20 million SMEs are operating across Europe, but 92% of companies have less than 10 employees, a report by Mazars has found.
Germany and Sweden are rare exceptions to the trend. As the only two countries in the European Union that have not only recovered from the financial crisis but have actually surpassed 2008 levels of population, employment and the amount of value added generated, they have managed to enjoy considerably more success than their peers. For the countries worst hit by the recession, the picture is far bleaker.
The report describes a “three speed Europe”, in which German and Swedish enterprises are able to steam ahead and UK, French and Dutch companies plod at steady pace – whilst Irish, Spanish and Portuguese SMEs are falling far behind. However, whilst individual country performance provides “a significant backdrop,” Mazar’s findings suggest that, with the right approach, SMEs can become globally competitive, regardless of country-specific socio-economic policy.
Prudent borrowing, planning for the future and a sharp focus on the target market are cited as the cornerstones of SME success. Rather than focusing on expansion per se, the report recommends “right-sizing” the organisation to achieve the critical mass required to compete in the marketplace and meet performance targets. Crucially, SMEs must learn to narrow their focus, pinpoint where they can add value through in-depth understanding of their clients’ businesses and most of all, to develop ways of approaching problems in new, creative ways. Countries that feature highest on Mazar’s “Innovation Leaders” metric were home to the most successful SMEs.
“It has been stated that we know more about medieval times than we do about the state of our SMEs,” said Joe Carr, Global Leader of SME Advisory Services with Mazars.”This report is filling that information deficit and is the first comprehensive report examining SMEs across Europe.”