The Challenges of SME Business Transfers: The Evidence from Croatia and Finland

Abstract

Background and Purpose: In the life cycle of a firm, business transfer represents the critical stage of development. Underestimating the complexity and longevity of this process can have negative implications for firms, their owners and wide network of stakeholders. The aim of this paper is to compare the attitude towards business transfer of entrepreneurs aged 55 and more in Croatia and Finland and provide policy recommendations for improvement of the national business transfer ecosystems. Methodology/Approach: Both surveys targeted entrepreneurs aged 55 and more using the same questionnaire, with some adjustments to Croatian business transfer ecosystem. Finish barometer was conducted through webbased survey among members of Federation of Finnish Enterprises. Survey in Croatia was conducted with combination of CATI and CAWI collection method by a professional data collection agency. Data collected was compared based on a demographic criterion, industry background, experience in business transfer, expected future of the company, support needed and biggest challenges. Results: The research results indicated a growing number of entrepreneurs in Croatia who will be interested in selling their firm once they withdraw from the business and less than expected family business successions. In Finland the most important challenges are related to business valuation and finding a successor or a buyer. Conclusion: For further development of business transfer ecosystem in Croatia it is recommended to focus on awareness raising activities, channels for matching sellers and buyers, promotion of takeover entrepreneurship and consultancy support for micro enterprises. In Finland results indicate the importance of investing continuous efforts in raising the effectiveness of the measures implemented.

Digital business research for small and medium-sized enterprises: The case of Ukraine

“…Many researchers believe that a high level of innovation (technological creativity, the emergence of commercial ideas and projects) is associated with the spread of digital technologies (Alpeza et al, 2018;Ruggieri et al, 2018), such as cloud computing, data analysis, and enterprise resource planning software (Ogrean, 2018). Companies that use Big Data are more likely to innovate and increase productivity by 5-10% (Perko & Ototsky, 2016).…”

“…According to empirical research, the transition to the digital economy and the increasing role of business platforms are driving innovation for small and medium-sized businesses, primarily within the value proposition of the business model (Alpeza et al, 2018). Analytical findings from a sample of small businesses show that connecting to business platforms creates advantages for small businesses such as promotion through network effects and communities of users/service providers, global business scaling, and opening up new sources of value creation (Ruggieri et al, 2018).…”

Ageing Entrepreneurs and Business Transfer Challenges in Croatia

“…Other parts of the business transfer ecosystem, as identified by Van Teeffelen (2010), namely sellers, buyers, financial institutions, advisors, market and economic conditions and tax regulations, according to Viljamaa et al (2015), are still undeveloped in Croatia, representing more an obstacle than the supporting factor in business transfer processes. Lack of adequate sources of financing and government subsidy programs for business takeover, scarcity of professional advisory expertise related to business transfer for micro and small business owners and lack of online matching platforms that would facilitate the establishing of contacts among sellers and buyers of SMEs represent the biggest differences of the Croatian business transfer ecosystem compared to the situation in more developed European countries (Alpeza et al, 2018).…”

Relevance of Business Transfers as a Fundamental Pillar of Resilient Economies and Outline of Current Development Based on a Recent Survey

“…Some scholars even argue that support of successful business transfers may be even more important for stable and sustainable economic growth than those of start-ups (Van Teeffelen, 2012). This is due to the significantly higher survival, turnover and profit rates of transferred businesses compared to start-ups, estimated between 35-50% for start-ups compared to over 90% for transferred businesses (Alpeza et al, 2018;Battisti & Williamson, 2015;Varamäki et al, 2014;Viljamaa et al, 2015a).…”

“…The European Commission started paying attention to business transfers in 1994 and has been issuing recommendations and guidelines both for its member states' governments and small and medium size enterprises (SMEs), in general ever since (Alpeza et al, 2018;Bastié et al, 2018;Deschamps et al, 2020). Particularly in the face of a failure rate of just over 30%, it is vital for national governments to provide the best possible support for business transfers in the best possible economic and political environment (European Commission, 2013in Deschamps et al, 2020.…”