Last week I was able to sit in on a meeting with a couple of highly placed European Commission officials. We were discussing what will soon become known as the SBA - the Small Business Act. 2009 will be a year of many events and publicity for this new piece of EU legislation.
Now I realise that this blog and website are about investment through the stock exchange and that small businesses are not usually listed on an exchange. Fair enough. However, investment is the study of business, economics, human nature and many other factors. But ultimately, it is mostly about business. So I figure that if I find out some interesting snippets of information, why not share?
I ought to point out that whilst the information below is in the public, it may not be very well known. There is nothing below that was ‘off the record’.
The following facts relate to small businesses in the EU, but one can presume that the figures are broadly similar for many developed non-EU nations. It would be quite easy to imagine, for example, that these numbers hold across North America. Ultimately, these are not business numbers, they are economic and societal numbers.
99% of all companies in the European Union are SMEs (Small and Medium Enterprises)
92% of all companies have less than 10 employees
50% of all firms have just 1 person
The EU has only 43,000 “large” firms
I don’t know about you, but I was very surprised to see those numbers so high. However, when you think about it, business is the ‘long-tail’ of the economy. By their very nature, not every firm can become a global player - there are only so many areas big enough to take global players…
Needless to say, this makes small business the engine that drives an economy. We all may think of the stock market as a ‘barometer’ of business in a country, but this unseen army of retailers, service providers, traders, craftsmen et al are the real business in a country.
The point that the European Commission was making - and it is very sensible - is that new business legislation needs to be looked at from the perspective of a small firm. Will a small firm be able to cope with additional rules? Just how much red tape can a one person company really deal with?
This relates very nicely to a point that Felipe Gonzalez made when I saw him speak recently. He maintained that there is very little corporate mobility in Europe. A company starts small and will invariably one day die small. Most don’t last and most don’t grow very big. Interesting stuff, I hope you will agree.