According to EU data, small and medium-sized enterprises (SMEs) are the backbone of the European economy. They represent 99% of all businesses in the Union, employ around 100 million people and account for more than half of Europe’s GDP.
Yet the survival of SMEs has been constantly tested since the pandemic. After suffering the consequences of the COVID crisisSMEs are now particularly affected by rising energy prices, inflation, supply chain bottlenecks and changing consumer behaviour.
That’s especially true in the retail, food and restaurant sectors — among those that were hardest hit during the pandemic.
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A survey conducted by Glovoa Spanish start-up offering on-demand delivery services found that European SMEs in these sectors are concerned about their future growth prospects.
The startup surveyed 2,049 SMEs in Bulgaria, Italy, Poland, Portugal, Spain, Romania and the UK. Disturbingly, 46% of companies in all seven countries say they are in ‘survival mode’.
“This research confirms that it is not surprising that SMEs, just emerging from the hangover of the pandemic, are struggling again,” said Rodrigo Alier, Executive Director, Partners & Brands at Glovo.
“The cost of living crisis is weighing heavily on their minds and their balance sheets, with more than two-thirds of companies surveyed in the UK and almost half of companies in Spain saying they are in ‘survival mode’,” Alier continued.
The role of technology in enabling business growth
Glovo’s survey also found that 42% of SMEs surveyed believe their customers’ digital experience is becoming more important than the in-person experience.
Romania’s example in the study highlights the role of technology in business growth. Nearly 1 in 3 companies that digitized during the pandemic – but have since stopped due to the return of in-person dining – say they are now struggling.
In comparison, almost half of all companies that were already digitized before the pandemic and are still doing so have experienced slow but steady growth over the past 2-3 years. They also expect significant growth in the next 12 months.
And while one in three UK companies see digitization as integral to growth, two in three still say they need help to become technologically innovative, but partnerships with private partners are only part of the solution.
To realize the ambition of the EU Goals of the digital decadeit is crucial that SMEs are equipped with adequate digital skills, access to technology and sufficient funding, all of which require a supportive policy environment.
“We need to step up our efforts to ensure that every EU SMEs, business and industry has access to the best digital solutions and a world-class digital connectivity infrastructure.”
Only then will SMEs and startups have a fighting chance in the future.