Four in 10 businesses might not survive beyond next six months

Prime Minister Robert Abela had promised a ‘return to normality’ by summer, but a survey reveals only 13% of businesses agree with him


Four in 10 business may not survive beyond the next six months if the current situation persists while two-thirds do not see their company surviving beyond 2021.

This emerged from a survey amongst 230 businesses surveyed by the Malta Chamber of SMEs between 18 and 24 January.

Asked how long they think their business can survive in the current situation, taking into consideration the amount of help provided by the government, 13% said they do not think they will survive beyond next March while 28% think they will not survive beyond next June.

Only a third believe that they can survive beyond the next year if the current situation persists.

Moreover, the survey shows that more than two thirds of business owners (69%) expect  that their companies will be needing the support of the government’s wage supplement till the end of 2021.

Only 6% believe they will only be needing the supplement untll March, as foreseen in the budget. A quarter expect the supplement to be extended till June.

‘Businesses need visibility’

SME Chamber president Abigail Mamo told BusinessToday that she was quite taken aback but the pessimism evident among business owners.

“The main problem is that businesses need visibility, they need a clear time line of how things are going to play out so they can plan accordingly,” she said.

Many businesses have gone into survival mode, seeking only to make it one more day, and abandoning all plans of enlargement, investment or staff take-up.

Mamo said that 2021 could end up being much worse for many businesses because of a lack of a resources cushion.

“Many business have used up any capital they may have had to keep their doors open these past few months, quickly using up their profits or savings,” she said.

“The moment government assistance stops, we predict many businesses will fold, not being able to subsist on their own.”

Mamo said that by now the country has enough experience dealing with COVID and authorities should therefore be able to map out clearly-defined scenarios and outcomes.

“And the government should start identifying sectors which are able to diversify and to provide guidance and assistance to businesses in those sectors,” she said.

“Because if one thing is clearer than ever now, is that our economy cannot remain practically totally reliant on tourism.”

Mood remains pessimistic

The survey also showed that vaccine confidence among small and business owners is low, with only 13% expecting “a return to normality” before summer as had been augured by Prime Minister  Robert Abela in an upbeat end-of-year message.

But 38% expect “an improvement” in the second half of the businesses year.

Still, nearly half of businesses (49%) are pessimistic expecting COVID-19 to remain prevalent beyond the next year.

65% of those interviewed are currently benefiting from the wage supplement. Two thirds of respondents employ less than 10 employees.

The survey shows that the biggest financial concern of businesses at the moment are low sales (26%), cash flow problems (17%) and problems in collecting payments (15%).

Only 10% of businesses saw an increase in their sales in 2020 while 43% have seen a decrease of greater than 50%.

The few businesses which saw an increase in sales mainly attributed this to improvements in their online presence and improved marketing.

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