Entrepreneurship as a main driver for economic growth

Brussels, 9-1-2013 — /europawire.eu/ — The Entrepreneurship Action Plan is a blueprint for decisive action to unleash Europe’s entrepreneurial potential, to remove existing obstacles and to revolutionise the culture of entrepreneurship in Europe. Investments in changing the public perception of entrepreneurs, in entrepreneurship education and to support groups that are underrepresented among entrepreneurs are indispensable if we want to create enduring change. Only if a large number of Europeans recognise an entrepreneurial career as a rewarding and attractive option will entrepreneurial activity in Europe thrive in the long term.

Entrepreneurial education and training = growth and business creation

Investing in entrepreneurship education is one of the highest return investments Europe can make. Surveys suggest that between 15% and 20% of students who participate in a mini-company programme in secondary school will later start their own company, a figure that is about three to five times that for the general population. In the same vein, the role of higher education in entrepreneurship goes far beyond the delivery of knowledge to participating in business ecosystems, partnerships and industrial alliances. With high-tech and high-growth enterprises increasingly becoming a focus of entrepreneurship-related public policies, higher education institutions are an active component of Member States’ and EU’s innovation policies (European Commission’s ‘Rethinking Education’ strategy and entrepreneurship: IP/12/1233).

In order to exploit the potential of entrepreneurship education, the Commission will take a number of actions, including those to:

Develop a pan-European entrepreneurial learning initiative for impact analysis, knowledge sharing, development of methodologies and peer mentoring between practitioners from Member States;
Reinforce co-operation with Member States to assess the introduction of entrepreneurship education in each country and to support public administrations wishing to learn from successful peers;
Establish, jointly with the OECD, a guidance framework to encourage the development of entrepreneurial schools and VET institutions.
Endorse successful mechanisms of university-driven business creation (spin-offs etc.) and emerging university-business ecosystems around key societal challenges.

Member States are invited to:

Ensure that the key competence “entrepreneurship” is embedded into curricula across primary, secondary, vocational, higher and adult education before the end of 2015.
Offer the possibility to young people to have at least one practical entrepreneurial experience before leaving compulsory education, such as running a mini-company, being responsible for an entrepreneurial project for a company or a social project
Boost entrepreneurial training for young people and adults in education by means of Structural Funds resources in line with national job plans, particularly as a tool for second chance education for those not engaged in education, employment or training.
Promote entrepreneurial learning modules for young people participating in national Youth Guarantee schemes.

Create an environment where entrepreneurs can flourish and grow

Access to finance is a significant constraint

Access to finance constitutes one of the most significant constraints on growth and entrepreneurship in Europe. Entrepreneurs have particular difficulties in raising finance in the early stages of their businesses.

The Commission will:

Finance programmes aimed at developing a market for microfinance in Europe, and make resources for micro-financing available to Member States and regions.
Facilitate the direct access of SMEs to the capital market through the development of an EU regime for venues specialised in the trading of shares and bonds issued by SMEs (“SMEs growth markets).

Member States are invited to:

Assess the need of amending current national financial legislation with the aim of facilitating new, alternative forms of financing for start-ups and SMEs in general, in particular as regards platforms for crowd funding, as well as consider the need for simplification of tax legislation to stimulate further development of alternative financial markets such as business angel investments.
Make use of structural funds resources to set up microfinance support schemes under the ESF and the ERDF respectively.

Supporting new businesses in crucial lifecycle phases

About 50% of new businesses fail during their first five years as businesses often lack an appropriate ecosystem to help them to grow. Given their limited resources and experience, small and newly created businesses suffer more from high compliance costs arising from complex tax legislation and cumbersome tax reporting procedures than large corporations do. In addition, in most of the EU, the legal frameworks for social security of self-employed persons differ substantially from that for the employed.

In order to support entrepreneurs in crucial phases of their lifecycle and help them grow,

the Commission will:

Identify and promote Member States best practices with a view to create a more entrepreneur-friendly fiscal environment;
Support the cooperation between clusters and business networks;
Reinforce the partnerships and capabilities of the Enterprise Europe Network with hosting organisations, the Single Points of Contact and all SME support organisations; to spread information on EU initiatives, sources of finance, and support for innovation, encourage Member States to help increase investment readiness of entrepreneurs and SMEs and help businesses fully benefit from the Single Market and access markets in third countries;
Revise the rules prohibiting misleading marketing practices to strengthen enforcement against such practices in cross-border cases.
Unlock the full potential of the Digital Single Market for SMEs by tackling existing barriers to cross-border online business.
Continue the development of the Erasmus for Young Entrepreneurs programme to meet the increased demand for participation in the EU and encourage exchanges of young entrepreneurs between the EU and external countries.
Help Member States develop integrated support schemes through seminars financed by ESF technical assistance.
Continue to develop the Your Europe Business portal with information on the Single Market from both the Commission and Member States.

Member States are invited to:

Make the national tax administration more favourable to early stage business.
Promote tax coordination to ensure that inconsistencies in tax treatment do not lead to double taxation or other harmful tax practices that hampering cross-border businesses and cross-border venture capital investments.
Reassess corporate income tax regimes to consider extending the statute of limitation of losses and deductions.
Consider implementing as from 2013 the option offered for small businesses of a cash accounting scheme for VAT. Adopt measures to support commercialisation of innovation, research and development projects, taking into account the special challenges of newly established firms.
Consider the option for owners of new enterprises to request adjustments of payment schedules for social contributions.
Take a full advantage of the European Agricultural Fund for Rural Development support for business start-ups and development of schemes for professional exchange of entrepreneurs and farm visits.

Unleashing new business opportunities in the digital age

Better use of information and communication technology (ICT) can significantly help new businesses to thrive. ICT is the key source of growth for national economies and European SMEs grow two to three times faster when they embrace ICT.

Web entrepreneurs constitute a specific category of entrepreneurs who create new digital services and products that use the web as an indispensable component. Web start-ups tend to grow and fail faster than other businesses and scale exponentially, which translates into higher rewards but also higher risks. Web start-ups are cheaper to set-up and the entry barriers are low, making them an attractive vehicle to start an entrepreneurial career. For these reasons web entrepreneurs require tailored support measures to structurally strengthen the web start-up ecosystem.

Investing in digital technologies is no longer a choice: companies can nowadays only be competitive when they embrace the digital world. Digital entrepreneurs are those entrepreneurs that fully exploit digital products and services, including “cloud computing”, to reinvent their business models and sharpen their competitiveness. The EU initiatives “Smart use of information technologies and the integration of SMEs in global industrial value chains”, and e-Skills will promote the uptake of digital technologies and connect SMEs to the digital world.

The Commission will help entrepreneurs and SMEs to fully exploit the potential of ICT and smart use of these technologies by.

Fostering the knowledge base of major market trends and innovative business models, by establishing an online Market Monitoring Mechanisms and a Scoreboard, in cooperation with the main stakeholders, to facilitate dialogue and lead to a shared agenda for action.
Raising awareness through a Europe-wide information campaign for entrepreneurs and SMEs on the benefits from the new digital evolutions;
Facilitating networking to spark and support new business ideas, such as: the creation of a European Mentors Network for training, advice and hands-on coaching on how to do business in the digital age, and match-making events among stakeholders to explore new partnerships.Launch specific actions for Web entrepreneurs such as: i) a Start-up Europe Partnership, ii) a Web Entrepreneurs Leaders Club; iii) a European network of web business accelerators; iv) to increase the flow of Venture Capital and crowd funding; and v) stimulating the emergence of Massive Online Open Courses and setting up mentoring skill building platforms.
Strengthening competences and skills by intensifying E-skills actions to improve e-leadership skills, scientific and creative disciplines, and managerial and entrepreneurial skills to address new technological and markets.

Member States are invited to:

Reinforce national or regional support for Web start-ups and foster alternative financing for early-stage technology start-ups.
Promote access for entrepreneurs to Open Data and Big Data compiled in public or industry-backed programs such as the cultural data set Europeana.
Support the most talented entrepreneurs, e.g. by encouraging, the brightest graduates to begin their career in start-ups.
Support the swift adoption of policy initiatives such as the data protection reform and the proposal for a Common European Sales Law (which will lower barriers to the uptake of cloud computing in the EU).
Ensure the best use of European funds for web and digital entrepreneurship.

Making transfers of business ownership easier

Every year approximately 450,000 firms with 2 million employees are transferred to new owners across Europe. Yet it can be so difficult to make a business transfer that an estimated 150,000 companies with 600,000 jobs may be lost each year. The main hindrances are regulatory or tax burdens, lack of awareness of necessary preparations and of transparent markets for such transactions, and the long time periods needed to comply with formalities. Would-be entrepreneurs should know that the acquisition of a ‘going concern’ may be an attractive alternative to starting a new business. Transfers should be made easier for both the entrepreneur who wishes to pass on his or her business and the acquirer.

The Commission will develop guidelines on the most effective programmes and best practices to make business transfers easier, including measures for deepening and expanding the markets for enterprises, mapping available programmes in Europe and proposing necessary actions to remove remaining possible barriers to cross-border business transfers.

Member States are invited to:

Improve legal, administrative, and tax provisions for transfers of business taking.
Use existing European funds to support transfers of small and medium-sized businesses to entrepreneurs.
Improve information and advice services for business transfers as well as improve data collection on and monitoring of business transfers.
Effectively publicise business transfer platforms and marketplaces and launch campaigns to raise awareness among potential sellers and buyers of viable businesses.
Consider reviewing tax regulation with respect to its impacts on the liquidity of a small or medium-sized family business in case of a succession of ownership.

Turning failure into success: second chances for ‘honest’ bankrupt entrepreneurs

Evidence shows that by far the majority (96%) of bankruptcies are due to a string of late payments or other objective problems – they are, in other words ‘honest failures’, without any fraud by the entrepreneur. Yet research shows that ‘second starters’ are more successful and survive longer than average start-ups; they grow faster and employ more workers. Thus, a failure in entrepreneurship should not result in a ‘life sentence’ prohibiting any future entrepreneurial activity but should be seen as an opportunity for learning and improving.

The Commission has just submitted a proposal for the modernisation of the Regulation on insolvency proceedings to ensure cross-border recognition of the rescue of enterprises and facilitating the lodging of claims in another Member State. The Commission will also present aCommunication on a new European approach to business failure and insolvency to create a more business friendly environment by improving the efficiency of national insolvency laws including the length and costs of the period of discharge from bankruptcy.

The Commission will also launch a public consultation to gather views from stakeholders on business failure and insolvency, including on giving honest bankrupts a second chance and on shortening and aligning the “time to discharge”.

The Member States are invited to:

Reduce discharge time and debt settlement (when possible) for an honest entrepreneur after bankruptcy to a maximum of three years by 2013
Offer businesses support services for early restructuring, advice to prevent bankruptcies and support for SMEs to restructure and re-launch.
Provide to bankrupt entrepreneurs advisory services to manage debt and facilitate economic and social inclusion and develop programmes for ‘second starters’ for mentoring, training and business networking.

Regulatory burden reduction

Entrepreneurs should be the ‘normal customer’ for whom administrations benchmark their procedural requirements and yet nearly three-quarters of Europeans consider it too difficult to start their own business because of administrative complexities. Many more complain about heavy regulatory burdens imposed on the running of a business.

Reducing regulatory burden remains at the top of the Commission’s political agenda.

The Commission will:

Continue to vigorously pursue the reduction of regulatory burden in EU proposed legislation especially in areas where such burdens are the highest.
Indicate how it will review and revise EU regulation to reduce the burden in areas identified as the’ top ten most burdensome’:
Propose legislation abolishing burdensome public document authentication requirements that SMEs must tackle to conduct cross-border business within the Internal Market.
Set up a working group to assess the specific needs of liberal profession entrepreneurs in relation to issues such as simplification, internationalization or access to finance.
Monitor progress via the Points of Single Contact under the Services Directive and encourage Member States to take a more business-oriented approach.
Take action to ensure that more businesses get help through SOLVIT when their rights are denied in the single market by public authorities.

Member States are invited to:

Reduce time for licensing necessary to start a business activity to one month by the end of 2015.
Fully implement the ‘European Code of Best Practices facilitating SMEs’ access to public procurement’ by 2013.
Continue modernising labour markets by simplifying employment legislation and developing flexible working arrangements, including short-time working arrangements.
Extend the Points of Single Contact to more economic activities and make them more user-friendly.
Set up “one-stop-shops for entrepreneurs” to bring together all business support services including mentoring, facilitation and advice on access to conventional and non-conventional finance, access to ‘incubators’ and ‘business accelerators’ and support for early internationalisation of young enterprises.

Dynamising the culture of entrepreneurship in Europe: nurturing the new generation of entrepreneurs

The main motives of Europeans for starting an enterprise are self-realisation and flexibility of time and place of work, not good framework conditions. Therefore a radical change of the European culture towards new notions about entrepreneurship is needed, one that publicly celebrates success, brings the contributions of entrepreneurs to European prosperity to the fore and showcases the rewards of an entrepreneurial career.

The Commission will:

Establish, in the framework of the “SME Week”, a Europe-wide “EU Entrepreneurship Day” for students in their last year of secondary education.

Member States are invited to:

Step up entrepreneurship promotion activities and appoint known entrepreneurs as national Entrepreneurship Ambassadors to become “the face of entrepreneurship” in their countries.
Better take into account the variety of business models and legal statuses in their national or local business support schemes, and develop social entrepreneurship education and training.

Demographic groups that are underrepresented within the entrepreneurial population and especially founders of start-ups are young people, women, disabled, migrants and the unemployed. Europe must open paths for them into entrepreneurship to create jobs for them, empower them economically and socially and leverage their creative and innovative capacities.

Women

Women constitute 52% of the total European population but only one-third of the self-employed or of all business starters in the EU. Women thus represent a large pool of entrepreneurial potential in Europe.

The Commission will create a Europe-wide on-line mentoring, advisory, educational and business networking platform for women entrepreneurs that will bring the current national ambassadors and mentors networks on-line, deepen their offer and expand their reach and support female entrepreneurship at national and regional level by promoting the exchange of best practices between Member States.

Member States are invited to:

Design and implement national strategies that aim at increasing the share of women-led companies.
Collect gender-disaggregated data.
Expand the networks of Female Entrepreneurship Ambassadors and Mentors for Women Entrepreneurs.
Implement policies enabling women to achieve an adequate work-life balance.

Seniors

Senior citizens are a valuable resource for entrepreneurship. Between 1990 and 2010 the share of citizens aged over 50 increased in Europe from 32.1% to 36.5% and the median age of the European population is expected to rise for the coming decades. Senior and retired entrepreneurs can also be a valuable knowledge resource for other entrepreneurs. The Commission will help exchange best practices helping senior executives and entrepreneurs to mentor new entrepreneurs as well as support mutual and intergenerational mentoring between entrepreneurs, to exchange vital skills, such as ICT literacy and the experience of seniors.

Member States are invited to:

Foster senior entrepreneurs interested in transferring know-how and match senior with inexperienced entrepreneurs.
Ensure that the participation of senior entrepreneurs and retired executives does not affect their pension prospects.

Migrants

Migrants represent an important pool of potential entrepreneurs in Europe. According to OECD, migrants are slightly more entrepreneurial than native citizens and foreign-born self-employed people who own a small or medium sized firm, can create between 1.4 and 2.1 additional jobs. However, qualified migrant populations often face legal difficulties, restricted access to labour markets and career opportunities that push them into self-employment.

The Commission will:

Propose policy initiatives to facilitate entrepreneurship among migrants.
Analyse proposing legislation to remove legal obstacles to establishment of businesses and giving qualified immigrant entrepreneurs a stable permit.

Member States are invited to:

Remove legal obstacles to business establishment by legal migrant entrepreneurs.
Facilitate access to information and networking for migrant entrepreneurs and prospective migrant entrepreneurs.

Unemployed

Business development support for unemployed and in particular the youth should include signposting information and providing links to support services, advice and counselling, and business coaching and mentorship.

The Commission will:

Launch a future micro-finance facility to target vulnerable groups.
Provide technical assistance for setting up support schemes for young business starters and social entrepreneurs.
Organise a micro-finance and social entrepreneurship stakeholders’ forum to engage local financial intermediaries.
Perform research into the situation of entrepreneurship for the unemployed, offer examples of good practice in tackling the issue and propose relevant policy recommendations.
Analyse results of the study on “Self-employment and entrepreneurship: the contribution of Public Employment Services to job creation.

Member States are invited to:

Connect Public Employment Services with business support services and (micro) finance providers.
Tackle the problem of unemployment by designing business training programmes for out-of-work youngsters.
Launch active labour market programmes that provide financial support to all unemployed people for starting a business.
Establish and run entrepreneurship education schemes for the unemployed.

For full details, please refer to the Entrepreneurship Action Plan: Re-igniting the entrepreneurial spirit in Europe:

http://ec.europa.eu/enterprise/policies/sme/promoting-entrepreneurship/index_en.htm