Small Business Attitudes Index 2018
Small business has adapted to the unfavorable economic environment in Ukraine and is actively developing.
Small business in Ukraine develops actively and is optimistic for 2018, despite the unfavorable business climate as reported by the Small Business Attitudes Index, conducted for the first time by the European Business Association together with LIGA: ZAKON within the Unlimit Ukraine project. The integral Small Business Sentiment Index is 3.2 out of 5, which is a neutral score. At the same time, such components of the Index as the evaluation of the current state of business, the dynamics of its development over the past 6 months, the forecast of the situation for the next 6 months and the evaluation of the business climate reflected radically opposite sentiments among the entrepreneurs.
The survey demonstrated strong optimistic sentiment in the expectations of business for 2018. 76.2% of those surveyed expect that their business situation will improve in the next six months. 87% expect income growth in 2018. Entrepreneurs are showing great optimism in their business development plans this year. In particular: 54.2% plan to increase the number of employees, 57.3% – to raise the level of salaries of employees, 64.3% – intend to increase the amount of financing for their business in 2018. The study shows that small businesses are export-oriented. 27% of companies surveyed have already entered foreign markets, and 30.3% plan to enter this year. Companies are committed to developing their businesses and reinvesting their earnings into their businesses.
Limited access to credit hampers the development of small businesses. According to the survey, 82% of companies are in need of credit funds. At the same time, 65% of respondents have difficulties with obtaining credit, of which 15.5% consider that it is absolutely impossible to receive loans.
Overall, the economic situation in Ukraine is not beneficial to small business development, according to 68.2% of those surveyed. Only 3% of respondents are completely satisfied with the business climate in Ukraine. Inflation (56.3%), tax burden (42.24%), high levels of corruption (41.9%), and lack of qualified specialists (39.3%) are the main factors for negative assessment of the business climate. At the same time, only 4% believe that inflation is the main reason that hinders business development.
About 21.6% of those polled want to change the tax system. 14.7% of respondents are most concerned about the availability of credit, while 9% consider corruption to be the most unacceptable. 6.1% of the respondents would first like to change the situation with state support for the business and purchasing power of the population in favor of their enterprise.
The mission of the European Business Association to improve the investment environment in Ukraine is naturally extended to supporting small businesses.
A few years ago, we launched a very important project Unlimit Ukraine. The idea behind is that big business can share their experience with small businesses. So, we started consulting small business and selected a team of mentors from experienced CEOs of large companies, who generously shared their expertise with young and ambitious Ukrainian entrepreneurs. We are convinced that such insights are needed for small and micro businesses to stay afloat and lay a solid foundation for development.
The Small Business Attitudes Index in Ukraine became a new stage of project development. This study revealed the problems that small businesses face daily – credit inaccessibility (65%), inflation (56.3%), tax burden (42.24%), high corruption (41.9%), lack of qualified specialists (39.3%) are the main factors of a negative assessment of business climate. Knowing the vulnerable points of the business, we can influence the situation so that small entrepreneurs can feel more confident, and starting and growing a business in Ukraine become easier and safer.”
Cheaper loans for entrepreneurs are not expected in the near future - there are no Government initiatives on this.
Moreover, the NBU has raised the refinancing rate, which will increase the cost of funds. But there are reasons for optimism. The President introduced a draft law on currency instead of the outdated 1993 Decree on Currency Regulation, which provides certain liberalization of currency transactions, which may remove some administrative constraints to attract real foreign investment.
There are also some changes in the development of the tax system – the introduction of full and timely VAT refunds; the expected replacement of income tax by the capital deduction tax; and, if the draft law on the National Financial Security Bureau is passed, the tax police will be eliminated. There are a number of macroeconomic factors for revitalizing the economy – increasing demand for Ukrainian products abroad, stabilizing the exchange rate and, as a consequence, increasing the purchasing power of Ukrainian residents. “
SMALL BUSINESS ATTITUDES INDEX – first conducted by the European Business Association and LIGA: ZAKON in 2018 within the Unlimit Ukraine project. The purpose of the study is to collaborate with small and microbusinesses and to analyze growth points that will stimulate its development. The survey was conducted from October 29 to December 18, 2019. 278 small business owners and directors of all fields of activity joined the survey. About 40% of the companies surveyed were founded during the turbulent 2015 – 2017.
Unlimit Ukraine is a small business and microbusiness development platform created on the basis of the European Business Association. The project provides comprehensive support for small and microbusiness through educational events and consultations, participation in special projects, diagnostics of business problems, and discussion of issues relevant to it. The participants of the project can be small and micro-businesses with the ownership of FOP without limitation of activities.
LIGA: ZAKON is the market leader in information and analytical products and services for business development. For 26 years, we have helped Ukrainian businesses navigate the right information for decision-making. More than 160,000 Ukrainian users trust us. Among our clients are Kyivstar, STB TV channel, Naftogaz of Ukraine, EY, Epicenter, Fozzy Group.