Published on January 28th, 2015 | by Laura BAEYENS | Credit: IT One0
Digital Agenda Series: Are digital entrepreneurs the future of European business?
Start-up Europe, Open Innovation 2.0, ICT Innovation Vouchers Scheme, the SME Instrument, Innovation for Manufacturing SMEs (I4Ms), and other initiatives make up the Digital Agenda for Europe’s entrepreneurs and SMEs. But is the European Union truly investing and putting enough focus on SMEs?
UNITEE had the opportunity of meeting Christian Saublens, Director of the European Association of Development Agencies (EURADA), on his views on the Digital Agenda for Europe in the context of entrepreneurship and SMEs and how digital entrepreneurs can be the future of European business.
What are the benefits of going digital for entrepreneurs who own SMEs?
The main advantage associated with going digital is to be able to reach out to new clients in different geographical circumstances, whether it is in your own region where you have established your company or at the national or global level. It also allows you to minimise the cost of investing in distribution channels. Nowadays, you do not necessarily need to have a physical store or find distributors to start a business.
Another important advantage is that new types of entrepreneurs can start their own business, because they do not have to have all the capacities related to the traditional way of doing business. Going digital is a good alternative to traditional business models and can be form of diversification.
Are “web entrepreneurs” the future of European business then?
We will still be needing the classical entrepreneur, and this depends on the business proposal and model these web entrepreneurs are able to offer to existing clients or new markets. In a sense, yes, web entrepreneurs can contribute to European business growth or can even increase the number of entrepreneurs that Europe has.
Are there disadvantages to entrepreneurs going digital?
I do not see real disadvantages, but rather risks if you do not move in that direction. With the rise of e-commerce, various entries to markets are shutting down. Also, you are faced with more and more new competitors if you do not go digital as soon as possible.
The small disadvantage that I see is exposure. Today, many entities are more relaxed with intellectual property rights (IPR) and imitations come very softly where your business model, products and services can be more easily be copied without any legal sanctions.
Despite the Digital Agenda emphasising on e-commerce being a potential tool for SMEs to grow, be more competitive and create jobs, according to the European Commission’s recent progress report, only 14% of SMEs use the Internet as a sales channel, less than half of the EU’s average target of 33% by 2015. What is lacking in this EU strategy in terms of supporting and encouraging entrepreneurs to go digital? How can these figures be improved?
There are two different issues regarding the Digital Agenda. One is on existing policies and the other on the culture of entrepreneurship in Europe. With policy, we lack ad hoc support systems for digital entrepreneurs. We tell ourselves that the internal market is functioning, but in reality it is not.
Also, many civil servants and politicians often say that we have a fantastic internal market, that it is bigger than that of the US, except that we have 27 languages. In which language should you invest in? Who pays for the translation of your website? Do you have the internal capacity to do business in another language.
Another problem is the lack of a clear legal framework for web entrepreneurs. If we have a look at the problem faced by Uber or Airbnb for instance, we see that the internal market is not functioning correctly. Also, though politicians say that the future of Europe is innovation, as soon as you come up with an innovation, we have countries like France who have adopted anti-innovation legislation. If you do not have a strong legal framework, entrepreneurs will not be able to innovate.
Moreover, politicians decided that the Digital Agenda target is to have 33% of SMEs use the Internet as a sales channel by 2015, is that realistic?
We have some good goals, but then we do not really have the right environment for achieving these goals. I used to say that in Europe, we are good at making strategies in paper, but we forget that strategies do not create jobs per se, it is the way you implement them, with the right instruments for the right people at the right moment.
What role can the local and regional level play in fostering digital entrepreneurship and SMEs in Europe?
Today, development is more on regions rather than the state, since the state can be far from regions and cities, especially in large countries. We have to provide SMEs with the right services, either through coaching or giving vouchers that help them buy support services, have an attractive web design, or secure payments through Web Order. Sometimes it is not necessarily about funding, although needed, but about the interface or the fact that you make digital enablers available to SMEs with insufficient capacity to do these online tasks. This is the area where government bodies have to work more on, as well as to come up with realistic solutions.
We need to have a complete ecosystem that favours digital entrepreneurs in production, distribution and promotion: entrepreneurs who use 3D apps and printing, e-commerce and crowdfunding. This is EURADA’s suggested business model in the digital era. If you are young and talented, you can design anything on a software which you can then send to fab labs who can make the prototype. Once the prototype is done, you can go to a small service outsourcing production firm or a 3D printing business. They can easily do a thousand pieces of your product for you. You can then use a dedicated e-commerce website like EDZI or A Little Market, and display your product in a crowdfunding platform where you can decide to have it crowdfunded on a reward basis for example. After obtaining the market’s feedback, you can easily decide to either pursue this business venture or move on to another product.
This is the fifth and last article from the series of What’s Up Europe articles published by UNITEE every (two) week/s on the Digital Agenda for Europe, focusing on different sectors of European society: Arts & Culture, Research & Innovation, Politics, Youth & Education, and Employment, Entrepreneurship & SMEs.