Researches

The European Business Association, as part of the Unlimit Ukraine project, together with OLX Ukraine and Raiffeisen Bank, has presented the results of the 2024 Small Business Sentiment Index survey. The overall index score has declined to 2.3 out of 5 (compared to 2.5 in 2023), indicating a negative trend in entrepreneurs’ sentiment.

At the same time, small businesses assess the current situation slightly better than during the peak of the COVID-19 pandemic, when the index reached a historic low of 2.2 in 2020.

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In 2024, all components of the index showed a decline, including the assessment of SMEs’ current status, changes over the past six months, expectations for the next six months, and the evaluation of the economic situation. The lowest indicator was the assessment of the economic situation (1.9), while the highest was the forecast for the next six months (2.6).

Currently, 21% of entrepreneurs believe their business is doing well (compared to 19% in 2023), while 27.5% assess their situation as neutral. However, the share of those who consider their business condition poor has increased from 39% last year to 51.5%.

Over the past six months, business sentiment has followed a negative trend: 62% of entrepreneurs reported worsening conditions, 26% saw no changes, and only 12% noted improvements.

Expectations for the next six months have also become more cautious. Only 22% of entrepreneurs anticipate improvements (down from 37%), while 47% believe the situation will deteriorate (up from 35%). The proportion of those expecting no changes has risen to 31%.

Moreover, entrepreneurs mostly have a negative outlook on Ukraine’s economic situation: 54% consider it unfavourable, 41% see it as catastrophic, and only 5% view it as favourable.

SMEs’ expansion plans have somewhat slowed down. The share of entrepreneurs planning to expand has dropped from 79% to 67%. However, growth ambitions remain: 25% plan to launch new production lines, 13% aim to expand their geographic reach, and 14% intend to enter foreign markets. Additionally, 17% of businesses already export goods or services abroad, up from 14% in 2023.

Of course, the war has significantly impacted business plans. There has also been a sharp decline in the number of entrepreneurs planning to attract funding – from 80% to 62%. The main sources of financing are:

• Own funds – 47%
• Grant programmes – 21%
• Loans – 16%
• Investments – 10%

At the same time, among those seeking funding, the number of entrepreneurs relying on their own funds and loans has increased. As a result, the share of those who consider bank loans inaccessible has slightly decreased from 42% last year to 34%. Meanwhile, 22% of entrepreneurs noted an increase in lending opportunities (compared to 19%).

Businesses are actively using digital channels for sales, with 67% of surveyed entrepreneurs confirming this. These include social media and company websites. The share of those operating exclusively online has risen from 15% to 24%.

The main challenges for small businesses remain the war, low consumer purchasing power, rising prices, economic instability, attacks on the energy system, and fiscal pressure.

SMALL BUSINESS SENTIMENT INDEX has been conducted by the European Business Association since 2017 as part of the Unlimit Ukraine project. The survey monitors small business assessments and sentiment, identifying growth drivers that will stimulate development. The project partners in 2024 are OLX Ukraine and Raiffeisen Bank. The study was conducted from 1 to 31 December 2024, with 1,716 sole proprietors participating.

Unlimit Ukraine is a platform for the development of small and micro-businesses, created by the European Business Association. The project provides comprehensive support through educational events, consultations, participation in international cooperation programmes, business diagnostics, and discussions on relevant business issues. Small and micro-businesses with sole proprietorship status can join the project regardless of their field of activity. Currently, Unlimit Ukraine includes 9,000 SME representatives.

In 2024, almost 80% of SMEs plan to expand their business and raise funds for development - this is evidenced by the results of the 2023 Small Business Sentiment Index survey conducted by the European Business Association as part of the Unlimit Ukraine project with the support of OLX Ukraine and PrivatBank, as well as information support from the Ministry of Digital Transformation of Ukraine, the Entrepreneurship and Export Promotion Office, and Diia Business.

The 2023 wave of the survey shows a slight improvement in SME sentiment, with the integral score of the Index rising to 2.5 points out of 5. This score remains negative but is higher than the 2.4 points in 2022 and 2.2 points in 2020. Among the components of the Index, assessments of the current business state and changes in the next six months showed a point increase.

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Among the entrepreneurs we surveyed, 41% assess the state of affairs in their business as satisfactory. At the same time, the number of those dissatisfied with the state of affairs has decreased compared to last year – from 58% in 2022 to the current 40%. However, the share of those satisfied with the state of affairs has also decreased to 19% (24% in 2022). Thus, the overall assessment of the current state of affairs in 2023 is more likely to be neutral.

Over the year, the number of entrepreneurs planning to expand their business increased from 76% to 79%. Of these, 30% plan to open new business lines, and 14% plan to expand their geography and enter other markets. Only 14% of the companies currently export their goods or services abroad. At the same time, 21% plan to expand their team, and 28% plan to increase employee salaries.

The number of entrepreneurs who plan to raise funds to develop their businesses in 2024 has increased to 80%. For comparison, 67% had such plans last year. As before, businesses rely mostly on their resources – personal funds (40%) and, to a lesser extent, on grants (20%), loans (12%), and investments (9%). Intentions to borrow and invest have slightly increased.

Even though intentions to attract credit remain modest, there is a positive trend in assessing credit availability. Among the entrepreneurs we surveyed, the share of those who consider bank lending to be unaffordable has decreased from 59% in 2022 to the current 42%. Accordingly, the share of those who consider it affordable has increased from 10% to 19%.

We asked entrepreneurs what share of their sales is accounted for by digital channels. It turned out that digital channels are used by the majority of respondents, namely 67%, of which 15% sell exclusively online. At the same time, a third of companies, namely 30%, say that online trading brings them much more profit. At the same time, another 33% of respondents said they do not use digital channels at all.

The assessment of expectations of change among SMEs increased slightly in 2023, so the forecasts are more positive than last year. The share of those who predict an improvement (37%) exceeds the share of those who believe that their business will deteriorate (35%). Another 26% do not expect significant changes in the next six months.

The dynamics of changes over the past six months are mostly negative, as more than half, namely 53%, said that the state of affairs in their business has somewhat or significantly worsened. For 28%, the business situation has not changed, and for 19%, the situation has improved.

Traditionally, the lowest of all Index components is the assessment of the economic situation in the country. The majority of respondents assess it negatively, with 34% considering the economic situation unfavorable and 31% catastrophic. It is worth recalling that entrepreneurs’ assessments of the economic situation during the active phase of the coronavirus pandemic were even worse, with 44% of respondents reporting a catastrophic situation. At the same time, in 2023, the number of respondents who consider the economic situation to be favorable increased to 11%, compared to 8% in 2022.

The top negative factors affecting business operations include the low purchasing power of Ukrainians, war and occupation of territories, economic instability, and rising prices and costs.

SMALL BUSINESS SENTIMENT INDEX – conducted by the European Business Association since 2017 within the Unlimit Ukraine project. The purpose of the study is to monitor small business assessments and sentiment and analyze growth points that will stimulate its development. The project partners in 2023 are OLX Ukraine and PrivatBank. Information partners are the Ministry of Digital Transformation of Ukraine, the Entrepreneurship and Export Promotion Office, and Diia Business. The survey was conducted from December 1 to 31, 2023. Altogether, 4569 small business owners and directors of all fields of activity joined the survey. 89% of survey participants have revenues of less than UAH 30 million per year.

Unlimit Ukraine is a small business and microbusiness development platform created based on the European Business Association. The project provides comprehensive support for small and micro businesses 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 form of ownership of the individual entrepreneur without limitation of activities. Today, Unlimit Ukraine includes 7500 SMEs.

Despite the war, 3 out of 4 SMEs plan to expand their business in 2023 - these are the results of the Small Business Sentiment Index 2022 conducted by the European Business Association as part of the Unlimit Ukraine project with the information support of the Ministry of Digital Transformation of Ukraine, the Entrepreneurship and Export Promotion Office, and the national project Diia.Business.

The survey demonstrates further deterioration in SME sentiment. Thus, the Index fell to 2.4 points out of 5 which is the second lowest value in the history of the study. For comparison, the Index amounted to 2.6 points in 2021 and 2.2 points in 2020.

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Of the entrepreneurs we surveyed, 58% are currently dissatisfied with the state of affairs in their business, a slight increase from 52% in 2021. At the same time, the share of those who are satisfied with the state of affairs has decreased – the current 24% compared to 32% last year.

Of all the Index components, the lowest score was given to the economic situation in the country. Thus, 42% of respondents consider it unfavourable, and 29% – catastrophic. These are the realities of wartime. However, it is worth noting that during the active phase of the coronavirus pandemic, these estimates were even worse – 44% of respondents rated the state of the economy as catastrophic.

For the second time in the 6 years of the survey, not only the sentiments but also the expectations among entrepreneurs have deteriorated. Currently, the share of those who forecast that the business situation will continue to deteriorate (38%) exceeds the number of those who expect the situation to improve (33%) in the next six months.

The following factors have the greatest negative impact on business valuations: active hostilities and proximity to the frontline, destruction, shelling, power and communication outages, inaccessible loans, falling consumer demand and decreased purchasing power, logistics challenges, inflation, and tax pressure.

Despite the difficulties, the majority of entrepreneurs, namely 76%, plan to expand their business in 2023. Of these, 28% plan to expand their geography, 26% plan to launch new products, 25% plan to enter foreign markets, and 21% plan to change the number of employees.

Most respondents (67%) will raise new funds to expand their business. Most entrepreneurs rely on their own finances (30%) and to a lesser extent on grants (21%) and loans (10%). Compared to 2021, the share of loans used by SMEs has tripled – 32% of companies relied on them then.

Loans are traditionally a sore point for small businesses. In 2022, entrepreneurs encountered difficulties in obtaining loans. Among the SMEs we surveyed, 59% consider bank loans to be inaccessible or difficult to access, compared to 40% in 2021.

We also asked entrepreneurs how the attacks on the energy infrastructure have affected their businesses. Only 8% of them completely stopped their operations due to the shelling, while another 20% temporarily suspended them. Most are adapting, for example, 45% of entrepreneurs change their work schedule and/or change the volume of production or services.

To prepare for such challenges, entrepreneurs have allocated additional funds to purchase generators and other uninterruptible power sources (55%), as well as telecommunications and Internet facilities (41%). At the same time, those who do not have the financial means are forced to adjust to the schedule of outages, including working night shifts.

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2017 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 their development. The survey was conducted from December 1 to 31, 2022. Altogether, 325 small business owners and directors of all fields of activity joined the survey.

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. Today, Unlimit Ukraine includes 4300 SMEs.

In December 2021, the European Business Association together with LIGA:ZAKON conducted another wave of small business mood surveys in Ukraine to determine how the conditions for small business have changed over the past year. Detailed results can be found in the PRESENTATION.

According to this year’s Small Business Attitudes Index, there is a significant deterioration in the sentiment of small businesses in Ukraine. This study was conducted within the Unlimit Ukraine by the European Business Association in partnership with Mind.ua. Thus, the Index fell to 2.38 points out of 5 possible, compared to 3.07 points last year, and returned to the negative plane. These results are the lowest in the history of the study of the Small Business Attitudes Index since 2017. 

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Compared to previous years, the number of entrepreneurs satisfied with the state of affairs in their business has almost halved – the current 24% against 42% last year. Accordingly, the number of dissatisfied has increased – from last year’s 29% to the current 58%.

Not only the sentiments but also the expectations for the better deteriorated in 2020. For the first time in four years, expectations are assessed only at 10% higher than the current state of affairs. Only 27% of respondents expect the business situation to improve over the next 6 months, compared to 59% last year. On the contrary, 52% of entrepreneurs expect deterioration.

About half of the respondents do not plan to change the company’s HR policy next year, both in terms of the number of employees and salaries. Although there are 18% who plan to increase the number of employees, and 23% – to increase salaries.

Survey participants gave the worst points to the economic situation in the country compared to other components of the Index. Thus, 80% consider the current economic situation unfavorable for doing business. The main reasons for this are the low purchasing power of the population, the impact of quarantine restrictions, the tax burden, and fiscal pressure. It is worth noting that the tax burden which traditionally tops this anti-rating, is now in third place.

However, the tax sphere remains one of the top areas that need change for the better according to small businesses. Thus, 31% say about the need for progressive changes in the field of taxation, while another 9% report the need for deregulation and increased efficiency of all government branches.

Affordable loans and credits are a traditionally relevant topic for small businesses. According to the survey, every fifth entrepreneur plans to attract loans to develop their business in 2021. At the same time, the vast majority, namely 64% of respondents believe that getting a loan in Ukraine is difficult or impossible. Last year, such pessimistic views were held by slightly fewer entrepreneurs – 52%.

We also asked entrepreneurs what the main pandemic-induced consequences are for their businesses. The majority, namely 58%, noted a decrease in the number of orders, another 18% were forced to revise the business model and look for new directions, 10% optimized activities and reduced staff, and 3% were able to increase sales or open new markets. And only 14% did not notice the effect of coronavirus on their activities.

“The state program “5-7-9″ is adapted to the needs of business in working capital and refinancing, and it has made a significant contribution to ensure that Ukrainian business goes through the pandemic with minimal losses. However, most micro and small businesses will continue to need alternative financing sources other than bank loans. That’s why the SME Development Office, in close cooperation with our partners, focuses on the development of not yet common ways of financing such as factoring, modern offline and online business support infrastructure, as well as training and consulting support programs.”

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2017 within the Unlimit Ukraine project. Project partner this year: Mind.ua. The purpose of the study is to collaborate with small and microbusinesses and to analyze growth points that will stimulate their development. The survey was conducted from December 1 to 31, 2020. Altogether, 426 small business owners and directors of all fields of activity joined the survey.

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. Today, Unlimit Ukraine includes 2400 SMEs.

Mind.ua is an independent business media portal aimed at creating a quality product that is useful to the readers. Mind professes “knowledge journalism” which means telling, explaining, and providing the reader with the opportunity to make conscious choices in various spheres of life – economic, cultural, social, and entrepreneurial ones.

The results of the Small Business Attitudes Index, conducted for the third year in a row by the European Business Association within the Unlimit Ukraine project, showed an increase in optimistic views among Ukrainian entrepreneurs. Thus, the index reached 3 points out of 5 possible, compared to 2.7 points last year, and finally came out of the negative plane.

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In general, it can be seen as a positive trend, compared to the results of previous years. The number of satisfied with the current state of business has increased significantly – from last year’s 31.6% to the current 42%. In addition, the number of those who are not satisfied with the current economic situation decreased – 29.2% against 38.4% last year.

The number of entrepreneurs who expect an improvement in the business situation has increased by 10% compared to last year – 58.7% against 47.4%. Almost half of the entrepreneurs plan to increase the number of employees – 40.8% plan to hire new people, and only 9.6% plan to cut. In addition, 44.6% plan to increase the salary for their workers. Over the past year, entrepreneurs’ satisfaction with their level of profits has increased dramatically – almost one and a half times. Last year, only 27% of respondents were satisfied with their income, and now there are 40.7% of them. However, it should be noted that the vast majority (59.3%) would still like to earn more.

At the same time, according to 69.1% of respondents, the economic situation is still unfavorable for doing business. Although the number of dissatisfied decreased by 3% (it was 72.2% in 2018), the number of entrepreneurs skeptical of the country’s economic environment remains quite large. Thus, the biggest obstacles to the business were the tax burden (49.6%) and the high level of corruption (46%). It should be noted that dissatisfaction with these two factors decreased compared to 2018 (56.4% and 51.9% respectively). Besides, entrepreneurs have become less concerned about inflation issues, shortage of qualified personnel and the War in the East. However, concerns about the complexity of tax administration and pressure from judicial and regulatory authorities have increased.

Due to the violation of tax regulation, 35.1% of entrepreneurs were fined in the last 3 years. Most (33.1%) were simply late in paying their taxes, and 10.8% made mistakes in reporting. However, the reason for this situation, according to respondents, is often the lack of clarity in procedures and the lack of knowledge of entrepreneurs in taxation changes. In addition, almost 10% of the respondents complained about the irregularity of the control bodies’ decisions during tax audits.

It is not surprising that, if entrepreneurs had the opportunity to change one factor affecting the country’s economy for the benefit of their businesses, most of them (29.8%) would have changed tax legislation. Priorities in this area would be to simplify tax procedures and reduce tax rates. The idea of deregulation was endorsed by 8.5% of those polled who want to simplify the conditions for doing business and developing digital technologies in the public services sector.

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2018 within the Unlimit Ukraine project. Project partners this year: LIGA:ZAKON, 28Quadrate, Ministry of Digital Transformation. 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. 632 small business owners and directors of all fields of activity joined the survey.

These are the findings from the Small Business Attitudes Index, conducted for the second straight year by the European Business Association within the Unlimit Ukraine project. This year, small business representatives slightly worsened their assessment of their own development prospects and economic situation in Ukraine. According to the survey, the overall Small Business Attitudes Index dropped to 2.7 out of 5, compared to 3.2 last year.

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Compared to last year, small businesses in Ukraine have found it more difficult to operate. Thus, 38.4% of respondents were dissatisfied with the current business environment, while 31.6% of entrepreneurs are quite satisfied with the situation. For comparison, last year’s positive sentiment prevailed – 45% satisfied against 26% dissatisfied. Also, according to the results of the survey, negative attitudes to the dynamics of business development over the past 6 months prevail – 44.4% against 30.1%.

Despite such sentiments, the surveyed entrepreneurs are willing to actively develop their business in 2019. More than half of respondents (53%) plan to increase funding, and 66% expect revenue growth in the first half of 2019. At the same time, almost half of businessmen (47%) expect the situation in business to improve within the next 6 months. Of these, 65% plan to hire new employees, 77% plan to raise wages, and the same number of entrepreneurs are going to increase investment in their business.

The main problems for the business have slightly changed. Last year most entrepreneurs named inflation as one of their main concerns and this year it ranks only 4th among topical problems for the business (43%). Entrepreneurs are much more concerned about the high tax burden – it was named by 56% of respondents, the high level of corruption (52%), as well as the war in the east (47%).

If entrepreneurs had the opportunity to change one thing in favor of their business, most of them would change the level of taxation. A quarter of respondents believe that this is a major problem for business. The availability of credit follows next by a large margin with 10% of respondents who want changes in this area. The state support for business and purchasing power of the population account for 9% each.

SMALL BUSINESS ATTITUDES INDEX – conducted by the European Business Association since 2018 within the Unlimit Ukraine project. Project partners this year: LIGA:ZAKON, BRDO, 28Quadrate. 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 December 5 to December 31, 2018. 133 small business owners and directors of all fields of activity joined the survey.

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.

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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.

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.