Six out of ten surveyed SMEs plan to expand their business

25/ 07/ 2024

A new wave of the SMEs in wartime survey, conducted by the European Business Association in partnership with UKRSIBBANK BNP Paribas Group, demonstrates that despite the challenging conditions, Ukrainian small businesses remain focused on developing their business. For example, 59% of surveyed SMЕs plan to expand their business, including 21% - expanding their customer base, 11% - opening new production lines, 10% - entering international markets, etc. View presentation 94% of surveyed SMЕs continue to operate: of these, about a third - 36% - continue to work in full, and 58% work with restrictions. The most common ones include a shortage of qualified employees/mobilization (60%), limited geography of operations (35%), and transition to online (32%). 40% of respondents assess the state of affairs in their business as satisfactory, while 29% consider it rather unsatisfactory, and 20% - very poor. Only 12% believe that their business is doing well. Forecasts for business dynamics by the end of the year are also quite restrained. The majority, namely 62%, believe that the state of affairs in their business will deteriorate, 22% do not expect any changes, and 15% expect some improvement.Among the primary factors of negative impact, businesses mention mobilization, decline, instability of the economy, war, occupation of territories, attacks on the Ukrainian energy system, etc. Given the aforementioned factors, businesses have somewhat worsened their assessment of their own financial stability. 57% believe they have a financial safety margin for a period of no more than six months. Another 24% have no reserves at all. And 19% have financial reserves for a year or more. 69% of surveyed SMЕs have experienced a decline in hryvnia revenue since the beginning of the full-scale invasion, with 47% experiencing a decline of 21% or more. For 22% of entrepreneurs, income has increased. At the same time, business losses due to the war are also increasing. Thus, 95% of surveyed SMЕs have incurred direct or indirect losses, of which 37% estimate the value of losses at up to $100,000, and 33% - more than $100,000. Despite the aforementioned difficulties, support for the armed forces by entrepreneurs remains quite high: 53% provide financial assistance, 22% - products, 21% - services. Today, 43% of surveyed SMЕs have employees in the ranks of the Armed Forces, and 20% provide them with separate support. In 11%, the number of mobilized employees reaches up to 10% of the total number of military personnel, in 18% - 10-20%, and in 14% - more than 20%. In a quarter of companies, among the mobilized, there are critical specialists, including managers, engineers, technical specialists, tractor drivers, mechanizers, combine operators, agronomists, etc. Among the surveyed SMЕs, 18% relocated their office or production due to Russian aggression, including 15% within Ukraine and 3% abroad. Less than a third (27%) of entrepreneurs have used state or international support programs over the past 2.5 years. 24% of entrepreneurs reported that they already export goods or services abroad, while another 24% do not currently export but have such plans. 66% plan to attract financing for business development. Mostly, it is own funds - 52%, as well as grants - 20%, loans - 14%, investments - 6%. 15% of surveyed enterprises are ready to borrow from banks on market terms. Among the difficulties in obtaining loans, companies mention high interest rates, lengthy and complex procedures, the requirement for significant collateral, weak credit history, etc. Small businesses currently need the most help in improving the conditions for employee booking, including free grants, searching for foreign business partners, preferential lending, and a moratorium on inspections. Olena Ero. Head of the Unlimit Ukraine project of the European Business Association. Indeed, small businesses are facing extremely difficult times. We see this from the survey results, we hear it directly when communicating with entrepreneurs. All the more valuable are some positive signals, such as data on development plans. Perhaps, for not everyone, development is equal to business growth, for some - it is a way to maintain positions and financial results. However, most continue to work, and we are happy to help those who are looking for opportunities for further development. Andrii Kashperuk. Deputy Head of the Board for Retail Business, UKRSIBBANK BNP Paribas Group. Despite the various negative impacts of the full-scale war on Ukrainian businesses, over half of the surveyed representatives of small and medium enterprises plan to expand and attract additional investments, which is undoubtedly a positive indicator. This survey helps businesses articulate their needs, and for us, as a reliable financial partner, it allows us to hear them and offer relevant products and services. With the support of our shareholders BNP Paribas Group and the EBRD, access to international expertise and best global practices, we can help Ukrainian entrepreneurs overcome today′s challenges through modern tools. For reference: The survey was conducted from June 7 to 18, 2024, and involved 148 participants of the Unlimit Ukraine project of the European Business Association (individual entrepreneurs). The research partner is UKRSIBBANK BNP Paribas Group.

A new wave of the “SMEs in wartime” survey, conducted by the European Business Association in partnership with UKRSIBBANK BNP Paribas Group, demonstrates that despite the challenging conditions, Ukrainian small businesses remain focused on developing their business. For example, 59% of surveyed SMЕs plan to expand their business, including 21% – expanding their customer base, 11% – opening new production lines, 10% – entering international markets, etc.

View presentation

94% of surveyed SMЕs continue to operate: of these, about a third – 36% – continue to work in full, and 58% work with restrictions. The most common ones include a shortage of qualified employees/mobilization (60%), limited geography of operations (35%), and transition to online (32%).

40% of respondents assess the state of affairs in their business as satisfactory, while 29% consider it rather unsatisfactory, and 20% – very poor. Only 12% believe that their business is doing well.

Forecasts for business dynamics by the end of the year are also quite restrained. The majority, namely 62%, believe that the state of affairs in their business will deteriorate, 22% do not expect any changes, and 15% expect some improvement.Among the primary factors of negative impact, businesses mention mobilization, decline, instability of the economy, war, occupation of territories, attacks on the Ukrainian energy system, etc.

Given the aforementioned factors, businesses have somewhat worsened their assessment of their own financial stability. 57% believe they have a financial safety margin for a period of no more than six months. Another 24% have no reserves at all. And 19% have financial reserves for a year or more.

69% of surveyed SMЕs have experienced a decline in hryvnia revenue since the beginning of the full-scale invasion, with 47% experiencing a decline of 21% or more. For 22% of entrepreneurs, income has increased. At the same time, business losses due to the war are also increasing. Thus, 95% of surveyed SMЕs have incurred direct or indirect losses, of which 37% estimate the value of losses at up to $100,000, and 33% – more than $100,000.

Despite the aforementioned difficulties, support for the armed forces by entrepreneurs remains quite high: 53% provide financial assistance, 22% – products, 21% – services. Today, 43% of surveyed SMЕs have employees in the ranks of the Armed Forces, and 20% provide them with separate support. In 11%, the number of mobilized employees reaches up to 10% of the total number of military personnel, in 18% – 10-20%, and in 14% – more than 20%. In a quarter of companies, among the mobilized, there are critical specialists, including managers, engineers, technical specialists, tractor drivers, mechanizers, combine operators, agronomists, etc.

Among the surveyed SMЕs, 18% relocated their office or production due to Russian aggression, including 15% within Ukraine and 3% abroad. Less than a third (27%) of entrepreneurs have used state or international support programs over the past 2.5 years.

24% of entrepreneurs reported that they already export goods or services abroad, while another 24% do not currently export but have such plans.

66% plan to attract financing for business development. Mostly, it is own funds – 52%, as well as grants – 20%, loans – 14%, investments – 6%. 15% of surveyed enterprises are ready to borrow from banks on market terms. Among the difficulties in obtaining loans, companies mention high interest rates, lengthy and complex procedures, the requirement for significant collateral, weak credit history, etc.

Small businesses currently need the most help in improving the conditions for employee booking, including free grants, searching for foreign business partners, preferential lending, and a moratorium on inspections.

Olena Ero Head of the Unlimit Ukraine project of the European Business Association

Indeed, small businesses are facing extremely difficult times. We see this from the survey results, we hear it directly when communicating with entrepreneurs. All the more valuable are some positive signals, such as data on development plans. Perhaps, for not everyone, development is equal to business growth, for some - it is a way to maintain positions and financial results. However, most continue to work, and we are happy to help those who are looking for opportunities for further development.

Andrii Kashperuk Deputy Head of the Board for Retail Business, UKRSIBBANK BNP Paribas Group

Despite the various negative impacts of the full-scale war on Ukrainian businesses, over half of the surveyed representatives of small and medium enterprises plan to expand and attract additional investments, which is undoubtedly a positive indicator. This survey helps businesses articulate their needs, and for us, as a reliable financial partner, it allows us to hear them and offer relevant products and services. With the support of our shareholders BNP Paribas Group and the EBRD, access to international expertise and best global practices, we can help Ukrainian entrepreneurs overcome today′s challenges through modern tools.

For reference:

The survey was conducted from June 7 to 18, 2024, and involved 148 participants of the Unlimit Ukraine project of the European Business Association (individual entrepreneurs). The research partner is UKRSIBBANK BNP Paribas Group.