by Marius Ghenea, Partner 3TS

SmartBill, one of the companies in the Catalyst Romania portfolio, has recently launched a very useful tool for analyzing the evolution of activities of SMEs in Romania in the context of the COVID-19 crisis – the “SmartBill Barometer”.

How and why did we initiate this project? We started from the simple observation that tens of thousands of small and medium enterprises in Romania, local entrepreneurial businesses, carry out both their billing activities and other business processes like management or accounting through the cloud platform provided by SmartBill. Thus, we have identified the opportunity to provide additional useful information using aggregated data, both to these clients and to the market in general, about how the cumulative value of sales evolves. I think this is very important especially in this period of maximum volatility in terms of Romanian entrepreneurial companies.

In order to provide the most useful information, the Barometer compares values of the current month with last month’s values and also the values of a similar month of the previous year. Moreover, it organizes the results from 1) the geographical perspective for all Romanian regions and Bucharest, and 2) from the sectoral perspective. The Barometer shows which are the regions and industries most affected positively or negatively due to the change of consumption habits during this atypical crisis.

To assess how accurate the results are, we compared them to the consolidated data the Romanian Ministry of Finance shared in the beginning of May about the evolution of consumer behavior. It indicated an 8% raise in the overall consumption at national level compared to March 2019. We made a comparison with the SmartBill Barometer’s results, which shows an increase of 9%, so it corresponds very well with the official data.

The advantage of the SmartBill Barometer is that it can show the data immediately, so for example the evolution of the numbers from April 2019 to April 2020 can be shown on May 1st while the statistical (governmental) data is only published towards the end of the following month. Thanks to the Barometer we already know that there has been a 20% decrease year-on-year and an almost 26% decrease from March to April 2020. In business, it is essential for any management team to have data as close to today as possible, preferably in real time and this is why I consider the Barometer a very useful tool.

Below, you can find some conclusions based on the analytics, which I found very interesting:

• 2020 has started with a significant increase compared to last year, both January and February being 20% up in terms of revenues compared to similar months of 2019. Partly, this may reflect the fact that many SmartBill customers are entrepreneurial companies with strategies of ambitious growth and using software-as-a-service solutions for their business processes which is showing that they are owned and run by entrepreneurs who are more concerned with business efficiency.

• Assuming that without the crisis the growth trend would have continued the same way (20% upward trend), the current decrease of 20% now effectively means that the companies have been impacted by 40% decrease in total.

• Region-wise, the lowest negative impact so far was registered at companies in Bucharest-Ilfov, with only a 13% decrease compared to last year. On the other side, the heaviest impact was recorded at companies in the South-East and South-West regions of Romania, with a 30% decrease year-on-year. In our opinion, this can be explained by the extent the entrepreneurial ecosystems are developed in different regions. In Bucharest-Ilfov, the ecosystem is more active and flexible and the companies found pivoting solutions faster and identified alternative revenue streams easier. In the South-East and South-West regions, the entrepreneurial ecosystems are less developed and articulated and many entrepreneurs have “a lock on the door” when it comes to ideas minimizing costs and generating new secondary revenue streams.

• When it comes to sectors of activity, the verticals including events, shows and cultural activities have decreased by over 70%. Decrease by approximately 60% has also been recorded for categories like hotels and restaurants, as well as private businesses in education and health. A smaller impact of 13-14% decrease was registered by the IT sector, as expected. The construction sector is also within the 13-15% decrease range as a result of governmental policy which allowed construction sites operating during the state of emergency. On the other hand, agriculture and other associated businesses saw a small increase.

Overall, I think the Barometer launched by SmartBill is a useful tool for analyzing the evolution of the Romanian SME business at this time. There are certainly various changes to be made and it can be further optimized, but I think that in the next period, this barometer will be able to give us more and more interesting information. For more information, I recommend you to have a look at it here!