Entrepreneurship & SMEs Sector: The Statistics' "Language"

The economic and social role of Entrepreneurship The dynamic role of Entrepreneurship The measure of the entrepreneurial spirit is provided (within some limits) by a number of statistical indicators, covering in particular: The number and structure of entrepreneurs; "Demography“...

The economic and social role of Entrepreneurship The dynamic role of Entrepreneurship The measure of the entrepreneurial spirit is provided (within some limits) by a number of statistical indicators, covering in particular: The number and structure of entrepreneurs; "Demography“ of the companies (the number of newly registered enterprises, their birth rate, their mortality rate etc.); The number of newly created jobs. The characteristics of the SME sector is a relatively fair reflection of the entrepreneurial activity in an economy!!! SMEs’ Definitions: Micro-Enterprise: Nr. of Employees < 10 Turnover ≤ 2 mil. Euro or Balance Sheet Total ≤ 2 mil. Euro Small Enterprise: Nr. of Employees < 50 Turnover ≤ 10 mil. Euro or Balance Sheet Total ≤ 10mil. Euro Medium Enterprise: Nr. of Employees < 250 Turnover ≤ 50 mil. Euro or Balance Sheet Total ≤ 43 mil. Euro Types: Autonomous/ Independent Enterprise (owns50%) Legal forms a business can take in Romania (I): I. Businesses with NO juridical personality: -Authorized Physical Person (P.F.A.) (1 person) -Individual Enterprise (I.I.) (1 person) -Family Enterprise (I.F.) (minimum 2 persons.)/ OUG 44/2008 II. Trading Companies (L 31/1990) Limited Liability Firm (S.R.L.) – maximum 50 persons/ partners; – Social capital of minimum = 200 Lei; Joint Stock Company/ Incorporated Company (S.A.) - Minimum 2 persons/ shareholders; - Social capital of minimum = 90.000 Lei; General Partnership Company with Unlimited Liability of the Partners (SNC) – minimum 2 persons/ partners; – No specific social capital required; Limited partnership Company (SCS) – minimum 2 persons; – No specific social capital required; Limited by shares partnership company (SCA) - Minimum 2 persons/ shareholders; - Social capital of minimum = 90.000 Lei;  Legal forms a business can take in Romania (II): III. Economic Interest Group (GIE) - minimum 2 partners/ associates; - Formed for a determined period of time; European Economic Interest Group (GEIE) - Nr of partners/ associates: 2-20 persons, from 2 different states; - Formed for a determined period of time; IV. Cooperative Companies: L 161/2003 - minimum 5 partners/ associates; V. Agricultural Companies - unlimited & variable nr. of associates; - variable social capital.  Did you know?! In the business world, the "unicorn" is the private company valued at over 1 billion dollars! The term was chosen especially to signal the rarity of such companies. At the top of the list (March, 2024) of >1200 "unicorns“ start-ups globally are: SpaceX/ 210 bil.$ (USA); Stripe/ 50 bil.$ (USA); Instacart/ 39 bil.$ (USA); Databricks/ 38 bil.$ (USA); Juul/ 38 bil.$ (USA); Byte Dance (TikTok owner)/ 200bn.$ (China); Ant Group/ 120 (China); Shein/ 65 (China).The first Romanian "unicorn" is UiPath/ IT (2015) along with Paval Holding, Banca Transilvania, Grupul Bitdefender, Superbet, Altex Ro, Chimcomplex. https://www.mediafax.ro/economic/romania-are-sapte-unicorni-care-provin-din-retail-industrie-tehnologie-si-servicii- 21362493. The exotic name of – “gazelle” company - is given to a company that, starting from a basic income of at least $ 100 thousand. It should register an increase of at least 20% of the income in five consecutive years! That is usually the case of businesses in the fields of high technology ("high tech"). Apple, Dell, Yahoo, Amazon, etc. were, named “gazelles”!  The “Small Business Act” for Europe (SBA/ 2008) It has served as the framework for SBA’s 10 principles: guiding SME policy-making, Entrepreneurship; based on a set of voluntary ‘Second chance’; policy recommendations centered on 10 principles! ‘Think small first’; ‘Responsive The overall objective of the SBA is to administration’; reduce administrative burdens, State aid & public foster entrepreneurship, improve procurement; access to finance and markets, and overall, to improve the conditions Access to finance; for SMEs to develop and grow. Single Market; Skills & Innovation; Environment; and Internationalization.  Coordinates of the SMEs sector in the EU https://www.statista.com/statistics/878412/number-of-smes-in-europe-by-size/ SMEs sector is the backbone of Europe's economy. SMEs bring innovative solutions to challenges like climate change, resource efficiency and social cohesion and help spread this innovation throughout Europe’s regions. They are therefore central to the EU’s twin transitions to a sustainable and digital economy. They are essential to Europe’s competitiveness and prosperity, industrial ecosystems, economic and technological sovereignty, and resilience to external shocks. There are 26.1 mil. SMEs (Sept., 2024), representing > 99% out of all businesses; (out of the total: 24,51 mil. Micro/ 93.9%; 1,38 mil. Small/ 5.29%; 0,210 mil. Medium/ 0.81%); SMEs are employing aprox.100 mil. people (FTE – Full Time Equivalent Employees) (>65% of the total); SMEs have contributed with 4.1 tril. Euros (56.8%) of the Gross Value Added (GVA), in all non-financial industries. Density/ 1,000 inhabitants (>15y old): EU an average of 57; Czech Republic has the highest density, with 115Romania an average of 29; Portugal -98; Slovakia – 94.  SMEs… in Romania (2023) 805 thousand of active SMEs No. of newly registered (= 99,7% of the total + 430,000 firms: AFP/PFA); 2024: >150,000 (2/3 = SRL) > 35,000 exits. 2023: 147.026 Approx. 4 mil. employees/ 66% 2022: 148.294; (out of 5.764 mil. active employees); Out of which (2023): Bucharest – 31.091 (32.1%) 56.3% - contribution to the Cluj - 7921 Gross Value Added (GVA), in Ilfov – 7059 all non-financial industries. Covasna 935/ Tulcea 937/ Mehedinti 966  Intrapreneurship/corporate entrepreneurship Some companies stifle innovation because there Examples of organizations that often isn’t room for people allowed their employees ideas to explore outside of their come to light and had great job description. benefits (https://www.vocoli.com/blog/may-2014/10- inspiring-examples-of-successful-intrapreneurship/): Lockheed Martin; The original word Texas Instruments; “intrapreneur” was coined Gore-Tex fabric; by G. Pinchot III (1978). It Google; was later popularized by Shutterstock. Steve Jobs (1985): “The Macintosh team was what is commonly known as intrapreneurship… a group of people going, in essence, back to the garage, but in a large company.”  The Need for Corporate Entrepreneurship Rapid growth in the nr of new and sophisticated competitors; Sense of distrust in the traditional methods of corporate management; An exodus of some of the best and brightest people from corporations to become small business entrepreneurs; International competition; Downsizing of major corporations; An overall desire to improve efficiency and productivity Efforts to stimulate the SMEs sector are based on sound economic and social motivations… SMEs are: 1. Contributing to a competitive environment; 2. Generating new jobs and lowering the fluctuations in the labor market; 3. Proving a greater sensitivity to market needs, thus better matching of supply to demand; 4. Are creating opportunities for the appropriate technologies’ development and adaptation; 5. Harnessing market niches that are not profitable for large companies, often accompanied by a more effective combination of the production factors; 6. Providing a better use of secondary resources, that would otherwise remain unused; providing a more efficient use of local resources; 7. Acting as a specialized supplier of spare parts, assemblies, and services for large enterprises (generally through subcontracting), usually at lower prices, thus positively influencing the profitability of large firms; 8. Encouraging investments having as main source the household savings (family, relatives, friends), or other funds that would otherwise be unproductive; 9. Contributing to a better distribution of the power in society, in general, and economic power (in particular) with positive long term effects on the social and political stability. Researching the Entrepreneurial Phenomenon - National & International Coordinates-  Entrepreneurship & SMEs Sector: the Statistics’ “Language” National Level Statistics: – The National Trade Register Office/ Oficiul National al Registrul Comertului (ONRC)/ www.onrc.ro ; – The National Institute of Statistics/ Institutul National de Statistica (INS)/ www.insse.ro ; – Ministry of Public Finance/ Ministerul Finantelor Publice (MFP)/ www.mfinante.ro – List of Romanian Companies: www.listafirme.ro – Ministry of Economy, Entrepreneurship and Tourism (Stefan Radu OPREA)/ Start Up Nation (nonrefundable funds up to 200.000 lei/ SME) E.U. Level Statistics: - Eurostat http://epp.eurostat.ec.europa.eu/; Structural Business Statistics/ SBS); International Level Analyses: – The Organization for Economic Cooperation and Development (OECD) (www.oecd.org ). – World Bank (www.worldbank.org / Doing Business Index);  Data Bases/ Studies/ Reports/ Web sites: Document type: Ec. Journals/ Official Statistics: A. At National Level: Oficiul National al Registrul www.onrc.ro Statistics Comertului (ONRC) National Institute of Statistics/ www.insse.ro Data Bases Institutul National de Statistica (INS) Ministry of Economics, http://www.imm.gov.ro/ Statistici/programe Entrepreneurship and Tourism http://www.aippimm.ro/ http://startup.gov.ro/ Ministry of Finance (MFP) www.mfinante.ro Statistici/ studii B. At the EU level: Eurostat (Structural Business http://epp.eurostat.ec.europa.eu/ Statistici/ baze de Statistics/ SBS); date C. At the International Level: Organizația pentru Cooperare și www.oecd.org Rapoarte periodice Dezvoltare Economică (OECD) Banca Mondială (World Bank) www.worldbank.org Doing Business Index Global Entrepreneurship Rapoarte anuale Monitor (G.E.M)  World Bank/ “Doing Business” 17th Annual Report (2021) https://www.doingbusiness.org/ The last Doing Business Report 2023, a World Bank Group flagship publication, measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies. Doing Business measures regulations affecting 10 areas of the life of a business: 1. Ease of starting a business (procedures, time, costs), 2. (Employing workers/ 2023) 3. Dealing with construction permits 4. Getting electricity, 5. Registering property, 6. Getting credit, 7. Protecting minority investors, 8. Paying taxes, 9. Trading across borders, 10. Enforcing contracts 11. Resolving insolvency. 1+2 = OPENING A BUSINESS; 2+3+4 = GETTING A LOCATION; 6=7 = ACCESING FINANCE; 10+11 = OPERATING IN A SECURE BUSINESS ENVIRONMENT 1.Top 5, countries: New Zeeland; Singapore; Hong Kong (China); Denmark; South Korea! Doing Business also measures labor market regulation, which is not included in this year’s ranking.  WB/ Doing Business/ Romania Overall score 55/ (1-190) Starting a business (rank) 91, Dealing with construction permits (rank) 147, Getting electricity (rank) 157, Registering property (rank) 46, Getting credit (rank) 25, Protecting minority investors (rank) 61, Paying taxes (rank) 32, Trading across borders (rank) 1, Enforcing contracts (rank) 19, Resolving insolvency (rank) 56.  Global Entrepreneurship Monitor (G.E.M.) Founded in 1997 by Babson College (Massachusetts, USA) & London Business School. GEM develops, annually, the most extensive and complex longitudinal study on entrepreneurial activity worldwide! The 2023/2024 GEM Report – “25 years and growing”: Is the result of data processing from 46 countries, representing 60% of current world population and 70% of global GDP; It is based on a representative sample (data gathered by national teams of experts). The analysis is based on the 3 groups of countries: – Economies (A) with a Gross Domestic Product (GDP) per capita of > 50,000$; – Economies (B) with a GDP per capita between 25,000 to 50,000 $ (/ including Romania); – Economies (C) with a GDP per capita of < 25,000$. The Pandemic hit hardest those who could least afford it!  Promoting entrepreneurship (E) and entrepreneurial education (EE) The E & EE promotion has become a strategic objective of the public policies for growth and employment in Europe; EE) is a determining factor in this process, having a positive impact on: – the young generation entrepreneurial spirit’s enhancement, – the attitude and willingness to promote private initiatives and, finally, – the role played in the economy and society; E can transform ideas into action, involving creativity, innovation, risk taking, project management potential and goals achievement; European Commission (EC) adopted a series of measures to empower entrepreneurial culture, entrepreneurial skills, especially among young people.  EU/EC Study: Effects and impact of entrepreneurship programmes in higher education The study was conducted among graduates of European higher education institutions; the fundamental conclusion was that: "Entrepreneurship Education (EE) - has a positive impact on young people's mental setting, on their entrepreneurial intentions, their chances of employment and finally their role in society and the economy"! Entrepreneurship (E) refers to an individual's ability to transform ideas into practical actions! EE must achieve the following objectives: - Improving the entrepreneurship mental setting of youth, in order to enable them to become more creative and self-confident, whether they will decide to decide to be self-employed, employers or employees. - Encouraging innovative start-ups; - Increasing the role of youth in the society and the economy. The Key Entrepreneurial components are: Entrepreneurial attitude (Initiative, Risk acceptance, Efficacy, Need for self- realization, structured behavior); Entrepreneurial skills (Creativity; Analytic Skills; Motivation; Interrelatedness network / networking, Adaptability); Knowledge (Understanding the role of entrepreneurs, Entrepreneurial knowledge / on setting up a new business and manage it).  “EntreComp” QUESTIONNAIRE (the following 2 slides/ table split into two components!) IT IS A SELF-ASSESSMENT TOOL OF A PERSON’S ENTREPRENEURSHIP COMPETENCE measured along 3 DOMAINS and 15 ASSOCIATED SKILLS Simply mark with - X - the level that you consider to be at the time of self-assessment (T0 / T1)! There are 3 basic levels: 1. basic; 2. intermediate 3. advanced) “EntreComp” was developed at the European Union’s level, by a team of experts. Source: Translated and adapted from - Bacigalupo, M. et al., 2016. EntreComp: The Entrepreneurship Competence Framework  Creating S.M.A.R.T. Goals/ Objectives: Specific; Measurable; Attainable; Realistic; Timely. Specific: A specific goal has a much greater chance of being accomplished than a general goal. EXAMPLE: A general goal would be, “Get in shape.” / “Join a health club and workout 3 days a week.” *Who: Who is involved? *What: What do I want to accomplish? *Where: Identify a location. *When: Establish a time frame. *Which: Identify requirements and constraints. *Why: Specific reasons, purpose or benefits of accomplishing the goal. Measurable - Establish concrete criteria for measuring progress toward the attainment of each goal you set. When you measure your progress, you stay on track, reach your target dates, and experience the joy of achievement; to determine if your goal is measurable, ask questions such as……How much? How many? How will I know when it is accomplished? Attainable – When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals. When you list your goals you build your self-image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them. Realistic- To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. Your goal is probably realistic if you truly believe that it can be accomplished. Timely – A goal should be grounded within a time frame. With no time frame tied to it there’s no sense of urgency. T can also stand for Tangible – A goal is tangible when you can experience it with one of the senses, that is, taste, touch, smell, sight or hearing.