Small Firms, Big Problems!
Profitability of Micro Firms Under Continuous Pressure!
Enterprise profitability took a hit during the pandemic. This is probably well known and understood. Less well understood is how firms of different sizes have suffered. One way to look at that is through the biannual survey on the access to finance of enterprises (SAFE) of the ECB, which is asking enterprises about their profit development. We all know about potential biases in surveys, but if below chart is only directionally right, its results are literally shocking:
Key Insights:
– Micro Firms have continuously reported deteriorating profits for more than ten years
– Micro firms have suffered much more than large firms during COVID19
– The profitability of micro firms has never recovered from COVID19
– The deterioration of micro firm profits accelerated during the last survey