2025 started with a tendency to close businesses
25 June 2025 18:04
In early 2025, Ukrainian small businesses faced a forced interruption in the operation of the Unified State Register. This was caused by a large-scale external cyberattack on state registries. According to YC.Market analysts, this event significantly affected the dynamics of opening and closing sole proprietorships, creating a specific picture of pent-up demand for entrepreneurship in the next period. Read more in the new study.
5 key trends identified
- Increase in business closures. In the first quarter of 2025, more than 108 thousand individual entrepreneurs closed, which is more than 50% higher than in the fourth quarter of 2024 (about 72 thousand)
- Increasein new registrations – an increase of about 20%. The number of newly created sole proprietorships reached 56.8 thousand in Q1 2025 compared to 47.3 thousand in Q4 2024
- Unchanged industry leaders. Retail trade, information technology, and the “other services” segment are leading in terms of the number of new sole proprietorships. The same industries also lead the “anti-rating” of closures of sole proprietorships, reflecting the high share of these industries in the structure of small businesses.
- Traditionally, most sole proprietorships are registered in Kyiv. Other leaders include Dnipropetrovs’k, Lviv, Kyiv, Odesa, and Kharkiv regions, where more than half of all new sole proprietorships in the country were opened.
- In termsof gender, women account for the majority of both new and closed sole proprietorships: about 61-62% of new starts and about 52% of closed ones are female entrepreneurs. The share of men, respectively, is ~38-39% among new and ~48% among liquidated sole proprietorships.
Overall activity: the effects of pent-up demand
Earlier, we found that in January 2025, there was a sharp surge in entrepreneurial activity in Ukraine after a long downtime of the Unified State Register. This trend continued throughout the first quarter – 56,826 new sole proprietors were registered in January-March 2025, which is about 20% more than in the fourth quarter of 2024(47,347). At the same time, the number of closed sole proprietorships increased even more markedly – from 71,975 in the fourth quarter of 2024 to 108,242 in the first quarter of 2025, an increase of more than 50%. This difference creates a pronounced negative balance for small businesses in early 2025.
Sectoral distribution
The largest number of new entrepreneurs traditionally appeared in the retail sector – 14,510 sole proprietors in Q1 2025 (13,490 in Q4 2024). The information technology (IT) sector ranked second in terms of the number of openings: 8,586 new sole proprietorships against 6,455 in the previous quarter. The third place was taken by the “Other services” category with 7,542 openings (5,736 in the previous quarter). The top five also included transport and logistics (3,578) and catering (2,895), followed by wholesale trade (2,692), education (2,608), advertising and marketing (1,769), medical services (1,745), and real estate (1,355). Most of the leading industries showed an increase in the number of new individual entrepreneurs compared to the fourth quarter. The only exception was wholesale trade, where the figure slightly decreased (2,692 vs. 2,859 in the last quarter of 2024).
The leaders in terms of openings largely coincide with the leaders in terms of closings. the retail sector leads the “anti-rating” – in Q1 2025, 32,726 sole proprietorships closed, compared to 21,222 in the previous quarter. This is the largest volume of liquidations among all sectors. High closure rates were also recorded in the IT sector (17,242 closed sole proprietorships in Q1 2025 vs. 14,040 in Q4 2024) and “other services” (16,663 vs. 10,227). This is followed by transportation and logistics (9,761 in Q1 2025), wholesale trade (4,729), catering (4,225), advertising and marketing (2,330), educational institutions (2,101), real estate (2,043), and agriculture (1,805).
Regional breakdown
The highest entrepreneurial activity was recorded in the capital: 8,363 new sole proprietorships were registered in Kyiv in Q1 2025 (compared to 7,333 in Q4 2024). Among the regions, the leader is Dnipropetrovs ‘k region – 5,461 openings per quarter, followed by Lviv (4,428), Kyiv (4,310), Odesa (3,974) and Kharkiv (3,771) regions.
Closures by region. The capital holds the lead in terms of the number of liquidated sole proprietorships. In Kyiv. In the first quarter of 2025, 14,212 sole proprietorships ceased operations in Kyiv. Among the regions, the highest number of closures was recorded in Kharkiv (9,830) and Dnipro (9,306). This is followed by Odesa region (8,314), Lviv (7,062), and Kyiv (6,879).
Gender distribution
In the first quarter of 2025, the share of women among newly registered sole proprietors amounted to 61.5% (34,896 out of 56,826), which is almost the same as in the previous quarter (62.4%). Accordingly, men accounted for 38-39% of new entrepreneurs.
Among closed sole proprietorships, the gender balance was closer to parity. Women accounted for 52.7% of the total number of terminated sole proprietorships in Q1 2025 (56,997 out of 108,242), slightly more than 51.8% in Q4 2024. The share of men among the liquidated sole proprietors, respectively, ranged from 47-48%.
Final analysis and strategic conclusions
In general, even adjusted for technical failures, the trend remains that the number of closed sole proprietorships consistently exceeds the number of new ones, which means a net decrease in the number of small entrepreneurs in the country. Despite the increase in new openings in the first quarter of 2025, this is not enough to compensate for the massive closure of businesses – a full-scale war and economic difficulties are likely to continue to make it difficult to run a small business, which is reflected in the indicators of almost all regions and industries.
