Eight out of ten small Catalan companies are clear that their business is not going to close down. At least, not before 2023. They are 83% of all small businessmen in this autonomous community and they look to the future with optimism.
So much so, that they outnumber happy SMEs in the rest of Spain, where only 73% see the future clearly for the coming months. Even so, they expect to continue growing and create 235,000 new jobs.
Despite the difficulties, this side of the Pyrenees is more optimistic among small businesses than in other neighboring countries. Outside our borders, only 65% are confident that they will overcome this period of post-covid uncertainty without being so affected as to close down. The figure rises to 69% when asked about their expectations of recovering pre-pandemic profitability for the next 12 months.
These are the results of the international report Small Business, Great Opportunities carried out by Sage, a world leader in business management and accounting solutions in the cloud.
Inflation worries a lot. A third of businesses have not yet recovered to pre-covid levels and are facing a scenario of runaway inflation. On the one hand, costs rise, which puts them in the dilemma of whether to assume this increase at all costs, reducing margins, or pass it on to their prices, with the risk of losing customers.
An anxiety that takes away the sleep of 31% of the study participants. All the more so when global inflation is testing the consumption capacity of citizens and businesses. Precisely for this reason, small entrepreneurs demand more public aid and facilities to access bank financing.
The pandemic was an earthquake at the macroeconomic level. Apparently it was not the best time to undertake. However, many defied fate and opened their doors during the covid crisis. Today they make up 14% of the fabric of small and medium-sized companies. The sectors with the most entrepreneurs against all odds are concentrated in personal services, such as sports or wellness, manufacturing and the creative professions.
As debutantes that they were, they faced greater difficulties than usual to prosper. And, paradoxically, these entrepreneurs, whom the study dubs the 'Covid Generation', have big growth plans for the coming years. Even more than those businesses founded before the pandemic.
They are demanding businesses with their employees, but in search of talent with which to grow. 71% acknowledge having already hired at least one person. They have a much greater capacity to adapt to the restrictions derived from covid than veteran businesses. For example, only 29% acknowledge that capacity limitations or travel restrictions have had a very negative effect on business.
More than half of the SMEs of the Covid Generation (58%) expect to increase their investment in technology compared to last year, while 32% plan to maintain it.
What 91% agree on is investing or changing to be more and more sustainable. “Sustainability is an aspect that is here to stay in all areas, but especially among SMEs, which must include it as one of the main axes of their strategies.
In this context, technology companies such as Sage are supporting and helping SMEs through the integration of sustainability in our services”, explains José Luis Martín Zabala, vice president of indirect sales and professional offices at Sage Spain.
27% of SMEs acknowledge having encountered many barriers. Also, they point out that they have found the resources to overcome the difficulties. Specifically, they agree on four business strategies that have allowed them to continue advancing without suffering too much.
In the face of closures or restrictions, the strategy of 37% has been to adopt innovative technology to sell more and maintain connection with their customers and take advantage of that same technology to improve their work processes.
In addition, 36% of these companies have taken advantage of the crisis to increase their client portfolio or launch new products. Finally, 44% have managed to reduce their costs, 13% more than the average.
At the opposite pole are the so-called 'resilient companies'. They account for 18% of the network of small and medium-sized companies. They have no confidence or lack of confidence in the success of their businesses in the next 12 months. Their expectations in the medium and long term barely count. Rather than trying to grow, they remain focused on overcoming the challenges of the last year. Only one in two considers investing in technology and 50% do not expect to increase their income.
A particularly worrying fact about these companies is that they have young staff (41% are between 18 and 34 years old). Among the sectors with the greatest presence in this group are those dedicated to technology (11%) and professional services (11%).
Finally, 9% are clearly pessimistic for the coming months. One in four find little demand and have financing problems. Some drop that, if they continue like this, they might have to cease their activity.
These two highly vulnerable groups are the ones that, paradoxically, have less access to public aid. Their letters to negotiate with the banks are not favorable either.
Small businesses have shown commendable optimism and resilience over the last 24 months. Steve Hare, CEO of Sage, warns that "their confidence should not be mistaken for resistance." He asks the administrations to make a greater effort to keep the small and medium-sized business fabric afloat. “Otherwise, we risk forcing them to choose between protecting people or keeping profits. Bypassing smaller companies jeopardizes the recovery and thousands of jobs, "says Hare.
