GRTU Business performance survey- State of small business

GRTU has this week held a press conference and issued the details of a survey conducted by the GRTU Research Unit randomly amongst the GRTU members on the state of their business between January and June 2010 as compared to the same period in 2009. A total of 250 members from different sectors participated. As reported by The Malta Independent:

A new question included this year in the survey showed that the majority of those interviewed (54.44 per cent) sell products directly to consumers, so they are well in touch with consumers' problems and difficulties. 40.8 per cent also employ between three and 10 employees, 15.20 per cent employ over 30 employees.

Comparing their turnover from January to June this year as compared with the same period last year, 24.80 per cent said it had remained the same while on the negative side, 20 per cent said it was up to 10 per cent less than last year, another 19.2 per cent said it was 20 per cent worse than last year and a further 14 per cent said it was over 20 per cent less than last year. In short, 53.20 per cent said their turnover was worse than last year.
On the other side, 14.40 per cent said this year was up to 10 per cent better than last year, a further 4.80 per cent said it was up to 20 per cent more better than last year and a further 2.80 per cent said it was more than 20 per cent better. In all, 22 per cent said this year has been better than last year.

More people said that profits were worse than last year (61.20 per cent) while fewer people from the optimists reported better profits (14.40 per cent).

The SMEs were prolific in the reasons they gave for experiencing lower profits:

The effects of the financial crisis;

High prices of utilities which have reduced consumer spending power;

Taxation which has also reduced consumer spending power;

Costs to run a business are always increasing;

There is far too much competition and too many businesses are seeking the same consumers;

There is strong competition from the Internet (this factor has greatly increased from a similar survey held a year ago);

There is new competition from foreign businesses setting up in Malta;

The government is not guaranteeing a level playing field for SMEs;

Clients are not paying on time, there are big cash flow problems;

The quality of tourists is on the low side – students do not have the financial capacities of tourists;

Valletta has lost many car parking spaces; and

There are too many construction works ongoing in Valletta.

On the other hand, the SMEs who registered growth identified the following as among the measures they have taken:

Cost cutting;

Increased range of services/products;

Invested more;

The economy seems to be recovering;

They advertised more; or

They changed the line of business.

When asked what they intend to do in the near future, only 6.80 per cent said they would close down. 44.4 per cent would remain the same while 11.20 per cent will cut down the size of the business.

Asked what they intend to do with their employees, 20.40 per cent said they intend to increase the number of employees while only 16.80 per cent said they intended to cut down the number of employees.

While only 22 per cent reported better business than last year, 33.20 per cent said they think the coming period will be a better one for business, as against a pessimistic 25.60 per cent.

While 58.40 per cent admitted they did not even try to raise finance for a new project, 23.60 per cent said they did and were successful, but 18 per cent said they tried but were not successful. Mostly, it would seem, tried through the banks.

As to the quality of service they get from the government, 68.40 per cent said it is of poor quality, 26.40 per cent said it was satisfactory, 4.80 per cent said it was good and only 0.40 per cent were found to say it is excellent.

As to ideas about what the government should do to help business, the respondents came up with the following ideas:

Cut bureaucracy;

Cut taxes on business;

Cut the cost of energy for business;

Help business by providing low interest loans such as the Micro-Credit Scheme rather than tax credit schemes;

Control unfair competition and provide a level playing field for business;

Increase efficiency and cut costs in government departments;

Remove taxes such as the eco contribution that gives illegal traders an unfair advantage;

Be more lenient when applying fines to businesses, at least in the current situation;

Find a solution to the parking problems in Valletta; and

Foster an environment where it is a pleasure to do business.

Following concern expressed by UHM on the high percentage of respondents who indicated Government services were Poor, GRTU would like to indicate in more detail what were the replies:

Too much bureaucracy

Some employees are helpful whereas others are just there to fill the position

Government departments should be more centralized-A one stop shop-Having to spend days going from one dept to another discourages new businessmen who do not know where it starts and where it finishes

Lack of communication between Government departments

Government starts charging interest from first day of dues while they take ages to pay

Larger enterprises are helped directly while the smaller ones have to find their way

Frozen or inactive schemes are hampering business

Zero efficiency. MEPA especially are taking too long to issue permits