The coronavirus pandemic resulted in a nationwide decline in turnover, profits and liquidity of small-to-medium-sized businesses (SMEs), but without a commensurate reduction in employee numbers, according to a collaborative study carried out by small shopkeepers’ union Povek, the Bank of Cyprus and business analytics company Retail Zoom.

The study surveyed 541 SMEs in total, spanning a number of sectors, including retail, wholesale trade, catering, entertainment and technical professions.

In addition, 70 per cent of participating businesses employ between two and nine staff members, 18 per cent have a single employee, while 12 per cent employ between 10 and 39 people.

“Τhe Cypriot economy continues to rely on very small and small businesses,” Povek said, adding that “the issues that have been identified through the study were preexisting, mainly because of the pandemic and its prolonged duration”.

The union also explained that any plan to deal with the consequences of the pandemic must involve flexibility and adaptation from the side of the businesses, combined with a comprehensive economic policy to support them.

The survey found that turnover, profits, and liquidity decreased significantly for most SMEs questioned, with 58 per cent of participants reporting a large reduction and 26 per cent reporting a significant reduction.

Regarding employee numbers, 43 per cent of businesses reduced their staff by up to 20 per cent, primarily in the entertainment and hospitality sectors.

Businesses also reported that they had to make alterations to the way they operate, with 61 per cent saying that they had to implement numerous changes, including e-commerce practices, invest in digital infrastructure, as well as launch new products and services.

In this context, Povek said that food delivery services, which boomed during the pandemic, “brought a noteworthy rise in sales” to the businesses that started to offer them.

In terms of how very small and small businesses assessed the level of support they received from the state, a whopping 83 per cent deemed it as insufficient.

This applies to direct financing, as well as support measures pertaining to rental costs, energy costs, digital infrastructure upgrades and utility bills.

Moreover, businesses overwhelmingly said that government funding is the first source of support they will seek out in the event of financial trouble.

Furthermore, 78 per cent of businesses said that rental costs are a concern, followed by various debts with 73 per cent, accumulated debt with 72 per cent, as well as the increase in competition with 52 per cent.

“As far as education and training of companies are concerned, the biggest needs are in the fields of digital marketing, marketing strategy, new product development and financing programmes,” the union said.

Regarding the issue of banking, 33 per cent of businesses would prefer if they were offered lower interest rates, 30 per cent would like lower bank charges, while 30 per cent asked for speedier financing.

“The majority of participants consider the interest rate subsidy as more desirable support than the provision of loans with state guarantees,” Povek said.

Finally, 84 per cent of businesses said that they maintain audited annual financial reports.