5 Ways Europe Prioritizes SMEs, The ‘Backbone’ of its Economy
Europe considers small and medium enterprises – commonly referred to as SMEs – as the backbone of its economy. Considering these businesses represent around 99% of all the businesses in the region, it’s not hard to see why.
In the past few years alone, these SMEs were responsible for creating around 85% of new jobs, providing two-thirds of the employment in the total private sector of the EU. It comes as no surprise that the European Commission would consider entrepreneurship as well as these small and medium-sized enterprises as vital to the continued innovation, economic growth, social integration, and job creation in the European Union.
But just what kind of support do these SMEs receive? Learn about what the EU does for them below:
Europe creates a business-friendly environment.
The European Commission has at its core the SBA or the Small Business Act for Europe, which provides a thorough SME policy for both the EU and the countries that are a member of it. This Small Business Act promotes an entrepreneurial spirit among all European citizens by promoting a “Think Small First” principle aimed at encouraging small and medium businesses.
The EU promotes entrepreneurship
Entrepreneurship is well promoted by the EU through the Entrepreneurship Action Plan. The Commission also provides the necessary support tools for those who aspire to become entrepreneurs.
With the “Think Small First” principle, SMEs are moved to center stage, whereby their needs are looked into in order for new laws and legislation that might impact their operations to be introduced. This move not only helps set the focus on small and medium-sized business entrepreneurship, it also allows national governments to present customized rules and legislation that benefits the SMEs.
Europe improves SME access to internalization as well as new markets
The European Commission prioritizes actions that ensures small and medium-sized enterprises that they can rely on an environment that’s business-friendly for them, allowing them to fully explore the potentials of cross-border activities within and outside the EU.
Currently, there are over 500 million consumers in the European market, making it a large market for entrepreneurs to try and break into. The thing is, SMEs appear to be lacking in motivation when it comes to expanding their businesses and marketing focus outside of their own respective country’s borders.
Back in October of 2010, the Single Market Act was launched which aimed to remove business transaction limitations between EU member states. Under this Act, member states had a set of featured measures that allowed gaps on market opportunities to be bridged by way of utilizing new business models and encouraging more room for potential business growth by adopting a less bureaucratic environment when doing business across the EU.
Europe supports innovation and competitiveness among SMEs
In relation to enterprise and industry particularly for SMEs, the EU policy promotes innovation and competitiveness. Innovation helps small and medium-sized companies to expand their reach within the EU. It also helps them in entering emerging markets by way of cutting-edge marketing and branding strategies.
The EU has also launched a plan that focuses on innovation strategies, allowing businesses to anticipate any big challenges that may occur within our lifetime. Dubbed the “Innovation Union” plan, it aims to change the way SMEs develop and figure out solutions for such challenges as energy efficiency and climate change. Not only that, the Innovation Union plan also aims to remove any barriers related to market fragmentation and limited business venture capital.
EU Provides necessary support networks and information for businesses
Entrepreneurs have access to a practical guide that’s full of information on doing business in Europe through the Your Europe Business Portal, which also offers interactive services that can help businessmen expand their businesses internationally. There is also the SME Internationalisation support page that not only has information on foreign markets, but also helps European entrepreneurs to take their business activities on an international level.
The Enterprise Europe Network aids SMEs by providing access to market information, assistance in overcoming legal challenges, and finding potential investors and business partners all across Europe. Also, helping SMEs find EU-supported finance is the single portal on Access to Finance.
There’s no doubt at all that small and medium businesses are the backbone of the EU’s economy. And through the Small Business Act for Europe or the SBA, the EU has been able to distribute euros in the billions to help out SMEs and smaller firms that need access to funding, making more opportunities for SMEs to expand beyond the borders of their own respective countries.