The current economic instability suggests a difficult 2023 for companies. Inflation will remain the protagonist in all forecasts and business forums, with SMEs being the most vulnerable to these price increases.
These small organizations, sometimes one-person, expect to go through various difficulties in the near future, as stated in the I Hiscox Report on SMEs and the self-employed in Spain, and is that, according to data from this report, 36% of Spanish SMEs believe that their profit margin will worsen in 2023.
However, this response varies according to the size of the company and, as the number of workers increases, expectations also improve. The self-employed and SMEs of up to nine employees are the ones with the most negative forecasts, 31.8% and 27% respectively, believe that their profit margin will be reduced in 2023, while 54.7% of companies with between 10 and 49 workers believe that your income will improve. It should also be noted that this figure rises to 67.3% among SMEs with between 50 and 245 employees.
On the contrary, the forecasts are more pessimistic as the the age of the company. 23.7% of SMEs less than five years old believe that their income will worsen this year, a figure that rises to 31.6% among those that are more than five years old.
Higher production costs that reduce profits in 2023
The same Hiscox report includes the main causes that Spanish SMEs attribute to this loss of profits. And it is that 60.9% of SMEs show concern about rising costs of production, a variable that will directly affect its profit figures for this year.
Added to these forecasts is the drop in the activity of SMEs, which is expected to affect 39.4% of these companies in this new year, according to data from the Hiscox report, which also states that 33.8% foresee problems of business continuity. In 2022, according to a study carried out by the Bank of Spain, 27% of companies had registered a drop in sales in the last quarter of the year.
Three out of four SMEs will maintain or improve their capacity to create employment According to data from the Ministry of Industry, Commerce and Tourism, small and medium-sized companies employ 9.2 million workers and, despite the prospects of SMEs in terms of to its benefits, the Hiscox report offers positive data regarding the forecasts on the ability of SMEs to contribute to employment growth in 2023.
Thus, only 20.7% believe that it will get worse, while 55.6% expect a situation similar to that of 2022 and 20.6% think that it will improve in 2023. If we look at the size of the company, the most optimistic are the large ones, those with between 50 and 349 workers, since 47.6% believe that the situation will improve in 2023 and only 2.8% think it will get worse. The most pessimistic SMEs are the smaller ones, those with 1 to 9 employees, since 20.2% of these think that the situation will worsen this year.
In the same way, the most experienced companies are the most positive, since 31.5% of those SMEs with more than five years old believe that more employment will be generated in 2023, while young companies with less than five years are more cautious and 61% think that the employment situation will remain at levels similar to 2022.
“The data from our study, although they reflect the concern of Spanish SMEs, leave some room for optimism. The figures related to benefits are very cautious, but those corresponding to the employment that SMEs will be able to generate this 2023 are much more positive. SMEs are the most important engine of employment in Spain and together we have to ensure not only their survival, but their prosperity” assures Ricardo Sánchez, director of Innovation and Alternative Distribution of Hiscox Spain.
