*FOP - sole proprietorship
At the beginning of 2025, Ukraine’s small business sector faced an unusual market disruption caused by a prolonged suspension of the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations (EDR). The registry was offline from January 19, 2024, until January 8, 2025, following a large-scale external cyberattack on Ukraine’s government IT infrastructure.
According to analysts from YC.Market, this event significantly impacted business registration and closure dynamics, triggering a wave of delayed entrepreneurial activity.
Five Key Trends Identified
- Sharp Increase in Business Closures:
Over 108,000 sole proprietorships (FOPs) ceased operations in Q1 2025, more than 50% higher than in Q4 2024 (approx. 72,000). - Rise in New Registrations – But at a Slower Pace:
The number of newly registered FOPs reached 56,800 in Q1 2025, up nearly 20% from Q4 2024 (~47,300). - Consistent Sector Leaders:
Retail trade, information technology, and miscellaneous services continued to dominate both new business registrations and closures, reflecting their high share in Ukraine’s small business landscape. - Regional Concentration:
The largest numbers of both openings and closures were recorded in Kyiv, Dnipropetrovsk, Lviv, Kyiv, Odesa, and Kharkiv regions. - Female Entrepreneurs Lead:
Women accounted for around 61–62% of new FOP registrations and approximately 52% of closures, with men representing ~38–39% of new businesses and ~48% of closures.
Overall Activity: The Impact of Pent-Up Demand
Following nearly a year-long registry downtime, Ukraine saw a sharp spike in entrepreneurial activity in January 2025, which continued throughout Q1. Between January and March 2025, 56,826 new FOPs were registered, marking a 20% increase over Q4 2024 (47,347). However, business closures rose even more sharply – from 71,975 in Q4 2024 to 108,242 in Q1 2025, over a 50% increase.
This surge resulted in a pronounced negative net balance for the small business sector at the start of 2025.
The spike is attributed to accumulated "pent-up demand" – entrepreneurs had been unable to register or close businesses during the registry’s downtime (Jan 19, 2024 – Jan 8, 2025). Once the system resumed, both postponed registrations and liquidations occurred en masse.
Sector Breakdown: Top Industries for Openings and Closures
New Registrations by Sector:
Retail trade led with 14,510 new FOPs in Q1 2025 (up from 13,490 in Q4 2024), followed by IT (8,586 vs. 6,455) and miscellaneous services (7,542 vs. 5,736). Other top sectors included transportation and logistics (3,578), food services (2,895), wholesale trade (2,692), education (2,608), advertising and marketing (1,769), medical services (1,745), and real estate (1,355).
Business Closures by Sector:
Retail trade also led business closures – 32,726 FOPs shut down in Q1 2025, compared to 21,222 in Q4 2024. High closure volumes were also seen in IT (17,242 vs. 14,040) and miscellaneous services (16,663 vs. 10,227). Other sectors with significant closures included transportation and logistics (9,761), wholesale trade (4,729), food services (4,225), advertising and marketing (2,330), education (2,101), real estate (2,043), and agriculture (1,805).
In all leading sectors, closures outnumbered openings, with retail experiencing the largest net decline—around 18,000 FOPs in one quarter.
Regional Breakdown
Entrepreneurial activity remained concentrated in Ukraine’s largest cities and economic hubs.
Top Regions for New Registrations (Q1 2025):
- Kyiv City: 8,363
- Dnipropetrovsk: 5,461
- Lviv: 4,428
- Kyiv Region: 4,310
- Odesa: 3,974
- Kharkiv: 3,771
Top Regions for Closures:
Kyiv led with 14,212 closures, followed by:
- Kharkiv (9,830)
- Dnipropetrovsk (9,306)
- Odesa (8,314)
- Lviv (7,062)
- Kyiv Region (6,879)
Zaporizhia also stood out with 3,473 closures despite not ranking in the top 10 for new openings, possibly reflecting a net outflow of businesses from this front-line region.
Gender Breakdown
Women continue to drive Ukraine’s small business sector. In Q1 2025, 61.5% of newly registered FOPs were female-led (34,896 out of 56,826), almost identical to Q4 2024 (62.4%).
Among closures, the gender balance was closer to parity: women accounted for 52.7% (56,997 of 108,242 closures), slightly higher than the 51.8% share in Q4 2024.
Summary and Strategic Context
The unusual surge in FOP registrations and closures in early 2025 is largely attributable to technical factors – specifically, the year-long suspension of Ukraine’s state registry following a major cyberattack.
This backlog-driven wave shifted many business liquidations (which would have occurred in late 2024) into Q1 2025, creating statistical distortions: unusually low figures for Q4 2024 and disproportionately high ones for Q1 2025.
Even adjusting for this factor, the overall trend remains one of contraction: the number of closures continues to exceed new openings, signaling an ongoing decline in the country’s small business base.
Despite a rise in new registrations, the rate of business shutdowns reflects ongoing economic challenges, shaped by the full-scale war and macroeconomic instability impacting entrepreneurs across all regions and industries.
