Seventy percent of Croatian businesses polled by the consulting firm EY said that the adoption of the euro as legal tender would have a positive impact on their business, EY said on Monday.

Businesses believe that the new currency will contribute to their international operations and the success of their business, as well as help them expand to new markets.

The survey was carried out among participants in EY Entrepreneur of the Year programmes from different sectors, such as manufacturing, technology, education, hospitality, tourism, media and entertainment, real estate, construction and professional services.

Although 49% of those polled said their business was affected by the COVID-19 pandemic, 39% said they expected their revenues over the next three years to grow by more than a quarter. 31% said they were aspiring to become an export company, and 51% were planning to hire more people this year.

28% of the respondents said their biggest challenge was further development and hiring and retaining skilled workers. 21% said they were concerned about barriers resulting from the present geopolitical situation and challenges relating to their desire to spread to international markets.

The survey revealed that 6% of those polled used EU funds as their primary source of financing, up from 4% in the 2019 survey. 61% said they used their own funds as the primary source of financing, while 26% used bank loans.

71% said they planned to invest between 5% and 25% of their revenues in their own development, including in IT, digitalisation and automatisation (23%), research and development, and sales and marketing (both 20%).

As many as 91% of the businesses polled worked on innovative solutions last year to optimise their business, and 34% of those were aimed at improving production, distribution or financial processes. 35% said they were planning on working on innovations relating to their products and services.

55% of entrepreneurs said their family members were involved in the operation of their company. 26% said they intended to leave their company to their family, emphasising the importance of a good education for business success.

30% of respondents said that the best incentive for their business would be lowering the income tax, 19% cited tax incentives for investment in small enterprises, 17% called for lowering the rate of indirect taxes, 16% said they would benefit from a lower profit tax, and 14% called for simpler fiscal rules.

Improving the quality of the education system (28%) and reducing administrative and other fees (19%) would also help improve business activity in Croatia, the survey found.