The SME+ sector has great prospects, but there are still no incentives for the growth of small companies themselves

The Agency for Strategic Initiatives (ASI) presented the first estimates of the size and potential of the SME+ sector, which can become a driver of import substitution. The data confirms the investment and innovation activity of such companies, as well as high labor productivity indicators, but the sector covers less than 7 thousand companies, which account for 11% of total turnover and business in the Russian Federation and 4% of those employed in it. Companies’ reluctance to grow is due to a lack of motivation and a desire to maintain benefits aimed at small businesses.

According to ASI, in 2022 there were 6.9 thousand companies in SME+ with a total turnover of 31.6 trillion rubles. and a workforce of 2.9 million people (among them there may be companies with state participation and representatives of holdings, but state unitary enterprises are excluded). The turnover of all companies in the Russian Federation excluding SMEs+ is estimated by ASI at 250 trillion rubles, and the number of employees is 69.1 million people. In terms of industry, SMEs+ are mainly trade enterprises (3.1 thousand; they have the least benefits and have no incentive to maintain SME status) and manufacturing enterprises (1.7 thousand).

SME+ refers to the category of business projected by the government that “grew up” from SMEs, but did not become large, that is, de facto, medium-sized companies that have become a rarity in the Russian Federation. The formation of this sector is hampered by the fork that arises for companies when crossing the SME border: in order not to lose benefits, small companies can split up, use optimization schemes (to maintain profitability without increasing revenue) or replenish the assets of large businesses. The government expects that companies in the “transition” category (with revenue up to 10 billion rubles) from priority industries (processing, IT, tourism, engineering centers and technology companies) will become the driver of import substitution and technological development.

ASI studied companies with average revenue of 1–19 billion rubles. in five years. The lower limit passes through the SME sector (the ceiling is 2 billion rubles), the upper limit extends to large businesses, which require minimal support. The framework allowed us to study the stages of the SME+ life cycle and identify problem areas. Thus, at the first stage (up to 3 billion rubles), enterprises expand their business, and profitability grows by inertia thanks to the benefits already received. Problems appear at the second stage (RUB 3–7 billion) – this segment accounts for the largest tax burden among SMEs per employee, and profitability is reduced by 30%.

Companies return to the trajectory of profitability growth in the third stage (from 7 to 12 billion rubles): they sharply increase spending on R&D, the introduction of innovation allows them to adapt to new conditions, and labor productivity reaches its maximum. These investments, however, are aimed mainly at increasing efficiency – capital investments are being postponed to a later date. As a result, at the fourth stage (RUB 12–17 billion), companies lose profitability due to the inability to increase production. In the absence of capital to support growth, a small percentage of companies enter the debt market. The fifth stage is determined by the transition of SMEs+ to the large business segment (from 16–17 billion rubles) – and an increase in efficiency and profitability of assets while the rate of productivity growth slows and the tax burden is high. The share of manufacturing industries in this segment reaches 30%.

Taking into account these features of the development of SME+, the authors propose to develop a standard set of support measures for them, stimulating SME+ sales through incentives for government procurement, export assistance and industry protectionist measures (in industries dominated by the largest companies), as well as ensuring access for SME+ to capital, while there is no sector-oriented infrastructure, and by building comprehensive support taking into account problems at each stage (measures of regressive tax incentives, preferential loans, grants and subsidies).

Diana Galieva