Current problems of adaptation of small and medium-sized businesses to military events in Ukraine

Abstract

The article aims to reveal the fundamental principles for the subsequent development of an algorithm to support domestic small and medium-sized enterprises (SMEs) in the context of Russia’s full-scale invasion of Ukraine. It determines the percentage of business vulnerability to military events: according to results published in January 2025, nearly 75% of entrepreneurs have ceased their activities, indicating an alarming trend of a sharp decline in the number of economic entities directly related to the economic crisis and reforms in the legal and regulatory framework.

However, the overwhelming majority of businesses are not stopping at what has been achieved and continue to seek innovative methods for adapting to these extraordinary circumstances. They are focusing on mobilizing additional reserves for sustaining their activities, implementing a range of transformational or relocation measures to preserve their facilities, resources, and production capabilities.

The paper examines the state of small and medium-sized enterprises, the set of pivotal changes in the organizational mechanism of the business sector that have proven advantageous under martial law, and summarizes the negative impacts of military events on the dynamics of activity indicators for individual entrepreneurs. At the same time, it analyzes the measures organized by the national government to support businesses, particularly in the context of providing additional effective financing to economic entities, with the goal of preventing their adverse bankruptcy.

The purpose of the study is to examine current issues with the subsequent development of practical recommendations for applying innovative approaches to implementing mechanisms of administrative and legal regulation to support small and medium-sized businesses in Ukraine, particularly under martial law conditions.

The research materials include:

– the works of domestic and foreign theorists and practitioners were reviewed in the context of ensuring promising directions for the improvement of national legislation in the field of regulatory and legal framework supporting the activities of domestic entrepreneurship.      

The application of methods is conditioned by a holistic and consistent approach, which in the near future provides broad opportunities for studying urgent issues within a unified administrative and legal framework. With the subsequent goal of achieving relevant objectives in the studied problem area, emphasis was placed on dialectical directions of scientific analysis, followed by the application of a set of multidirectional methodological tools of demanded modern universal scientific trends that have acquired individual significance in the legal field.

Depending on the research directions, the following research methods were used in the study: general scientific; empirical and theoretical; methods of description and processing of research results. The theoretical and methodological basis of the research consists of current informative indicators, statistical data, and facts based on real events related to the research topic throughout 2022–2025, as well as works of leading domestic economists and legal scholars in the field of small and medium enterprise development during the ongoing martial law period.

Conclusions. One of the promising directions for improving the legal regulation of small and medium-sized business activities in Ukraine during martial law includes:

–    the development of strategic approaches to overcoming the economic crisis;

–      maintaining financial stability for all current taxpayers;

–      ensuring support for domestic small and medium-sized enterprises;

–     optimizing the level of tax pressure, which is clearly outlined by the tax legislation of Ukraine and aligned with the financial and legal capacities of the relevant business entities.