One-third of small businesses lost more than 50% of their income
These are the results of a survey conducted by the European Business Association among the participants of the Unlimit Ukraine project, which unites micro and small businesses. One-third of entrepreneurs, namely 33% report 50-75% of income losses. Businesses also report a significant increase in receivables. Another 44% suffered up to 50% of revenue losses, and 7% of businesses are considering closing. At the same time only 14% did not have any changes in work or even increased their income.
It will take one year for 38% of entrepreneurs, two or more years for 25%, and about six months for 19% to reach the pre-lockdown of development. Only 3% reported that the level of development of their business has not changed. The following measures of state support can help companies recover – reducing the tax burden on the wage fund, providing cheaper loans, and abolishing penalties for tax violations by the end of the year.
Most companies, namely 48% managed to keep staff salaries unchanged, while 29% were forced to reduce wages, and another 19% sent employees on unpaid leave. 59% of enterprises were able to keep the company’s staff unchanged. Another 33% of companies had to cut staff, but 6% are even looking for new employees.
Businesses are ready to resume their work. Thus, 54% of companies will resume their offline operations during May-June. At the same time, 60% of entrepreneurs are considering the possibility of a full or partial switch to remote mode. Such a decision will not only bring more flexibility in work but also reduce rental costs for office space.
If we compare similar surveys conducted by the EBA among representatives of large and small businesses, we see that unfortunately, small entrepreneurs had a limited safety margin. The economic consequences of the pandemic affected primarily the financial results of small companies, which had to suffer way more losses than big companies. Also, small businesses have much fewer opportunities to retain employees and keep salaries at the pre-lockdown level. At the same time, we see that small businesses are more flexible, while large companies are considering only a partial transition to online mode, SMEs are ready for total digitalization if their activities allow. Flexibility and creativity are the competitive advantages of small entrepreneurs that I hope they will use to overcome the consequences of this crisis.
For the reference:
The survey was conducted from 15 to 21 May 2020. Altogether 111 participants – representatives of small and medium-sized businesses 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 more than 1861 participants.