The small and medium enterprises in Bulgaria have absorbed the biggest pressure of the world economic crisis. Experts in the field say that their deteriorated condition was caused by the slowly-developing institutions in this country and the political crisis. According to the CEO of the Bulgarian Small and Medium Enterprises Promotion Agency Evgeniy Ivanov, the small and medium business in 2013 has started slowly to recover from the consequences of the economic crisis. In comparison to 2012, a certain decrease in the unemployment rate was registered this year. If in 2012 40% of the companies in this sector reduced the number of the employed, in 2013 this share has gone down to 30%. Many of the industrial enterprises even hired new personnel, says Evgeniy Ivanov.

“In 2012 nearly 70% of the SMEs registered a decrease of their profit on an annual basis, whereas in 2013 this share amounts to nearly 30%”, Evgeniy Ivanov goes on to say. “Over 20% of the small and medium companies registered a profit growth. We can say that one of the main problems of the Bulgarian economy-the lack of industries with high added value is clearly visible in the small and the medium enterprises in this country. We should also note that the political situation in Bulgaria has undoubtedly reflected negatively over the business climate and the macro economic framework”.

According to Mr Ivanov, the SMEs have lost some of their market share in times of crisis, reduced their profits and the initial reaction of many companies was to cut the number of the employees. Many of the firms in this sector have frozen their investment plans and innovation projects and started to reorganize their business activities. These conditions provided opportunities to the flexible companies to become more competitive, produce better- quality products and search for new market destinations. The basic strategies applied by the small and the medium-sized companies to combat deteriorated economic environment envisage expense cuts and promotion of new products and the accumulated capital and the human potential become the main driving force. According to Mr Ivanov, the companies which apply good practices with regard to human resources, or use more actively the information and communication technologies, plan their business activity well and make regular marketing analyses, have suffered lower decrease in their profit margins or had no losses whatsoever.

How serious is the problem regarding the financing of the SMEs?

“The problem with the financing is one of the most important ones and it refers to all world companies”, says Evgeniy Ivanov. “This is one of the top priority problems in Europe. Currently 20% of the small and medium companies say they need a loan for current expenditures. Many of them apply for loans which are to be used for investments later. As a whole, in 2013 we have witnessed an improvement in the companies’ access to financing. For the period 2012-2013 the share of the SMEs with a difficult access to financing has dwindled. Moreover, the number of the enterprises which finance their activities with own capital, has increased.”

In 2013 more than a third of the SMEs have invested in new technologies. The companies, especially the micro enterprises, mainly use own savings. With regard to the EU funds absorption, it is of great importance to plan the next programming period 2014-2020 well, which will provide opportunities for a better and more efficient absorption of the money allotted to Bulgaria, specifies Evgeniy Ivanov. According to the expert, small and medium companies from various spheres have performed successfully this year.

What is the role of the state in support of the SMEs?

“The state sets the framework where business develops”, continues Evgeniy Ivanov. “Several moves of the Bulgarian government aimed at reducing the indebtedness between the companies and alleviating the registration and the license regimes show that the role of the state is very significant. Our agency has a key task with regard to the SMEs, because it is a mediator between the state and the business. This is implemented in compliance with the European Commission initiative entitled Small Business Act which regulates the policies of the EU member states with regard to the small and the medium business.”

Author: Kostadin Atanasov
English version: Kostadin Atanasov