SMEs are recovering their operations and building up financial reserves

21/ 08/ 2023

More and more representatives of small and medium-sized businesses are recovering their full operations after significant reductions in activity in 2022. Currently, half of the entrepreneurs surveyed, united by the Unlimit Ukraine project, namely 52%, are working at full capacity. For comparison, in May, 41% were working at full capacity, and a year ago, only 28% of companies were. The remaining 41% are still operating with restrictions, and only 7% are not working. Entrepreneurs are gradually rebuilding and increasing their financial reserves. For example, the number of SMEs with reserves for a year or more has increased from 12% to 22% in the last three months, while the number of those with no reserves at all has decreased from 32% to 28%. One-fifth of those surveyed (20%) have financial reserves for six months, 23% have reserves for several months, and 3% have reserves for one month. These are the results of a new wave of the quarterly survey by the European Business Association, SMEs in wartime, among representatives of small and medium-sized businesses who are participants of the Unlimit Ukraine project. At the same time, the dynamics of wage payments are somewhat worse. Over the last three months, the number of companies paying full wages has decreased from 62% to 56%. Simultaneously, the percentage of those reducing salary amounts has increased from 16% to 24%. However, there is a slight positive trend in reducing the number of enterprises unable to pay wages and those forced to lay off employees. Despite this, the level of support for the armed forces and the population has not decreased, with 48% of entrepreneurs continuing to provide financial support, and 19% supporting their own employees involved in the defense of the country. Another 26% are providing services, and 23% are supplying products to the defenders and those in need. Among the companies we surveyed, 37% have employees who have been mobilized into the ranks of the Armed Forces of Ukraine. Specifically, 15% of them account for up to 10% of the companys conscripted employees, 13% reach 10-20%, 5% reach 20-40%, and 4% have more than 40%. At the same time, one-fifth of the respondents claim that among those mobilized are critical specialists for their companys operation, such as engineers, electricians, technologists, mechanics, IT specialists, and business owners. Assets remain on temporarily occupied territories for 8% of the entrepreneurs we surveyed. These assets mainly include land plots, office and production facilities, equipment, and accounts receivable. About a third of entrepreneurs, specifically 31%, report that their businesses have incurred losses directly as a result of the hostilities. The overall losses for businesses due to the war continue to be quite substantial: 44% estimate them to be up to $50,000, 13% in the range of $50,000 to $100,000, and 24% report losses exceeding $100,000. Despite significant losses and challenges, Ukrainian entrepreneurs are focusing not only on survival but also on development: 43% of the surveyed SMEs stated that they plan to invest new funds in the development of their own businesses. At the same time, 21% do not plan to do so, and 36% have not yet made a decision. Anna Derevyanko. Executive Director of the European Business Association. It is encouraging to see a positive trend that small businesses are gradually recovering after an extremely challenging 2022. However, we see that many SMEs are still not operating at full capacity - almost half of them. In this situation, it is important to provide all possible support to entrepreneurs and eliminate any administrative or corrupt pressure on SMEs. This still remains a problem for entrepreneurs - 44% believe that corruption is growing, which is unacceptable. All efforts now should be directed towards supporting the survival of businesses and the state. For reference: The survey was conducted from July 26 to August 14 among individual entrepreneurs who are participants in Unlimit Ukraine, a project of the European Business Association to support small and medium-sized businesses. Thus, 95 entrepreneurs took part in the survey.

Entrepreneurs are gradually rebuilding and increasing their financial reserves. For example, the number of SMEs with reserves for a year or more has increased from 12% to 22% in the last three months, while the number of those with no reserves at all has decreased from 32% to 28%. One-fifth of those surveyed (20%) have financial reserves for six months, 23% have reserves for several months, and 3% have reserves for one month.

These are the results of a new wave of the quarterly survey by the European Business Association, “SMEs in wartime,” among representatives of small and medium-sized businesses who are participants of the Unlimit Ukraine project.

At the same time, the dynamics of wage payments are somewhat worse. Over the last three months, the number of companies paying full wages has decreased from 62% to 56%. Simultaneously, the percentage of those reducing salary amounts has increased from 16% to 24%. However, there is a slight positive trend in reducing the number of enterprises unable to pay wages and those forced to lay off employees.

Despite this, the level of support for the armed forces and the population has not decreased, with 48% of entrepreneurs continuing to provide financial support, and 19% supporting their own employees involved in the defense of the country. Another 26% are providing services, and 23% are supplying products to the defenders and those in need.

Among the companies we surveyed, 37% have employees who have been mobilized into the ranks of the Armed Forces of Ukraine. Specifically, 15% of them account for up to 10% of the company’s conscripted employees, 13% reach 10-20%, 5% reach 20-40%, and 4% have more than 40%. At the same time, one-fifth of the respondents claim that among those mobilized are critical specialists for their company’s operation, such as engineers, electricians, technologists, mechanics, IT specialists, and business owners.

Assets remain on temporarily occupied territories for 8% of the entrepreneurs we surveyed. These assets mainly include land plots, office and production facilities, equipment, and accounts receivable.

About a third of entrepreneurs, specifically 31%, report that their businesses have incurred losses directly as a result of the hostilities. The overall losses for businesses due to the war continue to be quite substantial: 44% estimate them to be up to $50,000, 13% in the range of $50,000 to $100,000, and 24% report losses exceeding $100,000.

Despite significant losses and challenges, Ukrainian entrepreneurs are focusing not only on survival but also on development: 43% of the surveyed SMEs stated that they plan to invest new funds in the development of their own businesses. At the same time, 21% do not plan to do so, and 36% have not yet made a decision.

Anna Derevyanko Executive Director of the European Business Association

It is encouraging to see a positive trend that small businesses are gradually recovering after an extremely challenging 2022. However, we see that many SMEs are still not operating at full capacity - almost half of them. In this situation, it is important to provide all possible support to entrepreneurs and eliminate any administrative or corrupt pressure on SMEs. This still remains a problem for entrepreneurs - 44% believe that corruption is growing, which is unacceptable. All efforts now should be directed towards supporting the survival of businesses and the state.

For reference:

The survey was conducted from July 26 to August 14 among individual entrepreneurs who are participants in Unlimit Ukraine, a project of the European Business Association to support small and medium-sized businesses. Thus, 95 entrepreneurs took part in the survey.