الرئيسية
By Arab News
JEDDAH: Many more entrepreneurs in Europe and the US are optimistic than pessimistic about the year ahead, despite the debt crisis and general fears of a global slowdown, a survey says.
The report offers unique insights into the mood and behavior of entrepreneurs in Europe and the US as they grapple with economic crisis.
They may be losing turnover, losing profit or even losing sleep — but they are not losing determination to succeed.
Published by Hiscox, the international specialist SME insurer, the DNA of an entrepreneur reports findings from research of 3,000 owners or partners of small and medium-sized businesses in six countries: The United Kingdom, the United States, the Netherlands, Germany, France and Spain.
Bronek Masojada, CEO at Hiscox, said: “SMEs are pumping life blood into the global economy. Those of us who work with SMEs, be it government, banks or other service providers, have a role to play in supporting them and their future goals.”
Masojada said: “The strength and resilience of entrepreneurs continue to shine through. Every day, SMEs have to assess and manage a wide variety of risks at different levels of intensity. Our study highlights their concerns over threats from the global economic environment, which are often very hard to control or even predict. However, it also showed that they are optimistic and believe they can succeed despite this backdrop.”
Commenting on the report, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “The relative optimism of entrepreneurs in these Western economies is clearly an encouraging sign for the global economy. In mature economies, SMEs are the backbone of economic activity, typically accounting for anywhere between one-half and three-quarters of all jobs and GDP. Their success is hence critical for the broader economic fortunes of Western economies.”
But he said, these survey findings also highlight the general resilience of the SME model, something that holds important lessons for the GCC countries, including Saudi Arabia, which are actively trying to stimulate entrepreneurship and SME formation.
“As relatively small and centralized organizations, SMEs tend to be fairly close to their clients and nimble in their management. They can sense and adjust to demand trends with relative speed. Their light organization often allows them to modify their products and solutions without lengthy planning and preparation. In many economies, SMEs are the backbone of innovation, partly because their ability to survive and succeed so critically depends on their ability to adjust to evolving circumstances as they typically lack the financial cushions of their larger peers,” Kotilaine said.
Part of the SME optimism in the West is also likely to come from the improved access to qualified labor at a time when unemployment levels are going, he added.
“It is likely that these companies will dominate the process of new job creation in the years ahead as they have done during the past decade when they were responsible for nearly all new jobs in the US and Europe. This flexibility and resilience of Western SMEs highlight the importance SME development will have for successful economic diversification and sustainable growth also in the GCC where SMEs still lag clearly behind their Western peers in relative economic importance,” Kotilaine pointed out.
Key themes from the report:
Forty three percent reported negative or no growth in revenue last year.
Despite this performance and the general economic climate, 47 percent of all respondents were optimistic about the year ahead for their business, against 26 percent who were not and 27 percent who were not sure. The Germans and Dutch were the most optimistic, the British and Spanish the least.
More than four in ten (44 percent) SMEs in the five EU countries surveyed said their business plans were affected by the euro zone crisis although only 28 percent did any significant exporting. Against this background, the EU evoked more negative than positive responses. In each of the five EU countries, there were more SMEs who stated that the EU gave little or no help to their business than those who found it helpful. The Spanish had the lowest net negative rating (8 percent), the British the highest (40 percent). The Americans gave a net negative rating of 30 percent to the North American Free Trade Agreement. Only in France did more respondents find government helpful to business than not (central government helpful 41 percent, not helpful 31 percent; local government helpful 47 percent, not helpful 27 percent). With some significant national variations, 56 percent criticized their country’s “inflexible” labor laws and over two thirds were unhappy about taxation (67 percent) and bureaucracy (68 percent). And yet among all respondents the most frequently cited fear for the year ahead was losing the support of government (40 percent).
Finance is tough — but relationships with banks and lenders are stable
Only one in eight (12 percent) said finance was easy to find and half (50 percent) had experienced problems with late payments (75 percent of the Spanish). But only 38 percent had tried to renegotiate terms with lenders or had sought greater funding. Seventy three percent reported no change in their relationship with their banks and 10 percent had a better relationship.
Labor force issues — and frank views on new recruits
Although only 15 percent intended to recruit more staff next year (36 percent Germany, 10 percent US), 54 percent thought they would avoid redundancies. Six in ten (60 percent) of those who had taken on school or university leavers were favorably impressed with their keenness and motivation, but fewer than half rated their basic arithmetic (48 percent), their time-keeping (47 percent) or their work ethic (46 percent). The Germans gave the highest ratings for arithmetic (60 percent), the Spanish the highest for reading and writing (61 percent) — the Dutch gave the lowest ratings on both counts (32 percent for arithmetic and 38 percent for reading and writing).
Motives, lifestyles and the working week (and the working lunch)
The main motive for going into business was to be one’s own boss, rather than to make money. Sixty two percent defined business success as affording a comfortable lifestyle. Average working hours were 42.5 hours per week (suggesting an increase of two hours since February 2010).
The Germans worked longest (average 46.9 hours) and the British worked shortest (39.4 hours). The most frequent lunchtime choice was a working lunch or sandwich at the desk.
The Germans were most likely to skip lunch altogether (20 percent) — the Dutch and the French were least likely (6 percent and 7 percent). Forty three percent said that the economic downturn had caused them greater stress. The Spanish (60 percent) were the most stressed, the Dutch (26 percent) were the least. Nearly three in ten (29 percent) reported sleep problems (led by the French). But 28 percent said that the crisis had made them more determined to succeed, and 29 percent said it had made them work more efficiently.
