OREANDA-NEWS. December 29, 2014. The survey “Business Barometer 2015“ conducted by SEB in October and November reveals that 75% of small and medium-sized companies in Voru County will invest in innovation in 2015.

The survey shows that next year, the companies in Voru County concentrate more on the internal market and a fifth of all enterprises plan investments. The optimism of enterprises in Voru County regarding a rise in turnover has remained on the same level as in the year before.

The companies planning to increase their turnover at least 15% next year were classified as optimistic in the research. The survey covering 3,000 small and medium-sized enterprises (SMEs) in Estonia revealed that average business optimism in Estonia has decreased from 25% to 20%.

The number of companies in Voru County that have a positive outlook at a rise in turnover has remained on the same level with the results of the survey conducted in 2013: 19% last year, 18% this year.

By sectors, trade and industry continue to be on an optimistic position, and the construction sector was added as well. Last year, it belonged among the most pessimistic sectors.

“The steep fall in business optimism of the rest of Estonia has not occurred among the companies in Voru County. The local enterprises are strong enough to survive temporary economic fluctuations, and can see new opportunities in the changing situation,” said Indrek Lass, the Head of the South Division of SEB.  

Expanding on export markets and investment plans of companies have decreased significantly

Compared to 2013, the number of companies in Voru County that plan to enter new markets or expand on the existing export markets has decreased. During the previous survey, 42% of enterprises in Voru County had such plans, while this year, the respective rate was 18%. On an average, 28% of Estonian enterprises plan to enter new or expand on the existing export markets, which exceeds the previous year’s result by 3 percentage points.

Within the year, the investment plans of companies in Voru County have also started to decrease. Investments exceeding 30,000 euros were planned for 2014 by 42% of the companies in Voru County, whereas only 19% plan to invest in 2015. The average figure of investment plans of Estonian companies has fallen from 41% to 16% in a year. However, in Estonia, there are still examples of business regions with active investments, such as Ida-Viru and Jarva Counties (already for the second consecutive year), where every fifth company is planning investments. Investment readiness is the lowest in Valga County, where only every tenth company is planning investments.

“The decrease in number of those companies that plan to expand on and invest in export markets is characteristic of numerous Estonian counties. It refers to the fact that the enterprises are rather cautious about new developments in these changing times in economy,” Lass noted.

Fewer new jobs; innovation of products and services continues

The surveyed companies plan to create almost 1,500 new jobs in total in the coming year in Estonia. This is an unexpectedly high figure, taking account of the current economic situation.  Only 4% of Estonian companies expect a decrease in the number of employees. A year ago, 25% of the companies in Voru County planned to hire new employees, while this year the rate is 17%. The average indicator of Estonia is 23%, which is 4 percentage points less than the year before.

The number of Estonian companies planning innovation has increased from 59% to 73%. In Voru County, the enterprises value innovation investments and according to this year’s survey, 75% of companies plan innovation in 2015. Last year, the respective indicator was higher by 3 percentage points. 35% of the surveyed Estonian companies is planning innovation of a product or service, 24% invests in the development of employees, and 11% plans to change their business model.

In a year, the interest in innovation has essentially increased in the Estonian construction sector, which is planning to intensify training and development of employees. The most innovative field is still industry, where competition is tight and companies are operating extensively on export markets. Innovation plans are the smallest in agriculture.

“Despite of the somewhat smaller optimism, the combination of positive factors is still promising and we hope that the development of companies is also supported by the overall economic situation,” Indrek Lass summarised the business plans of the region.