In the third edition of the Small & Medium Business Trends Report, we interviewed business owners from all over the world to identify the obstacles they encounter on the road to success, and to discover insights into decision-making processes and the actions of the business leaders who oversee them.
In addition to acquiring universal insights, we found that small-business owners in the European Union (EU) face a unique set of challenges. Read on to learn more about the state of small and medium business in the EU.
The current economic conditions in Europe create additional challenges for those starting or trying to grow a business. Slow economic growth, political instability, the repercussions of Brexit and other concerns set up unique hurdles for businesses – and this is not to mention issues that arise from having different sets of laws and rules governing individual companies.
Still, there is a huge amount of opportunity in Europe, both inside and outside the European Union. Small and medium businesses are not only crucial to economic growth and stability, but also to job creation and innovation in products and services.
According to the European Commission Directorate-General for Enterprise and Industry, more than 23 million small businesses in the EU have fewer than 250 employees. These businesses make up a significant part of the EU’s economy and represent roughly 99% of all enterprises in Europe. Most of these businesses are independent, and 9 out of 10 have fewer than 10 employees.
One of the most pressing concerns for business owners is the inability to access financing. Banks may be hesitant to offer loans and funding solutions, and businesses that do receive funding are often subjected to inflexible and time-consuming processes that pull their attention away from their primary focus.
The report found alternative lending is an attractive option for many business owners. They often seek out term loans, credit cards, invoice factoring and other non-banking lending solutions.
However, most of the EU business owners surveyed cited insufficient time and hiring the right talent as bigger obstacles to their business than access to capital, although perceptions vary by country. Business owners also struggle with maintaining financial growth into the future, retaining employees and meeting customer expectations.
Despite the challenges that EU business owners face, they also enjoy benefits that support their growth in the short and long term. There are many EU laws and rules designed to protect business owners, such as the Small Business Act for Europe. The principles of this Act cover many aspects of business operations, such as the consideration of laws and legislations that may impact businesses, and the provision of information and initiatives to prepare for future challenges and market fragmentation.
Business owners also benefit from the Single Market Act, which aims to remove barriers to business transactions between Member States across the EU. Having the option to bridge gaps in market opportunities and capitalise on new business models offers more room for growth.
Small and medium businesses are also leveraging advanced technology. Satisfying the needs of customers is a universal goal for business owners everywhere. With easy access to tools in the cloud such as customer relationship management (CRM), marketing automation, and artificial intelligence (AI), business owners can reduce time-consuming administrative tasks, provide deeper and more accurate insights about their ideal customers, and build stronger relationships. Using automated tools also reduces time lost doing mundane tasks, leading to a more productive and profitable team.
Although the current climate presents some challenges for small-business owners and startups, there are plenty of ways that owners can maximise their effectiveness and optimise their growth.
If you’re looking to start or grow your business, take a look at the Small & Medium Business Trends Report to gather insights from business owners all over the world and develop your strategy for a successful venture.