FOSTERING EU GROWTH THROUGH SMEs
Submitted by christian on Wed, 01/14/2015 - 16:51
- Meeting SME Finance Needs :SMEs need capital to be able to grow and employ people, which has to come not only from debt markets but also from capital markets. In order to enhance the lending capacity of banks, there is a need to encourage securitisation. With regard to expanding the non-lending financial routes, the capital requirements for banks and insurance companies should be calibrated in a way that does not discourage investment in assets that are essential for SME growth (equity, securitised SME loans’ portfolios, SME bonds. Commission experts claim that, in certain countries, it is difficult to put innovative financing schemes (e.g. the SME instrument under Horizon 2020) on the ground because applicant SMEs are not easily coming up with appropriate proposals. This mismatch has to be tackled. The European Bank Investment Group (EIB) should further develop co-investment schemes with business angels to support start-ups. It is important for business angels not only to provide finance but also advice so-called ‘smart money’.
- Business Dynamics (Start-up, Transfer and Second Chance for business and entrepreneurs: Support in those key moments of the entrepreneurs’ life cycle requires an array of measures that include legal and policy measures (like access to finance) for creating an entrepreneur-friendly environment. In this mix, education and training remains a key element as it helps to acquire knowledge, skills and attitudes to actually enable them to fully benefit from the support in place and help them to survive tough times. Many entrepreneurs today in Europe are actively searching around for the best environment in which to create and run their enterprises. Member States’ administration need to become aware of the fact that they are already in such kind of competition and work even harder on being able to cater for entrepreneurs’ needs in their respective territories. Concerning bankruptcy and a second chance for honest failed entrepreneurs, there is a need to accept failure as part of the entrepreneurship lifecycle and get rid of the ‘stigma of failure’. Furthermore, entrepreneurs need to learn from failure in a systematic and relevant way so they can do it better the second time round.
- Completing the Single Digital Market: Digital transformation can accelerate growth of companies and completion of the single market, but it can also delay it. This is when respective policies and the regulations don’t follow fast enough the technological and de facto developments. Imperfections of the single market for the companies using digital tools and channels become then disproportionately burdensome than for the more traditional businesses. There is a need to create an EU (wide) company status to facilitate EU wide trading online; to find a balanced approach to consumer rights and data protection should not be too burdensome. Consideration should be given more thoroughly on the ‘online’ implications of introducing changes e.g. in taxation. The rise of new company models such as the new ‘micro-multinational’ should be taken into account as it is possible nowadays to go global even, as a ‘one person company’ trading from ones garage.
- Growth through responsive administration: The EC’s priority is to modernize public administration. What concerns the SMEs, there is a need to strengthen the implementation of the Small Business Act (SBA) which adequately reflects the needs of SMEs and is also fully reflected in the appropriate legislation. In many areas, what is needed is not more new legislation but effective and swift implementation of existing rules (e.g. the SBA, the Single Market Act). Besides an ex-ante impact assessment that includes the application of the ‘think small first’ principle and SME test which has to reflect that most policy areas are horizontally intertwined (e.g. when it comes to the completion of the digital single market), a rigid evaluation of results is direly needed. Private sector can offer good examples of dynamic, pragmatic and flexible governance to the public sector. Three main suggestions are: consult stakeholders and create a ‘to do’ list, measuring what is being done, adapting the administration according to needs.
- Entrepreneurship Forum: With the ever growing need for business to compete on innovation and originality, Europe needs new models of entrepreneurship and entrepreneurs need more Europe. This includes more support for immigrant entrepreneurs; single rules for business set up or corporate tax; access to digital technology tools and skills; entrepreneurship education.
- Growth through Enterprise: Think small first but especially act on it, apply and implement it. Really use the reduction of administrative red tape, access to finance, access to markets for growth. ACT Small first to then Grow.
- Skills for entrepreneurship: Education is a national competence so the European Union can support and encourage the development of entrepreneurial education but it is up to each national and regional administration to use the know-how and already existing initiatives to include entrepreneurship education in the curricula. Entrepreneurship is in fact a key competence for life. It encompasses not only skills necessary to run an enterprise but also to be a more valuable employee or public servant, as well as better manage one’s professional and private life. For setting up a successful entrepreneurship education scheme there must be cooperation between authorities at all levels (national, regional etc.) responsible for education, for economic development/promotion of entrepreneurship and the business world itself. Academic degree is no longer a guarantee for getting a good job. Today, excellent career prospects often come from vocational education systems. The most advanced ones offer both practical skills and direct experience adapted to the needs of the labour market.
- Design for growth: A successful business needs a clear vision and strategy to grow. Design is an investment, but one that yields dividend: it attracts customers, makes them loyal and brings profits. Design can be a strategic tool for innovation and growth. It can radically transform the way businesses think and work. For the design to lead to growth, clear leadership of the process is key.
- Setting up SME Intergroup: National governments should install an ‘SME Intergroup’ in all Member States so that the issues tackled on a European level are also followed through on the national level, and to make information loops and efficient collaboration possible. Thinking about SMEs is not enough, the focus needs to be on acting.
- Co-operation: The EU institutions (EP, EC, EESC), national representations and business associations need to cooperate more actively and deliver tangible results for entrepreneurship, growth and employment over the next five years and beyond.
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