According to a survey conducted by Luminor bank, about a third of small and medium enterprises (SME) in the Baltic States value 2020 as a positive year compared to 2019. The most positive are entrepreneurs are in Lithuania (37%) and Estonia (35%) while Latvian entrepreneurs are slightly less positive in their evaluation (29%). Furthermore, the same proportion of Baltic companies are also planning to expand their business in 2021, with the most optimistic being Lithuanian (41%) and Latvian (37%) small and medium enterprises, yet Estonians (25%) turned out to be more cautious in planning their business growth.
With regard to evaluating the past year, the views of Baltic entrepreneurs are contradictory. About a third of entrepreneurs acknowledge that 2020 has been better than 2019, a third values both years as comparatively equal, and another third admit that the year has been worse. The most positive ones are Lithuanian entrepreneurs, as the greatest part of them (37%) weigh the year as positive, Estonians equally see the year as both positive (35%) and neutral (33%), but the most pessimistic have turned out to be Latvian entrepreneurs (35%).
“Although 2020 has brought unexpected events and challenges to us all, I am glad to see that a considerably large part of businesses have still found a way how to not only keep afloat but even to develop or re-profile their business. I am also glad about the rather optimistic view to the future the Baltic entrepreneurs have because at least a third of small and medium enterprises state that they are planning business growth in 2021, aiming both at increasing sales volumes and developing their business in the digital environment. Meanwhile, Luminor bank is ready to provide support and be a valuable business partner also this year, helping businesses with financing to achieve their development goals,”
– says Kerli Gabrilovica, Member of the Management Board of Luminor Bank, Head of Retail banking.
Unfortunately, almost a half of the Baltic small and medium enterprises have had a drop in turnover in 2020. However, about a third have managed to keep up the previous volumes, and 13% of Baltic entrepreneurs have even managed to increase their turnover.
The entrepreneurs that are the most optimistic about business growth in 2021 are in Lithuania, while the most cautious ones are the small and medium enterprises in Estonia. More than a half of them are not planning a business expansion next year. Thoughts of Latvian entrepreneurs are divided: 37% hope for growth and 33% are not sure about predictions for 2021. Out of those Baltic enterprises that are planning to grow their business, more than a half hope to increase sales volumes, as well as to introduce new goods or services. In turn Estonians are more ambitious with export plans, as 33% of them are planning to increase export volumes (19% in Lithuania and 28% in Latvia). Estonians (27%) are also more interested in developing their e-commerce sales volumes than the other neighbours — in Lithuania it will be done by 20% but in Latvia — 22% of small and medium enterprises.
The main reasons mentioned by Baltic entrepreneurs for not planning business growth in 2021 is the uncertainty due to the spread of Covid-19 disease, as well as Brexit and other global events. About 10% state that they already experienced growth in 2020, while a fifth of respondents point out that there is lack of financing for development plans.
The survey of Luminor bank was conducted in December of 2020 in cooperation with the market research company Norstat, with participants being managers or financial directors of over 750 Baltic small and medium enterprises (SME).