Small businesses are the driving force of the European economy; accounting for 99 percent of European enterprises, making up 52 percent of Europe’s GDP, and employing 85 million people. This week marks the European Commission’s annual SME Week, a chance to celebrate the enormous contribution these businesses make, but also an opportunity to problem solve and ensure they are supported in their evolution.
At the heart of many small businesses across Europe are families, working together and sharing their passions with their local communities, from plant shops to homemade cakes and confectionaries, to healthy meal deliveries that pack a punch. It has not been an easy ride, but despite ongoing financial hardships, these businesses have shown remarkable resilience in tough times.
At Mastercard, we recognise the challenges they have faced, working to support their transition into the digital economy by identifying the barriers stopping them from getting there.
Many SMEs, especially those that are family-run, need additional support to thrive in this changing world.
In a survey conducted earlier this year, we revealed that family SMEs are facing a series of hurdles; listing digital transformation as their biggest challenge (20 percent), feeling unprepared to operate in a digital economy (37 percent), and being unsure of the right solutions to choose (28 percent).
These businesses could be at risk of falling behind, and while there is appetite for them to modernise (41 percent want to update and digitalise) they are lacking the guidance and support they need to make this goal a reality.
Bringing SMEs into the digital economy
By identifying the barriers preventing small businesses from feeling confident in their digital futures, we can focus on driving the right solutions - enabling them to take the next steps and continue to thrive.
Launched globally in 2021 — supported by the Mastercard Center for Inclusive Growth — Strive is a portfolio of philanthropic programs aimed at helping small businesses around the world thrive in the digital economy.
As a company dedicated to powering commerce and empowering people, Strive is one way that Mastercard is tapping into the power of networks to strengthen the small business ecosystem and support the livelihoods of those who depend on it.
Strive was established in the wake of the COVID-19 pandemic, which compelled consumers to swiftly embrace technology and adopt digital behaviours. Ensuring that small businesses can benefit from digital acceleration is crucial for their long-term success and has the potential to help narrow economic divides in communities around the world.
The post-pandemic recovery for small businesses in the EU has been uneven, with businesses not yet fully recovered to their 2019 levels. Only 55 percent of European small business owners anticipate growth in the coming year, and the rollback of pandemic support measures, coupled with high energy prices and general inflation, poses a risk of increased bankruptcies.
With programs in place across the globe, Strive aims to support more than 10 million small businesses around the world by unlocking access to capital, markets, and digital solutions, as well as helping to build their capacity through training and mentoring.
Nurturing the unique offerings of a family-run business
While supporting the digital needs of SMEs is important, we also recognise the value of nurturing the unique selling points these businesses can offer.
Family-run SMEs are at the heart of the European economy, but also the heart of their local communities – offering a level of personalisation and connection that larger organisations cannot.
“Taking care of our customers and offering a personal treatment with every purchase is what makes our small business unique” says Ordoño Alonso, owner of a small local confectionary shop in Spain. “This relationship with customers is what we attribute our success to, and it’s an offering large corporations can’t offer their customers. We pride ourselves in the quality of our product, visiting the shop every week to check it is in perfect condition.”
From services such as Business Bonus, a digital loyalty program that offers discounts to SMEs on the products that matter most to their business, to support with cash management solutions and educational resources, to adopting ESG practices to make their businesses more sustainable, we aim to equip small businesses with everything they need to succeed so they can focus on what they do best.
Preparing for the future
At Mastercard, we have worked alongside the small business sector in Europe for over half a century, supporting 4 in 5 small businesses in our commitment to helping them keep pace with the shifting digital landscape. This SME Week, we want to continue expanding these efforts and encourage others to do the same.
While initiatives like Strive bring together industry and civil society to support SME growth, the mobilisation of policymakers is needed to take this to the next level. We’d like to see EU policymakers expand digital skills training schemes and mentoring opportunities to small business owners – the ones most in need of support.
Driving success for the families at the heart of Europe’s economy will always be a priority for us, bringing together key stakeholders, policymakers, and entrepreneurs to continue paving the way for SMEs - powering them for the digital future.
Lead image via Promoting Enterprise