Veronique Willems: SMEs need to see that EU is making their life better
We have to provide support to entrepreneurs not to be destroyed by failure, but to learn from the experienceMaria Koleva , Helsinki
First of all, the new SME Strategy needs to be for all SMEs, not only for those which are innovative, fast-growing, internationally active, but also for those that are providing our day-to-day needs, such as food, clothes, houses, cars, anything we sit on. We also need to show the added value of the Union to them. Secondly, we need to make sure that all these words that we have at EU level are turned into action, says Veronique Willems, Secretary General of SMEunited, in an interview to Europost.
Ms Willems, what were the main takeaways you wanted to deliver at this year's SME Assembly, held in Helsinki?
At the workshop Green deal for SMEs, we discussed with the participants which best practices are already in place in different Member States and regions to support the small businesses and to incentivise them to go to the greener business models. It includes, among others: circular economy, resource efficiency, decarbonisation. We had Mr Janez Potocnik, co-chair at UNEP, who put forward the scene setting. A representative of the European Commission gave some insight into what they will be proposing with the Green deal, and two entrepreneurs gave their view on how they have been greening their respective companies. We discussed with the participants what is already existing, what the EU level could contribute further to see how we can move forward. So, the takeaway from the session was: what should be the role of SMEs in mitigating the effects of climate change, but also what policies and tools the new Commission and the EU member countries have to adopt to support them in the move towards sustainable economy.
Do SMEs see the greening and digitalisation as a kind of burden, an additional cost?
We wouldn't say greening is a burden, but it is a challenge for SMEs. Just as digitalisation is a challenge for small companies. For both of these challenges we see a lot of differences among the big group of SMEs in Europe. We have companies that are really developing digitalisation, we have companies that are setting the tone in eco innovation, making sure that they move towards more greener products, greener business models. Then we have a group which is trying to find out how they can improve their companies. There is also a small group that might not have a clue yet. Especially for those who want to innovate, we are providing support to transform their business towards the digital and the green economy. In order to do that, we need an enabling legal framework. It means those who are innovating and making the new economy will have the possibility to continue their activities. It needs to be technology neutral, and give those companies a chance to look at different options.
What are the dimensions of the support that small firms need?
For those that are transforming their businesses, we need to make sure that legislation is easily applied. Apart from the enabling legal framework, we also need a facilitating environment. Here we focus a lot on skills development, which is very important. We need to make sure that entrepreneurs in the first place have the necessary skills to deal with transformation and, of course, their workers as well. We also need to make sure that the necessary infrastructure is in place. For instance, if you want companies to digitalise, you need to have a digital infrastructure - broadband, 5G. In Europe there are still a lot of areas that don't have a broadband infrastructure, so it is difficult to digitalise. We need as well to have the necessary know-how capacity first and foremost with the organisations to which entrepreneurs turn if they want to get information. Those SME organisations need to be well informed about what is going on, where they can refer to, and then we also need to make sure that the entrepreneurs get - especially for the green transformation - technical assistance for example on their production line. Finally, there is the question of the necessary financial provisions since, if you want to green your production line, it takes huge upfront investment while the returns would come only afterwards. Banks aren't always keen to provide finance for such big investments with a doubtful outcome. So, we need to make sure that there are loan guarantees and other schemes available for small companies.
Are the European companies still so attached to bank loans or are they already looking for other tools to finance their businesses?
Bank loans remain a big part of financing. Apart from that, we also see shift towards more mezzanine financing with support from subordinated loans, loan guarantees, friends and family investing in companies, etc. Of course, banking mechanisms have always been a very important part of financing for SMEs, but we also see some diversifying and interesting developments in the crowd-funding market.
What are the main findings in your recent EU SME Barometer?
We were positively surprised with the results of our SME Barometer, because the Spring SME Barometer indicated a rather negative outlook for the autumn. It wasn't as bad as expected, especially due to the internal demands that allowed SMEs to keep their business activities at a good rate. For example, due to the internal demand that remained very strong, the construction sector was kept at a positive flow. However, the uncertainty - with Brexit, with trade discussions between the US and China going on, and the threats from the US side towards Europe and the possible recession in general - it is putting some doubts on how we will move forward. The effect of these factors is impacting bigger companies that are more export oriented. Our smaller companies often depend on the internal demand. We saw that internal demand is quite positive. The SME Climate Index for Autumn 2019 increased by 0.5 points, reaching 77.1 points, an improvement, but the overall trend over the last year goes downwards, but less than expected. It seems that SMEs still are relatively uncertain about the future in general, but less worried about the direct reflection on their own businesses. So, the outlook is stable, but uncertain, and we need to be careful at the moment.
The attitude in Europe towards bankruptcy is still unacceptably harsh, and people whose business has failed are almost stigmatised, and forever. What can associations like SMEunited do for this to change?
SMEunited has been involved in project “Early Warning Europe” (www.earlywarningeurope.eu) over the past three years. The project was funded by COSME Programme and we will continue activities in a different format next year. Within it, we are setting up mechanisms across Europe to help entrepreneurs in difficulties. It works to either turn around the situation, to make the entity become a viable company again, or to close it down as soon as possible and not allow its debts to grow even bigger. In this project we worked also on the stigma of failure, making sure that indeed the perception in society on failure turns around, and it comes to be seen as a learning experience. We need to provide the support to the entrepreneurs to learn from that experience. It is important for us as well, because as an SME organisation, we should not only be there for the entrepreneurs when they are successful, but we certainly have to be there when they are facing difficulties, to help them overcome them. Under the project, in the past three years we supported 3,500 enterprises in the target countries. The new Insolvency Directive, which has to be transposed until July 2021, provides for Member States to setup such a mechanism to support companies in difficulties. Within the project, we implemented such schemes in four countries, and at the moment we are implementing in another six countries. The idea is to continue next year discussing with the other Member States to also implement the programme, because it is useful for every country. If a public authority needs to choose between losing taxes, social contributions, employment, or helping a company in difficulties, the choice can be easily made.
What should the new strategy for SMEs entail, in your view?
At the end of 2018, SMEunited published our ten political priorities for the European elections in 2019, which were the big lines. Then we started to translate them into concrete measures and published them in our SME 2024 document 'Strengthening Crafts & SMEs for the Future of the European Union'. This should be the basis for the content of a specific SME strategy, on what needs to be done. What do we need to pay attention to in the SME Strategy? First of all, it needs to be for all SMEs, not only for those which are innovative, fast-growing, internationally active, but also for those that are providing our day-to-day needs, such as food, clothes, houses, cars, anything we sit on. We also need to show the added value of the Union to them. Secondly, we need to make sure that all these words that we have at EU level are turned into action, and that SMEs on the ground see a difference, that the EU is cooperating with Member States, with their region, to make their life better. At EU level, Commissioner Breton proposed the idea for a cross DG task force for SMEs. This means SMEs should not only be a topic for DG Grow, but should be point of attention in all the other DGs - in DG Environment, DG Employment, in DG R&D, DG Connect, and others. They should also pay specific attention on SMEs in what they are doing here. Whether it is benefiting SMEs. That is an element that we want to see taken on board for the whole Commission. Secondly, we want to make sure it is implemented at the national level and regional level. We would like to see the new SME strategy included in the European Semester. The Commission has been following the Small Business Act (SBA) every year with fact-sheets, really tracking and monitoring the implementation of the ten pillars. We would like to see something like this included in the European Semester. This will allow Member States to learn from each other, seeing who is doing well on early warning, who is doing well on skills development, access to finance, etc. Of course, it is very important that we take “Think Small First” principle and better regulation into the heads and hearts and actions of the institutions, making sure that the legislation take “smaller” into account, making sure that they are able to comply with the legislation without too many burdens. The Commission is taking a lot of initiatives, but for SMEs, it is not always so easy to see the forest for the trees. We support a lot of things developed at European level, but we need to make sure that it can really get to those who can use it best. There will also be a discussion with the Commission to ensure capacity building for SME organisations across Europe, to make sure that we have a good knowledge of everything existing at European level, in order to serve the SMEs better.
Veronique Willems is the Secretary General of SMEunited, a Brussels-based European association that speaks on behalf of 24 million crafts, trades and SMEs across Europe. Since 2009, she is the Head of European affairs at UNIZO (SMEunited Belgian member organisation) and has been responsible for advocacy on policies affecting SMEs at EU level. In January 2016, she was nominated deputy to the SME-representative for Belgium at the European Economic and Social Committee. Veronique Willems holds a Law degree from Vrije Universiteit Brussels and a Master's in Commercial sciences / Business management from VLEKHO Brussels.