Introduction
Living in Seoul means experiencing constant change and motion. Trends come and go at such a rapid pace that it can make you dizzy—from Tang Hulu to Dubai Chocolate, with many more to come. Staying in Korea for more than a month, you'll feel this energetic pulse and witness your favorite stores or cafes vanishing overnight, only to be replaced by completely new ones.
Statistics reveal a harsh truth: approximately 90% of small businesses in Korea fail within their first two years. This phenomenon is particularly visible in popular districts like Hongdae, Gangnam, and Itaewon, where cafes, restaurants, and retail shops frequently change ownership.
The Photography Studio Story: A Common Scenario
The story of my friend's photography studio venture illustrates a common pattern among aspiring Korean entrepreneurs. Her confidence in the aesthetic appeal of her studio and willingness to sign a two-year lease without market validation reflects a broader trend. Many new business owners in Korea prioritize appearance and location over fundamental business principles.
What makes this situation particularly challenging is the combination of high rental costs in prime locations and the pressure to maintain a certain image. In Seoul's competitive market, having a "pretty" space isn't enough – you need a solid business strategy, market understanding, and sufficient capital reserves.
Looking back at my conversation with my friend about her photo studio plans, I was particularly struck by her casual approach to such a significant investment. When she told me about signing the lease, her confidence seemed to stem more from optimism than practical business sense. Her response, "Well if I just do it they will come, don't they?" revealed a common misconception among new business owners in Korea – that aesthetic appeal automatically translates to customer traffic.
What worried me most was her dismissal of basic market research. The suggestion of starting with a pop-up store to test the waters seemed obvious to me, but to her, it was an unnecessary step. Her attitude of "I could survive for 2 years" showed she was viewing the venture more as a personal project than a business that needed to generate sustainable income.
Our conversation became even more concerning when I learned about her job situation. When I asked if workplace issues had prompted this decision, her response was surprising. Not only was her job environment positive, but her colleagues were supportive – her team leader had even gifted her an expensive camera lens. Her simple explanation, "it's time for me to do what I want," revealed a concerning lack of strategic thinking.
What particularly troubled me was her willingness to leave a stable, positive work environment without first testing her business concept as a side project. The security of a consistent income could have provided a safety net while she built her client base and refined her business model. Instead, she chose to dive headfirst into entrepreneurship without this crucial financial buffer.
While I had more advice to offer about building a customer base and understanding the local market, I chose to remain silent as it was already too late. Sometimes, experience is the most effective teacher, though it's often the most expensive one too.
The Cultural Context: Title “Business Owner”
Understanding why so many Koreans rush into business ownership requires examining the cultural context. The title of "사장님" (business owner) carries significant social status in Korean society. This cultural pressure, combined with the relatively straightforward process of starting a business, often leads to hasty decisions.
Additionally, many aspiring business owners fall into the trap of the "employee mindset." Just because someone excels at their specific job role - whether it's making coffee, taking photos, or cooking - doesn't necessarily mean they're equipped to handle all aspects of running a business. The skills that make a great barista, photographer, or chef are vastly different from those needed to manage finances, handle marketing, negotiate with suppliers, and lead employees.
This disconnect between technical expertise and business acumen is particularly evident in Korea, where professional excellence is highly valued. Many employees who are recognized for their skills at work naturally assume they can replicate this success in their own business. However, they often underestimate the complexity of business operations, from managing cash flow and inventory to dealing with regulations and human resources.
For instance, a skilled chef might know everything about creating delicious dishes but struggle with food cost calculations, supplier negotiations, or staff management. Similarly, a talented photographer might produce stunning images but lack the marketing skills to attract clients or the financial knowledge to price their services profitably.
Lessons from the Cafe Industry
The cafe industry in Korea perfectly exemplifies these challenges. Any neighborhoods in Seoul, you might find dozens of cafes within a single block. While many owners focus on creating Instagram-worthy interiors, few calculate the number of daily customers needed to break even, considering rent, utilities, ingredients, and labor costs.
Low Barrier for Opening Stores
The low barrier to entry in Korea's business landscape presents both opportunities and challenges. While it's remarkably easy to start a business - often requiring just a few days for paperwork and location setup - this simplicity can be deceptive. Unlike countries such as Germany, where opening a restaurant involves extensive permits and can take months, Korea's streamlined process means many entrepreneurs jump in without adequate preparation.
The standard two-year lease structure in Korea creates a natural business cycle. Many owners realize the challenges of business operation only after committing to these leases. For cafes, a common example, basic calculations are often overlooked. Consider this: with rent, utilities, staff wages, and ingredient costs, a typical cafe in Seoul might need to sell 100-150 cups daily just to break even - a target that many owners don't factor into their business plans.
This ease of entry, while appearing advantageous, often leads to premature business launches without proper market research or financial planning. The result is a high turnover rate, with businesses frequently closing as their two-year leases expire, replaced quickly by new, equally unprepared entrepreneurs.
A Better Path to Business Success
If my friend had asked for my advice before starting her photography studio, I would have suggested a three-phase approach.
1. Hobby
First, start small by building a photography portfolio as a side hustle. Take photos of friends, build a social media presence, and gauge interest organically. If after a year of consistent effort there's genuine interest and paid inquiries, that's a positive market signal. If not, it might be better kept as a hobby.
2. Internship and Mentoring
Next, I would recommend gaining industry experience by working or interning at an established photography studio. This provides invaluable insights into the business aspects of photography - from client management to pricing strategies. It's also an opportunity to explore different specialties like portraits, fashion, or product photography, and find a profitable niche that aligns with her interests. During this phase, she could build a network of fellow photographers who might later become collaborators or even refer overflow clients.
3. Establish Business
Finally, only after gaining both technical expertise and business acumen, would I suggest opening her own studio. By then, she would have market validation through her existing client base, practical business experience, and a supportive professional network. This approach minimizes financial risk while maximizing the chances of success through methodical preparation and real-world testing.
Returning to my friend's photography studio, while I hope she becomes part of the successful minority, her approach highlights the common pitfalls many face. The combination of minimal market research, immediate full-scale investment, and reliance on aesthetic appeal rather than business fundamentals puts her venture at significant risk.
Conclusion
The high failure rate of small businesses in Korea reflects a complex interplay of cultural factors, low entry barriers, and often inadequate business preparation. While the entrepreneurial spirit is admirable, the tendency to prioritize aesthetic appeal and social status over sound business fundamentals leads many ventures to fail within their first two years.
Success in Korea's competitive business landscape requires more than just passion or a beautiful storefront. Aspiring entrepreneurs would benefit from a more methodical approach: starting small, gaining industry experience, and validating their market before making significant investments. This measured strategy, though less glamorous, offers a more sustainable path to business success.
As Korea's business environment continues to evolve, understanding these challenges and learning from others' experiences becomes increasingly crucial. Whether it's a café, photography studio, or any other small business, the key to longevity lies in thorough preparation, realistic expectations, and a solid business strategy that goes beyond surface-level appeal.
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About the Author
Kim Ninja (Huy-Kim Nguyen)
Cloud Engineer / WebApp Developer 💻
Content Creator Bridging Korea 🇰🇷 to the World 🌎
Startup Founder based in Seoul, South Korea 🚀
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