47 % of Latvian companies have changed their business model due to COVID-19, or are planning on changing it
Survey conducted by Luminor Bank shows that the small and medium companies in Latvia hold the most optimistic outlook in comparison with companies in other Baltic countries: 47 % of these companies are planning on changing their business model according to the new situation or have already done so, and 26 % are planning on expanding their business this year.
At this time, most companies have stopped all intended development plans; however, Latvia has the largest ratio of entrepreneurs who are still planning on developing and expanding their business in 2020. This has been stated by 26 % of Latvian small and medium enterprises, while only 12 % of their Lithuanian and 13 % of their Estonian counterparts are considering development this year.
“Latvian small and medium companies look into the future with more optimism and are more ready to take on new challenges; possibly because the restrictive measures in Latvia were not as strict and allowed the businesses to maintain confidence in the future. In our survey, we found that 47 % of Latvian companies are planning to make changes to their business model due to the coronavirus, or have already implemented changes; while 38 % of Estonian companies and only 22 % of Lithuanian companies are ready to adapt to the situation. For some of the companies the only possibility to survive the emergency situation was to reorient or develop their business in the online environment. Results of the survey show that entrepreneurs are already implementing or planning on implementing the necessary measures for improvement of e-commerce by using online trading locations or by creating their own online shops,” said Kerli Gabrilovica, Head of Luminor Latvia. While adapting to the new conditions, 24 % of Latvian businesses have started using social networks more actively; 14 % have started home deliveries of their products, as well as have made various other individually developed improvements.
At the same time, approximately 65 % of small and medium enterprises in the Baltics predict the fall of sales volumes in 2020; however, the opinion on which consequences caused by the coronavirus affect business the most differs among the businesses of the Baltic States. The small enterprises of Latvia believe that they have been most affected by uncertainty in the global economy: it was stated by 40 % of the respondents in Latvia, 47 % in Estonia, and only 17 % in Lithuania. Also, 23 % of the businesses in Latvia have been affected by interruptions in delivery chains, and only 16 % have mentioned the restrictions imposed on operations during the emergency situation as the most significant impact of the virus. Meanwhile, these restrictions have left the greatest impact on business in Lithuania, as was stated by 35 % of the Lithuanian respondents.
*The survey of Luminor Bank was conducted at the end of April 2020 in cooperation with the sociological research agency Norstat. More than 600 small and medium enterprises with the turnover of up to 5 million euro were surveyed in Latvia, Lithuania and Estonia.