The NOEMA marketing agency has presented for another year an analysis on the condition and problems of the sector of micro, small and medium-sized companies in Bulgaria. Those form the basics of this country’s economy – more than 99 percent of it. The analysis views the macroeconomic environment that the companies work in, their current state and competitiveness. What happens in the sector several months after the crisis started to disappear?
The number of micro companies in Bulgaria is the biggest – some 325,000. Small companies amount to almost 23,000, according to statistics, while middle-sized are 4,444. Big companies’ number is 744, or only 2 percent. In terms of demography business is concentrated in South Bulgaria, where companies from the processing industry dominate. The poor infrastructure also contributes to the significant difference between South and North Bulgaria’s economic development, NOEMA experts say. The crisis has affected the most the production companies in the sector, as the number of closed down or bankrupted enterprises of this kind has been the biggest over the past years. The analysis says that ¾ of Bulgaria’s manpower is employed precisely in small and medium-sized companies and that is why the biggest drop in terms of employment can be observed there. The financial indexes of the sector are getting a bit worse over the past years, as incomes have dropped by a percent and a half. According to the analysis the companies have saved over the difficult months from investments in fixed assets, i.e. new appliance. Small and medium-sized companies relied mainly on export in 2011, data shows – an increase of the share of such firms was observed. Products for processing, machineries and appliance are mainly exported, as the greatest share of this export targets the other EU member-states. The entrepreneurs’ group in Bulgaria is aging and no continuity is observed, as most entrepreneurs are over 46 years old, Ralitsa Ganeva from the Sofia University warns. She has cooperated for the analysis’ preparation.
“Young entrepreneurs are barely 5 percent of all entrepreneurs in the sector,” Ganeva says. “The old ones, aged over 60 are 15 percent. 1/3 of Bulgarian small and medium-sized companies are family ones, while 70 percent of those are still managed by the person that established them. We can say that exactly these businesses will be closed down, when this person retires.”
Funding is one of the major problems of small and medium-sized companies. Banks tend to be very selective, when crediting is discussed. The analysis shows the necessity of alternative funding sources. The lack of enough funding is also the reason for the lack of enough innovations. Ralitsa Ganeva further says:
“62 percent of the companies have been funded last year with money of the owner. This means own money or money of family and friends. Our small and medium-sized companies lag behind significantly, regarding their development. Less than 10 percent of those cooperate with educational and academic institutions. In 2011 nearly 40 percent of the innovations were in processes, related to reduction of expenses as an effect from the crisis.”
Intellectual property is also a weakness of small and medium-sized companies in this country. The percentage of active companies in the sphere is very small. Barely 7 percent of them have registered their own patent, while 13 percent have registered a trade mark. Less than 1/5 of the companies can afford these operations either.
English version: Zhivko Stanchev