“Should we shut off life support for businesses that have no plans to adapt and cannot survive more than a few months?”
This was the tough question put forward by Malta Enterprise CEO Kurt Farrugia during a half-day conference organised by the Chamber of Small and Medium Enterprises and Business First.
Mr Farrugia was reacting to the findings of a survey commissioned by the Chamber of SMEs among its members that showed that a quarter of businesses did not believe they would survive beyond three to six months in the current situation.
While 37 per cent of businesses expressed uncertainty in this regard, only a quarter of businesses were confident of their survival after 12 months.
The survey results also revealed that four out of every five businesses had experienced a reduction in turnover of over 10 per cent. Over half reported a sharp decrease of over 30 per cent.
Only one in nine businesses reported an increase in revenue of over 10 per cent.
Turning to businesses’ plans to adapt, the Chamber of SMEs president Abigail Mamo noted that 18 per cent said they were planning on moving their operations online, while another 18 per cent planned to reduce their employees.
Meanwhile, 17 per cent indicated they would be implementing a diversification of their strategy, while the remaining 47 per cent said they had no plans to change their business model.
It was these findings that Mr Farrugia latched onto as he chided businesses for not taking a more aggressive approach to adapting to the situation.
“This is hardly the time to lie in bed and wait for supplements and better times to keep you afloat,” he said. “This is why we recently announced a scheme that links consultants with businesses struggling to find re-engineering ideas.”
The Malta Enterprise CEO, who took up the position last year after working as the Prime Minister’s head of communications since 2013, said that the wage supplement should be seen as life support giving some breathing room to businesses to restructure and keep going.
“Our help will be useless if businesses are in no better a position to weather the storm than they were back in March,” he said.
“Should we keep businesses that have no plans to adapt alive for the next three to six months?”
While saying there are no plans to switch off the life support just yet, Mr Farrugia called on businesses to change and adapt their model to ensure survival and growth over the long term.
He invited businesses to look into Malta Enterprise schemes intended to help businesses adapt.
“Today’s Malta Enterprise scheme are not just meant to provide life support, but also to encourage economic operators to go beyond survival. Businesses that adapt will be able to move forward, but those that do not change will lose out,” he said.
He also cautioned businesses against seeing the arrival of the COVID-19 vaccine as signifying a return to normality, saying that although the vaccine is important, consumer fear will persist.
Such fear is driving massive uncertainty among businesses, with 71 per cent of the Chamber of SMEs members flagging it as a concern. Over half of businesses reported concern about very low turnover while a third were worried that government aid would stop and 30 per cent said they were worried about a “non-existent market”.
Ms Mamo said that rental costs, increasing debt, difficulties to pay wages and increasing banking costs were other factors causing concern.
Malta Enterprise CEO Kurt Farrugia