The strength of small businesses

“Our objective must be to be able to open a new business in a maximum time of 30 days and at a cost of no more than 100 euro”, said Antonio Tajani, vice-president of the European Commission and Commissioner for Industry and Entrepreneurship, on presenting the second phase of the Small Business Act (SBA), adopted by the EU in 2008. In the same statement Tajani summed up some of the commitments that the member countries and the Union as a whole “ought to make in support of small and medium-sized enterprises” (SME), “which are the lifeblood of our economy”.For recovery and jobs. Some 23 million SME are present in the European Union. They employ 67% of the labour force of the private sector (some 90 million employees). “The Small Business Act – explains Tajani – is the EU policy framework aimed at strengthening SMEs so that they can grow and create employment. Between 2008 and 2010 the Commission and EU member states implemented actions set out in the SBA to alleviate administrative burdens, facilitate SMEs’ access to finance and support their access to new markets”. According to Tajani, “although most initiatives foreseen by the SBA have been initiated, a review of implementation so far reveals that much more must be done to help SMEs”. So the re-launch of the SBA is placed in the wider context of the response to the recession and the implementation of the Europe 2020 strategy for growth and employment.Credit, rules, market. To give fresh impetus to the Small Business Act, which has hitherto seen a different application (and hence different results) from one EU country to the next, the Commission has spelt out some priority guidelines in its determination to continue to give priority to SMEs. First, improved access to finance to invest and grow”; and second, “smart regulation to enable SMEs to concentrate on core business” (improved EU legislation in favour of SMEs, facilitating administrative procedures, reducing the costs for business start-up). The Executive further proposes measures for “making full use of the Single Market” (common consolidated corporate tax base; measures to facilitate cross-border debt recovery; revision of the European standardization system). Lastly the SMA proposes to “help SMEs face the challenges of globalization and climate change”, with measures aimed at supporting SMEs in markets outside the EU, a new strategy for the creation of “globally competitive clusters and networks”, and specific action for knowledge transfer between environmental and energy experts within the Enterprise Europe Network.Some results. Tajani insists: “SMEs represent more than 99% of all EU businesses. They are the engine behind our economy and must be kept strong, competitive and innovative. Member States must act quickly to ensure that the Small Business Act is fully implemented”. Ever since its adoption in June 2008, “considerable progress has been made through actions to strengthen SMEs in a number of areas”. Examples are not lacking: “100,000 SMEs – points out Tajani – have benefited from the financial instruments of the Competitiveness and Innovation Framework Programme, creating more than 100,000 jobs”. Moreover, “through the late payment directive public authorities are now required to pay their suppliers within 30 days, improving cash flow for businesses”. Another example: “In most EU Member States the time and cost of setting up a company has been considerably reduced, lowering the EU average for a private limited company from 12 days and 485 euro in 2007 to 7 days and 399 euro in 2010”. But Tajani also speaks of simplified procedures for the participation of SMEs in public procurement and emphasizes that “the new EU SME Centre in China is helping SMEs access the Chinese markets”.Pro-SME priorities. Though member states have recognized the importance of rapidly implementing the SBA, “the approach taken and the results achieved vary considerably between Member States”. The review of the Small Business Act underlines that member states “have to step up their efforts to promote entrepreneurship and SMEs to support entrepreneurship in today’s difficult economic climate”. The SBA spells out a series of general principles that ought to inspire European and national policies in support of SMEs. They range from the more general ones (creating the necessary conditions so that entrepreneurs and family businesses can prosper) to more particular priorities (guaranteeing entrepreneurs that have suffered bankruptcy the immediate possibility of a second chance; helping the participation of SMEs in public procurement; and facilitating access to credit).