VSE managers approach 2024 between growing concerns for their activity and renewed confidence in the government

Despite a particularly difficult economic situation, decision-makers have a positive view of their relations with their bank, whatever the situation of their account. The bank, or more precisely the banker, would be recognized for its advisory capacity, including in more delicate moments...

Less confident about the future of their own activity, decision-makers are showing renewed confidence in government measures on the economic level

The third quarter brought out a strong ambivalence among VSE managers: particularly optimistic about their own future, their feeling of distrust towards government measures and their pessimism towards the general business climate were at their highest. A form of 'entrepreneurial survivalism'?

At the end of 2023, the situation changes. While managers' optimism for their own activity is down slightly, going from 63% in Q3 to 58% in Q4, we are seeing a strong increase in confidence in the measures taken or announced by the government. 39% of the managers surveyed say they are confident, a rate up 12 points compared to the previous quarter, above the average rate observed over 20 years (32%). A degree which varies greatly from one sector to another since 53% of business services managers express their confidence compared to only 27% in the hotel sector.

Same trend for the indicator of confidence in the general business climate, up 7 points over the fourth quarter. At the end of 2023, although they remain in the minority, 33% of decision-makers say they are optimistic about the business climate, compared to 26% three months earlier.

The financial difficulties of companies are increasing for the most vulnerable: the rate of VSEs which could default within 6 months is at its highest since the start of 2023

At the end of this fourth quarter, 1 in 3 small business managers (32%) say they are experiencing financial difficulties. A rate up slightly over 3 months, which nevertheless remains below the thresholds observed at the start of the year. Among them, 15% mention significant difficulties, a share also up slightly over 3 months, but below the thresholds of T1 and T2.

More worrying, we observe a precariousness in the situation of already weakened leaders. Indeed, among the 15% of managers citing significant difficulties, 45% plan to file for bankruptcy or cease their activity, including 28% in the next 6 months, a rate at the highest since the start of the year and which doubles by compared to Q3.

Another figure very revealing of the tensions weighing on company cash flow, 13% of managers confide having had to give up a loan due to current interest rates, an increase of 6 points over three months.

On the employment front, hiring and job cuts remained almost stable throughout 2023

13% of managers surveyed hired or planned to hire in the last quarter of 2023, i.e. +1 point compared to Q3. In detail, depending on the size of the company, this rate rises to 49% among managers of VSEs with more than 10 employees. In a slight decline of 2 points over 3 months, 6% of managers had, on the other hand, eliminated or planned to eliminate positions during the last quarter. 85% of VSEs say they have no vacant positions within their company.

For 2024, the vast majority of managers anticipate stagnation in their activity, but 43% of decision-makers in the largest VSEs and B2C service companies are aiming for growth.

Asked about their forecasts for 2024, 49% of managers envisage stagnation in their activity, 30% want to focus on their growth and 21% envisage a decline. The largest small businesses with 10 to 19 employees and personal service companies are the most optimistic with 43% projecting growth in their business. Conversely, only 20% of retail companies envisage a more dynamic year 2024.

Focus barometer event #74 - Entrepreneurs and their banks

Despite the tense economic situation, relations are good with bankers: the traditional banking model remains largely favored

Managers overwhelmingly favor simplicity and relationships for their banking management

• 78% of VSE managers work with a single bank
• 65% have domiciled their professional and personal account in the same bank
• Only 7% use online banking, or are considering it

The low cost of services (cited at 26%), the ease of online access (20%) and the speed of procedures (18%) would be the primary motivations for considering using an online bank.

Conversely, the absence of a dedicated contact (cited by 42%) and the difficulties in reaching a contact (13%) remain the main obstacles to using an online bank.

The vast majority of decision-makers are satisfied with their relationship with their bank, even when their banking situation is difficult!

• 43% mention a positive banking situation, 47% balanced and 10% negative;

Business leaders in industry and construction seem to suffer the most from negative banking situations (16% and 13% respectively).

Conversely, 50% of business services bosses say they are in a positive situation.

• 83% maintain a relationship deemed satisfactory with their bank, including among managers who speak of difficult banking situations.

An even higher rate among companies with more than 3 employees and bosses in industry (90%) and construction (86%), even though they are the ones reporting difficult banking situations.

Which would tend to show that, despite the sometimes delicate banking situation of VSEs, banks are perceived more as advisory and support players rather than as organizations putting pressure on bosses and their finances, breaking with the critical discourse of years 2008-2010 with regard to banks.

• More than 8 out of 10 managers say they are satisfied with interpersonal exchanges with their banker: delays in obtaining answers (84%), support for professional projects (82%), or even knowledge of their company (82%).
• The ease of opening credit lines is also considered satisfactory by 74% of business leaders, including 20% ​​very satisfied.

And ultimately, decision-makers who rarely consider changing their organization with their bank, even if the inflationary context could lead to changes in 2024

• 25% of business leaders (who have not already done so) plan to compete with other banks in 2024;
• 17% plan to work with multiple banks in 2024;
• 15% are finally considering changing banks.

Methodology of the study: Sample of 1.005 managers of VSEs with 0 to 19 employees, including self-employed people, based on the criteria of the company's sector of activity, size of the company, region where the company is located. Sample interviewed by telephone from December 11 to 29, 2023. Companies with annual turnover of less than €50.000 were not interviewed as part of this study.

Illustrative image of the article via Depositphotos.com.