A survey conducted by Luminor Bank showed that, despite the impact of the pandemic, about a third of small and medium-sized enterprises (SMEs) in the Baltics have a positive view of 2020 compared to 2019. Most positive entrepreneurs are in Lithuania (37%) and Estonia (35%), while Latvian small and medium-sized businesses are a little more skeptical (29%).
Latvians the least optimistic
Moreover, it turned out that the uncertain situation in the markets did not deter the desire to expand. Lithuanian and Latvian SMEs are the most positive in this respect – 41% and 37% plan expansion, respectively. Estonian entrepreneurs intend to be more cautious – 25% of respondents plan to grow their business.
The assessments of Baltic entrepreneurs regarding last year are quite contradictory. About a third of all respondents admit that 2020 was better for them than 2019. One-third feel that the situation has not changed in 2020 compared to 2019. The rest says the past year has been worse. Lithuanian entrepreneurs are the most optimistic – 37% of them think that 2020 should be assessed positively. For Estonian business representatives, last year looks both good (35%) and neutral (33%). Latvian business is the least optimistic, 29% representatives assess last year as good and 35% as neutral.
One third maintained turnover
Although we all faced unexpected challenges in 2020, we had to face unforeseen events, but the year also confirmed the banal truth – every crisis creates new opportunities. Some sectors grew naturally under the new conditions, some adapted quickly. On the other hand, it is pleasantly surprising that a relatively large part of the Baltic business has not only not stopped, but is also optimistic about the future prospects. At least a third of SMEs said they intend to expand in 2021, both to increase sales and digital business.
However, more than half of the Baltic small and medium-sized enterprises experienced a decline in turnover in 2020. Nevertheless, about a third were able to maintain their previous turnovers and 13% even increased them.
Estonians expect to grow online
Lithuanian entrepreneurs are the most optimistic about business growth in 2021. The most cautious are the participants of the Estonian small and medium business (SME) sector. More than half of them do not plan business development in Estonia this year. The intentions of Latvian entrepreneurs are different: 37% expect growth and 33% are unsure about the 2021 outlook.
More than half of those Baltic companies that are planning to expand their business expect to increase sales and introduce new goods and services to the market. Representatives of Estonian SMEs expressed higher ambitions regarding export plans – 33% of them intend to increase export volumes, compared to 19% in Lithuania and 28% in Latvia. Estonian SMEs are also more interested in growing online sales, 27% of the country’s entrepreneurs expect this, compared to 20% in Lithuania and 22% in Latvia.
The main reasons for the Baltic entrepreneurs’ decisions not to expand their business in 2021 are uncertainty about the Covid-19 pandemic, Brexit and other global factors. About 10% of survey participants say they have already experienced growth in 2020, and a fifth of respondents say they lack funding for development.
The Luminor Bank survey was conducted in 2020 in collaboration with market research firm Norstat. Survey participants were 750 Baltic SME managers or financial managers.