26.01.23 Review

Economic Demobilisation: polling by FOM shows that the mood among small businesses significantly deteriorated in the autumn of 2022

According to 58% of small business representatives polled on a regular basis by the Public Opinion Foundation (FOM), Russia's economic situation has worsened. The announcement of mobilisation at the end of September has created difficulties for 44% of the entrepreneurs polled. Younger entrepreneurs took the brunt of these negative effects of mobilisation. As a result, they are much more pessimistic about their prospects. At the same time, entrepreneurs appear to be either unaware of the government's small business support measures or do not believe in their ability to help them. 21% of the entrepreneurs polled said their business had improved, 36% said their business had declined, and 3% had completely shut down operations. Micro-enterprises and those focused on selling directly to consumers have fared worse than businesses that rely on b2b or public procurement.

According to the latest round of polling, the majority of entrepreneurs surveyed by the Public Opinion Foundation (58%), regardless of whether their business has faced difficulties as a result of mobilisation, agreed that the economy worsened in autumn 2022. Profits and order volume fell for one in four entrepreneurs running small businesses (25%) following the announcement of mobilisation, while for every fifth entrepreneur, mobilisation resulted in  staffing issues (21%). Among those who reported negative results of mobilisation, almost half (48%) reported decreased revenues, 38% experienced staffing issues, and 20% cited ‘people's anxiety and uncertainty about the future.’ 19% believed the impact on their business would only increase in the future. 

Those who were already struggling and whose business strategy was ‘survival’ were more likely to be affected by mobilisation, whereas only 40% of those whose focus was on business retention or growth were affected. 

Young entrepreneurs aged 18 to 46 were hit the hardest by mobilisation, as was to be expected. When compared those over the age of 46, half (50%) believed that mobilisation had created new challenges for small businesses. Younger people were also less optimistic about what small businesses can expect in the future: only 27% expressed a belief that mobilisation will not affect their business in the future, compared with 37% of entrepreneurs over the age of 46. 

The majority of entrepreneurs surveyed (62%) were unaware of any government assistance programmes for small businesses, this number was higher among younger entrepreneurs (67%). Across the board, 37% of those who had heard about government assistance schemes did not believe that these new measures would be of any use. This critical attitude is more frequently expressed by younger people: 40% of entrepreneurs under the age of 46 had faith in government assistance, while this figure stood at 53% among those over the age of 46. Many people's interactions with the state indicate that there is little point in hoping for assistance: one in every four entrepreneurs who had received some sort of state assistance prior to the war did not believe that the new measures would be effective. 

Despite mobilisation, 19% of the small businesses surveyed were able to increase their income in autumn 2022, when compared with their earnings from the summer months. This group of entrepreneurs was the most optimistic about their prospects for the future: 37% of respondents did not anticipate any negative impact on their business as a result of mobilisation. 

According to another section of the same survey, 3% of the small businesses monitored by FOM closed in the third quarter of 2022, 21% strengthened their position, and 36% believed their position had deteriorated. The impact of mobilisation was felt by 44% of those who improved their position and 51% of those whose position had worsened. According to additional questions within FOM’s survey, businesses oriented towards individuals (i.e. those focused on the final consumer) were more likely to have seen their position deteriorate, as well as micro-enterprises and the self-employed (those without other employees). 

‘Have your business conditions improved, deteriorated, or remained unchanged?’ % of respondents in Q3 2022

The FOM survey was conducted as part of a longitudinal survey (a survey that is repeated on a regular basis with the same respondents) that has been conducted by FOM since 2021. This round of the survey, which took place from October 13 to November 14, 2022, was the sixth in the series, with698 respondents, including entrepreneurs with up to 100 employees and annual revenues of up to 800 million roubles.