Every fifth small business in Ukraine may shut down due to quarantine

These are the results of an express survey conducted by the European Business Association among representatives of small and microbusiness – participants of the Unlimit Ukraine project.

“According to the survey, 18% of respondents consider closing their businesses, 78% report losses of income up to 75%, and only 4% stand out with increased profits for the company. The economic impact of a coronavirus pandemic is extremely severe for small businesses,” the EBA informs.

The Association notes that small business must overcome this crisis with the fewest losses possible, because a successful small business is a benchmark of a progressive economy and the basis of a strong middle class. Small business provides employment, however, due to the slowdown in business activity, some will have to reduce the staff size and cut the salaries.

“Thus, among the respondents, 41% plan to adjust the salaries of staff, 33% have not yet decided, and 26% of business owners will keep the current size of salaries. It will be necessary to reduce the number of employees in 31% of enterprises, while 21% are undecided and 48% of respondents do not plan any staffing cuts,” the report reads.

As noted, the entrepreneurs, perhaps, are most worried about the uncertainty of the current situation. In circumstances when the duration of quarantine and changes in consumer behavior are hard to predict, it is almost impossible to elaborate any scenarios for business development. The decline in number of orders, the disruption of procurement and delivery terms, the paralyzed sales channels are just a few problems facing small businesses. While many companies have a substantial decrease in their revenues, expenditures remain virtually unchanged (rent, utilities). More worries added up with shifting to the remote work and organizing employee transportation when the movement is restricted.

“Despite all the challenges of the situation, entrepreneurs remain optimistic for the most part. Thus, 47% will look for new development opportunities in case of the indefinite duration of the quarantine. At the same time, 22% of respondents will have to close their businesses. However, due to the unpredictability of the situation, business sentiment may change,” the EBA adds.

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