In particular, the viability index registers an improvement, as only 2.2% of businesses express a fear of stopping their activity in the near future, compared to 4.7% in July 2023, according to the Confederation’s previous economic climate survey .
It is noted that the percentages of companies which in the surveys of IME GSEVEE declare that they will immediately, within the next quarter, stop their activity constitute the so-called “sustainability index”.
Improvement
The rate of 2.2% recorded in the latest survey refers to February 2024. It is in fact the lowest rate in four years and the third lowest in five years, based on the surveys of the Small Business Institute of GSEVEE.
“We have returned to normal economic conditions. Which means that businesses, with all the difficulties they face, can and do operate – in general – in normal conditions”, he told “ET”. competent analyst. As he explained, the percentage of 2.2% concerns businesses that face major problems, for example they have low turnover, debts, they are usually very small businesses – self-employed. And it is in fact a normal percentage, because some businesses actually close and this can be due to various reasons, e.g. to accumulated pressure, to a wrong business decision, etc.
From 2019
Meanwhile, in July 2019 the sustainability index stood at 1.7%. It is recalled that this is the month in which the early national parliamentary elections were held (July 7, 2019), after the defeat of the ruling party in the European elections and in the self-governing elections of the same year. A few months later (February 2020), the percentage of businesses that declared that they would cease their activity within a quarter further decreased (1.4%). The outbreak of the health crisis (quarantine – March 2020) affected the course of the index. The number of businesses that said they were going out of business increased. Something that was reflected in the next GSEVEE measurement. In July 2020 the percentage rose to 5.9%. In the next semester (February 2021) it increased slightly (6%) and after some fluctuations (July 2021 – July 2023) it ended up at 2.2% in February 2024. It is recalled that during the period of the Memoranda the corresponding percentages were at the level of 10 %.
“Key” for survival the liquidity
A major issue for the next business day is liquidity. According to the economic climate surveys of IME GSEVEE, with regard to the liquidity of small and very small businesses, the same inverse relationship between the first and second semesters is observed compared to previous years, with the second semester falling short of the results of the first semester , despite the fact that, due to the effect of tourism, the second half is traditionally better.
Specifically, 21.5% of businesses declared an increase in liquidity, while 42.4% reported a decrease. Finally, as can be seen from the percentage of businesses that declared a decrease in liquidity, the lack of liquidity remains one of the most important problems faced by small and very small businesses, linked to the difficulties they face over time in terms of accessing financing either for working capital or for investments.
Cash available
The liquidity problem faced by a fairly large number of small and very small businesses is reflected in their liquid assets. In particular, more than half of the businesses do not have (25.5%) or have cash available for at most one month (25.1%).
Firms’ cash resilience is linked to their size, with smaller firms experiencing significantly greater liquidity shortages than larger firms. In particular, 40% of businesses with a turnover of up to 50,000 euros stated that they have no cash available at all, while this percentage drops as we go up the scale of size, reaching only 8.2% of businesses with a turnover of more than 300,000 euros. We observe the exact opposite with regard to companies that have a high level of cash reserves. In particular, only 5.9% of businesses with a turnover of up to 50,000 euros stated that they had cash reserves sufficient for more than 6 months, while this percentage stands at 17.7% for businesses with a turnover of more than 300,000 euros.
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