Cautious signs of improvement among SMEs

SMEs’ assessment of how their business is currently doing has improved slightly since last autumn. Single person businesses are faring the worst.

Over half of businesses assessed in the latest Yrittäjägallup survey that their financial situation is either extremely good (17%) or quite good (36%).

“Businesses have seen an improvement since last September, which is a good thing. In addition, the worst of the energy crisis is behind us, at least for now,” Mikael Pentikäinen, CEO and President of Suomen Yrittäjät, the Finnish SME association, says.

However, 15% of businesses continue to consider their situation either quite bad (11%) or extremely bad (4%). Almost one business in four (23%) considered its situation either quite or extremely bad.

The strongest situation was reported by businesses employing more than 10 people, and the weakest by single person businesses.

“The more employees there are, the better the business’s situation is. This speaks to the pressure small employers are under and explains why the number of businesses employing people has dropped drastically in recent years,” Pentikäinen says.

“However, what is positive is that significantly more business owners believe that their situation will improve, compared to those who believe it will worsen, over the next year. It’s particularly positive that young business owners’ outlook on their business prospects have significantly improved,” Pentikäinen adds.

There are particular difficulties in the retail sector. Female business owners have more difficulties than male ones.

“It’s important for the government programme to secure competitive and predictable taxation. The taxation of businesses and their owners should not be increased, nor should the burden on businesses be made heavier. That would be toxic for businesses’ growth and investments,” Pentikäinen says.

Energy crisis easing

As the price of energy has dropped, the associated pressure has slightly eased. However, 27% of businesses still report weaker profitability because of the energy crisis.

“The more people they employ, the more they speak about weaker profitability. The most difficulties are experienced in industry and retail,” Pentikäinen says.

The number of businesses requiring public energy subsidies has roughly remained the same. They constitute about 4% of businesses.

Inflation felt widely

Inflation raises costs and affects businesses. Of businesses, 42% say they have raised their prices and almost the same proportion (41%) says their profitability has suffered. Nine per cent consider their business’s future under threat.

The impacts of inflation are greatest in industry, construction and retail. It is noteworthy that one in eight (13%) industrial company considers its future threatened.

How the survey was conducted

The survey was conducted by Kantar Public Oy on behalf of Suomen Yrittäjät.
A total of 1,038 representatives of SMEs responded to the survey between 5 and 20 March 2023.
The confidence interval for the overall results is +/- 3.1 percentage points.

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