good survival rate: report

Failing companies that were given a second chance through government assistance showed a better survival rate than startups, with many growing bigger in size and sales, a report said Thursday.

The Small and Medium Business Administration surveyed 965 firms that received state support in 2014 to resuscitate their ailing businesses and found that 83.9 percent of them were still in operation two years later. These companies include restarts, which were helped in reopening new businesses or in R&D, and turnarounds that received consulting.

The survival rate of the second chance companies was much higher than that of startups, according to the report from SMBA.

State statistics released at the end of last year said only 47.5 percent of new businesses were still open two years later.

Companies that restarted were able to expand their businesses.

The 165 such firms started out with an average 7.4 employees but had eight two years later. Their annual sales averaged 928 million won ($811,898) on the opening year and grew to 1.131 billion won two years later, an increase of 21.9 percent.

Likewise, 645 turnaround firms started out with 25.8 employees and had 26 two years later. Their sales increased from 7.09 billion won to 7.39 billion, up 4.2 percent.

The government plans to continue its support for businessmen seeking a comeback, allocating 300 billion won in funds for the purpose.

"There is still a strong belief that failing at business will destroy an entire household," Noh Min-seon of Korea Small Business Institute said. "The government needs to activate a program that not only supports starting businesses but allows them a second chance even if they fail." (Yonhap)