Bulgarian Economy Threatened by Aging Businessmen - Study

According to a recent study, in the Bulgarian economy 90% of all business is family business. File photo

The young entrepreneurs in Bulgaria are just 5% of all businessmen in the country, according to an analysis of the state and of problems of the very small, the small, and the medium enterprises in the country.

The analysis, conducted by the market research agency NOEMA, shows that businessmen age 60 and over are 15% of all, while 33% of the small and medium companies are family business. The family business is mostly run and managed (70%) by its creator and makes the foundations of the Bulgarian economy where 90% of all business is family business.

The study focuses on the macro-economic environment of the enterprises, their current state, competitiveness, the influence of the economic crisis, how are they recovering from it, and the share of innovations used by them.

There are 325 000 small businesses in Bulgaria (the largest portion), followed by the small business with 23 000, and the medium business with 4 444. The large companies are only 774 or 2% of all companies.

The business is mostly concentrated in southern Bulgaria with a strong difference with the North. Experts from NOEMA see the reason for it in the poor infrastructure in many northern regions.

The crisis has affected negatively and the most the manufacturing companies with a large number stopping work or closing in the last years. The employment rate went down the most in small and medium business, which provide 75% of all jobs in the country.

The financial indicators have worsened slightly in the last years with revenues and turnovers going down by several percentage points, leading the business to cut expenses and investments in new equipment.

In 2011, the small and medium business has relied largely on exports, mailny those of raw material, and machines and equipment for other EU Member States,

Experts warn of the aging of Bulgarian entrepreneurs since most of them being over 46.

Financing, with banks having very biased approach when it comes to crediting, is one of the top problems for the small and medium business in the country, leading to reduced investments in innovations and showing the need of alternative sources of financing.

In 2011, according to the study, 62% of the companies used funds of their owner or of friends and relatives as source of financing.

Another problem for the small and medium business is intellectual property with only 7% of these companies having registered patents, 13% - a commercial brand, while less than 20% have enough funds to be able to carry out such registrations.

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