European SMEs May Be Outperforming Those Based In The UK

UK-based small and medium-sized enterprises (SMEs) are being outperformed by their European business counterparts, according to new research.

Accountants and business advisory firm Mazars has released the results of an analysis into the market performance of small businesses throughout the European Union, where there are nearly 21 million SMEs overall.

Poole-based Mazars partner David I'Anson spoke to the Bournemouth Echo about the study's results, explaining that smaller companies based in Sweden and Germany were performing strongest in the EU, due to their "favourable" economic conditions.

In comparison, France and the Netherlands-based SMEs were rated as average, while those in Spain, Portugal, Ireland and the UK were all ranked as weak, indicating that they are being significantly outperformed by some of their European counterparts.

Mr I'Anson commented: "While biggest is not always best, our analysis suggests that size does matter and having the right critical mass for the specific competitive and performance challenges of each business is absolutely crucial. In some companies, it will not be possible to maintain market position without being significantly bigger."

He suggested that to increase their performance rating, SMEs would do well to create safety buffers to help to secure higher levels of profitability and assist in retaining cash in tougher economic time. The Mazars partner also recommended that smaller businesses should adopt a prudent attitude to borrowing and try to extend their reach as much as possible.

Mr I'Anson explained that those who do not expand beyond local or regional markets must understand they are putting themselves at a greater level of risk.

Mazars' research also noted that 99.8 per cent of all enterprises in Europe are classed as SMEs, with no more than 250 employees. This means two-thirds of the entire European workforce is employed by such a firm.

However, 92 per cent of these are deemed to be microbusinesses, with ten or fewer members of staff.

Expert Opinion

We know how important SMEs are to the UK economy a whole and although we have heard many reports about how well the sector is doing, these findings are a timely warning sign which highlights that we cannot afford to be complacent. <br/> <br/>“It was interesting to note that the report highlighted that size gives companies an advantage. SMEs must be given the support required to grow their businesses, but we shouldn’t lose sight of the benefits of being smaller and ensure that relevant business leaders are encouraged to take advantage of these. <br/> <br/>“We agree SMEs shouldn’t just be focussed on their local market just because they are small. Companies in other countries within the EU have shown what can be achieved by looking at growth opportunities overseas and we would also urge companies here to look at these and seek the necessary professional advice before they do so.” <br/> Steven Beahan - Partner