Do EU initiatives treat SMEs on an equal footing with larger companies

A deficiency of finance and inordinate administrative loads are two of the most frequent troubles faced by enterprisers that either ain a little or average sized concern or are in the procedure of set uping one. What initiatives has the European Commission launched over the old ages to turn to and relieve such jobs for SMEs? Do these EU enterprises treat SMEs on an equal terms with larger companies?

Over the old ages, micro, little and moderate-sized endeavors ( SMEs ) have been recognized as playing a major function in the European economic system. They are a major beginning of invention and employment, and enhance and promote entrepreneurial accomplishments. In the hypertrophied European Union, there are 23 million SMEs, which provide around 75 million occupations and stand for 99 % of all endeavors[ 1 ].

It is of import to hold a common definition to depict SMEs in order to better consistence, effectivity and to restrict deformations of competition[ 2 ]. Given the myriad of member provinces actions to help local endeavors, these should be compatible with EU steps. This logical thinking led the Commission to come up with a common definition for micro, little and moderate-sized endeavors.

The latest SME definition is that to be found in the Commission Recommendation 2003/361/EC of 6 May 2003[ 3 ]. In literature about this Recommendation, it is mentioned that the chief grounds behind the creative activity of a new definition were to update thresholds, to advance micro endeavors, to better entree to capital, to advance invention, surrogate partnerships and better entree to research and development, to take history of different relationships between endeavors[ 4 ].

Besides, there was a demand to come up with a new definition to take into account economic developments since 1996 and turning consciousness of the specific hurdlings facing SMEs. The Recommendation entered into force on 1 January 2005. The new definition came approximately as a “ consequence of wide-ranging treatment between the Commission, the member provinces, concern administration and experts, and through public audience on the Internet ”[ 5 ].

The definition is an of import tool for implementing efficient steps and programmes to back up the development and beginnings of SMEs. The Commission Recommendation concerns all Community Policies applied within the European Economic Area in favor of SMEs and is addressed to the member provinces, the European Investment Bank and the European Investment Fund. The definition has been adopted in a figure of community Acts of the Apostless and programmes and integrated in the field of province AIDSs where SMEs can profit from freedom commissariats including assistance for research and development and vocational preparation. Further polishs may be made to the new definition and the Commission will, if necessary, accommodate it in the coming old ages to take history of experience and economic developments in the EU.

On the other manus, enterprisers have a really of import function within the economic system. They are those that stimulate and trip economic activity, non merely within their ain state, but besides within the whole market. Assorted enterprisers take different attacks to their profession, but the most of import thing is that all enterprisers are leaders who can take a squad with a common purpose. Even more in SMEs, enterprisers should keep a vision and maintain a positive spirit within the employees of the several SME[ 6 ].

The fact that SMEs lack the necessary fiscal assistance is a well-known job that the bulk of enterprisers brush, both when the endeavor is being founded and when the demand of growing arises. From my experience of talking with enterprisers, I easy noticed that their first fiscal ideas are about their employees ‘ rewards.

Another job which a batch of SMEs face, particularly after the international crisis of the past months, is that Bankss tend to be more careful when imparting money to SMEs and take all the necessary safeguards, and it has now become rather common that the loans given by Bankss to SMEs are n’t plenty for the undertakings planned by enterprisers[ 7 ].

Besides the chief jobs already discussed, enterprisers on a day-to-day footing face other minor jobs which other large companies do n’t hold. Because the demand for IT forces is ever on the addition, IT specializers tend to be much more attracted to big and multi-national companies, instead than to SMEs, besides because big companies tend to offer more attractive contracts instead than those offered by SMEs[ 8 ].

Besides, it is a tradition that a batch of SMEs tend to get down out as a household concern, and hence lack the subject required to run a larger concern. Keeping this in head, the enterprisers and their employees tend to miss specialisation, really frequently IT related. Another job that SMEs find when running their concern is that enterprisers frequently have a deficiency of human resources when covering with specialised undertakings, particularly with the deficiency of advisers employed.

Many SMEs tend to happen their first major jobs when make up one’s minding to turn internationally or even on a European degree, i.e. fostering their endeavor non merely within its original state, but besides to new states where the market is available. This frequently occurs either because the necessary survey of the market is n’t conducted beforehand or because the several enterprisers would n’t hold made the necessary contacts within the new market prior to the enlargement of their market.

Keeping in head the fiscal load that SMEs have on the European economic system, the European Commission, on behalf of the European Union, has placed SMEs on top of its political and economical precedences. In fact, by the twelvemonth 2013, the European Union will hold invested more than a‚¬1.1 billion in a set of fiscal instruments to help SMEs in acquiring more and better entree to finance[ 9 ].

The Competitiveness and Innovation Framework Programme ( CIP ) 2007-2013 helps little houses obtain the financess they need. In fact, in the last 10 old ages, the fiscal instruments made available by the EU have helped more than 330,000 houses to use about 1.9 million people[ 10 ]. The chief intent of the CIP is to do it easier for little houses to finance their investing and enlargement. Through loan warrants, houses have easier entree to Bankss that can impart them the necessary financess, even though the fiscal and economic crisis have built barriers to this loaning. Equity funding is suited for houses that have possible for rapid growing and necessitate more capital. Access for finance makes it possible for houses to put and spread out. In this manner, successful houses can increase production and employment, whilst fiscal growing enables enterprisers to confront new challenges[ 11 ].

The really fact that 99 % of Europe ‘s endeavors are SMEs puts indirect force per unit area on the European Union to make enterprises in favor of SMEs. The first enterprise of the Commission in this respect could be considered to be the Colonna Report of 1970, in which the Commission presented its Memorandum on Industrial Policy to the European Council. Whilst its comprehensive attack proved excessively controversial to command credence, the demand for an SME policy had been identified[ 12 ].

In 1971, the United Nations Economic and Social Council ( ECOSOC ) initiated a survey of the state of affairs of SMEs in the so European Community. This was considered to be the first effort to foreground the jobs faced by SMEs and prompted the Commission to present steps to help them. It was merely two old ages subsequently when the Commission established a division for ‘small, moderate-sized and trade endeavors ‘ . The aim of this division was to assist SMEs set up cooperation understandings in conformity with EC Competition regulations.

1983 was the ‘European Year of SMEs & A ; Craft Industry ‘ designated by the European Parliament. On the 9th of December of the same twelvemonth, a Joint Action Programme for a Community Policy on SMEs was adopted in which the Commission, the European Parliament and ECOSOC laid down basic policy rules, notably on employment and preparation[ 13 ].

An of import measure was taken during the month of May 1984, in which the Commission and the European Parliament, through a communicating and a declaration severally, agreed on a figure of stairss to better the administrative, economic and legal clime for SMEs. After these enterprises taken by the Commission and the Parliament, it was the clip for the European Council to make its portion. The turning point was the Brussels Summit held in March 1985 where four Fieldss of precedence action were identified, including encouragement of the formation and development of SMEs[ 14 ].

During the Hague Summit in 1986, a common scheme to advance the spirit of endeavor, promote occupation flexibleness and assist unemployed return to work, was adopted, with particular accent on the function of SMEs to accomplish these aims. During January of the same twelvemonth, it was the first clip that a Commissioner was made responsible for the creative activity of a scheme and development of an SME policy. The Commissioner, which at that clip was the Spanish Abel Matutes, identified three characteristics to obtain this policy: the use of bing resources instead than supply direct subsidies, the action to complement with national degree where much policy action remained appropriate, and the policy to be designed through a bottom-up attack, i.e. together with the stakeholders and non imposed from above[ 15 ].

In June 1986, an SME Independent Task Force was created. This undertaking force had four chief aims, being the coordination of all relevant activities within the Commission sing SME policy, the publicity of estimate of national and EC policies, the constitution of a system of affair for administrations stand foring SMEs and the puting up of a job work outing system for SMEs, in peculiar developing a communicating and preparation scheme for SMEs and their staff.

The SME Action Programme was adopted by the Council of Ministers on the 3rd of November 1986. For the first clip, a consistent model of guidelines was defined for Community action towards SMEs. During the following two old ages, the Commission published of import communications related to SMEs. These communications discussed the waies to beef up the communicating between European houses, the rating of European Information Centres, the simplifying of administrative processs within the Community, and another communicating on an Enterprise policy within the Community[ 16 ].

In January 1989, the 2nd Delors Commission transferred the SME Task Force to organize the chief karyon of DG XXIII, responsible for endeavor, distributive trades, touristry and co-ops, under Lusitanian Commissioner Cunha. Later on, this DG has been changed to DG Enterprise and Industry, under Commissioner Verheugen and late, Barroso appointed the Vice-President of the European Commission Antonio Tajani with this portfolio[ 17 ].

Recently, on the 5th of November 2010, Antonio Tajani launched the EU SME Centre in Beijing in China. At first glimpse, it seems unusual that such an of import Centre for European SMEs was founded in China, but as the Commissioner has explained, this Centre will supply all the necessary information and support for European SMEs that wish to export to or put in the Chinese market. “ The capacity to construct on the growing and invention potency of SMEs is decisive for future EU-China trade dealingss.[ 18 ]“ This Centre is an of import measure towards the stabilization of European SMEs because it is should get the better of the challenges that European SMEs find when seeking to run in the Chinese market.

Besides, one would promote SMEs to take part in international carnivals related to their market, before make up one’s minding to widen their concern in other states, farther to the endeavor ‘s original state. Previously, the European Commission used to organize the Europartenariat, which was an inaugural “ designed to excite the development of less-favoured parts by promoting little and moderate-sized concerns from all over the Community to set up concern relationships with their opposite numbers in the event ‘s host part[ 19 ]“ . However, from the research that has been done, this enterprise has been stopped and has n’t been held for the past recent old ages.

Even though the Europartenariat has n’t been held late, the Commission, under the DG Enterprise and Industry, as of 2009, has been organizing the European SME Week. The European SME hebdomad is one of the events that is implemented under the Small Business Act, and the first widespread SME policy model for the EU and its member provinces[ 20 ].

Banks tend to do a difference between big houses and SMEs when covering with the several companies. SMEs tend to borrow more on a short-run footing, unlike big houses, as SMEs tend non to carry through the standards put by Bankss to obtain long-run loans. On the other manus, SMEs tend to be on a much more positive side from the clients point of position because SMEs tend to give much more recognition to the clients than they get from the providers.

Problems wo n’t vanish, both for SMEs and for big and multi-national companies. Problems and loads tend to harvest up twenty-four hours after twenty-four hours, hr after hr, and these must be solved so that endeavors will go on to turn and accomplish their chief purpose: that of maximising their net incomes. However, with a spot of prep before and during the constitution of the endeavor, the several enterpriser can hold a much higher chance that the constitution and the running of the endeavor will be successful.

It is extremely important that before puting a big amount of money into a concern, the enterpriser must put up a clear vision of what he, she or they want the company to go in a set clip frame. Besides, the first chosen people to organize portion of the squad are really critical, as they have to supply the endeavor with the necessary accomplishments in its most hard clip, during its first old ages. Communication and sharing of thoughts are besides two of import accomplishments which the enterpriser, besides implementing himself, must feed into his or her employees.

It has been emphasized that the major job for all SMEs is the deficiency of fundss. However, without taking the importance on the funding of SMEs, authoritiess and the European Union, should n’t merely supply the necessary fundss to back up these SMEs, because by making merely that, the job will reoccur in the close hereafter. The European Commission and its member provinces should supply enterprisers with the necessary preparation, non merely in covering with fundss, but besides in covering with their employees, covering with force per unit areas, and with other utile cognition covering with direction.

Finally, markets change and so should the mark market of SMEs. It ‘s useless for concerns in the technological market to go on publicizing the sale of cassette recording equipments and non importing MP3 participants or camcorders. Within the same market, it ‘s useless for computing machine Sellerss to seek and go on selling typewriters when the demand is laptops. This shows that endeavors are at that place for the consumers and non frailty versa, hence, at fixed footings, SMEs should measure the market and change their service or merchandise consequently.

On the whole, the hereafter of SMEs in Europe looks bright as SMEs are being given importance non merely by the European Commission and the several Commissioner but besides by the authoritiess, that have now realised that SMEs are a cardinal portion of a state ‘s economic system and that investing in SMEs is a must.