The situation has led to a 40% shutdown in business activity.
Safeguarding jobs and surviving the situation are the two most important concerns for Spanish entrepreneurs.
The Laboratory for Entrepreneurship and Social Innovation (LEIS) at the University of the Balearic Islands, led by senior lecturer Julio Batle, has taken part as joint author of the report 'The situation of entrepreneurship in Spain faced with the COVID-19 crisis'. Based on a national survey run in month of April by the Global Entrepreneurship Monitor Network in Spain that collected over 4,000 responses from entrepreneurs regarding the COVID-19 crisis, the study includes soon-to-be presented data from the Balearic Islands.
During the first fifty days of lockdown in Spain, 40% of Spanish businesses were forced to temporarily close, with only 10% managing to maintain normal operations. This has led to a sense of uncertainty across society and has also impacted entrepreneurs (as stated by 58% of them) who have been obliged to adapt to an unprecedented situation.
Demand has fallen by 80% but has not affected all sectors in the same way
The B2C services sector has suffered the most during lockdown, which 66% of firms in the sector shutting down, of which only 2% have plans to not reopen. This situation will have a direct impact on employment: 35% of firms in the sector state that they have cut staff and only 7% are planning to take on new workers.
In terms of B2B firms, 35% are planning on cutting staff numbers due to a 60% drop in demand, and this despite have continued business through home working. For this reason, 45% of firms are planning to cut hours, with half considering possible wage cuts.
The solution to the crisis of 57% of service sector firms involves attracting new customers. In general, the last few weeks have seen one in every four firms 'reinvent' themselves - a requirement linked to the production system where, according the last GEM report, 75% is focused on the services sector either in B2B or B2C.
During the lockdown, the industrial sector saw less of an impact, with 70% being able to maintain their business activity. Nonetheless, the fall in demand and uncertainty has led to cuts in jobs and hours.
Moreover, 48% of these firms have modified their investment plans, and 16% are renegotiating them. Around 25% highlight the difficulty in taking on risks to come out of the crisis situation.
With regard to self-employed workers, 70% had no finance plans, meaning liquidity problems are the major concern amongst this sector of the population where 48% of workers have seen their business activity decline.
The main demand amongst self-employed workers (78%) has been the suspension of self-employment contributions, in addition to access to public funds, since one in four believe that they are insufficient to mitigate the effects of the crisis.
Firms with over fifty workers
Firms employing over fifty workers have managed to survive thanks to working from home and are considering adapting their business models (65%), increasing resources (12%) or applying for extra funding (45%).
The closure of borders and the barrier this represents for internationalisation and free circulation means that whatever their size, these firms are now facing an uncertain future and job losses.
Lines of support to lower these barriers (33%) and cut bureaucracy (72%) are the main measures these firms are requesting from administration to help in their recovery.
Entrepreneurs are championing positivity and seeking out new market opportunities
According the annual reports from the GEM Network (which includes the UIB Laboratory for Entrepreneurship and Social Innovation), around 10% of the population state that they intend to innovate. After the 2008 crisis, there was stagnation in this approach which is a major problem in terms of entrepreneurship.
Fortunately, most of those surveyed (96%) now see opportunities, whether they be for any type of business (14%), as an exceptional circumstance (30%) or for those who have resources or are diversified (26%). The data show that Spanish entrepreneurs are positive in their outlook.
Only 4% have abandoned their plans; 45% plan on changing their business model; and 35% has temporarily halted their plans. Around 75% agree that the main requirement is measures of support in creating businesses.
Laboratory for Entrepreneurship and Social Innovation
The Laboratory for Entrepreneurship and Social Innovation (LEIS) at the UIB was set up in February 2020 with a view to undertaking teaching, research and knowledge transfer activities, as well as being an active agent in impact project in the fields of entrepreneurship and social innovation. The laboratory is currently a member of the Global Entrepreneurship Monitor and, with support from the Institute for Business Innovation in the Balearic Islands, continues research into entrepreneurship (GEM-Global Entrepreneurship Monitor reports from the Balearic Islands produced by the LEIS team since 2017), as well as other sector and single-issue studies such as the 'COVID-19 GEM Spain' report into entrepreneurship and social innovation, which is due to be released on 14th May.
Access the full report at: <https://www.gem-spain.com/situacion-del-emprendimiento-en-espana-ante-la-crisis-del-covid-19/>
Publication date: Fri May 15 10:28:00 CEST 2020
