Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
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<strong>of</strong> <strong>SME</strong>s are not informed at all <strong>of</strong> <strong>the</strong> opportunities presented by <strong>the</strong> Structural Funds, <strong>and</strong>only 1.7 per cent <strong>of</strong> <strong>the</strong> respondents answered “I am fully informed”. 45 per cent <strong>of</strong>respondents are informed to a low extent, <strong>and</strong> hardly 10.6 per cent – to a significant extent.3.2.5. TASKS FOR IMPROVEMENT AND FURTHER DEVELOPMENT OF <strong>SME</strong> SECTORSome <strong>of</strong> <strong>the</strong> weaknesses <strong>of</strong> <strong>the</strong> small <strong>and</strong> medium – sized enterprises are <strong>the</strong> following:• Low labor productivity – twice lower compared to big enterprises• Underused information technology <strong>and</strong> e-commerce• Poor quality <strong>of</strong> marketing strategies• Lack <strong>of</strong> specialization <strong>of</strong> small-scale production; lack <strong>of</strong> unique products• <strong>SME</strong>s are under active in <strong>the</strong> patenting <strong>of</strong> products <strong>and</strong> services• Powers <strong>and</strong> authority concentrated in top managers; underused pr<strong>of</strong>essionalmanagement staff• Insufficient organization <strong>and</strong> collective lobbyingAs we already pointed out, access to financial is a crucial factor for <strong>SME</strong>s start-up,current operations <strong>and</strong> growth. The money <strong>and</strong> <strong>the</strong> capital markets penetration in <strong>the</strong> area <strong>of</strong><strong>SME</strong>s is very low. This is proven by <strong>the</strong> data that almost half <strong>of</strong> <strong>the</strong> Bulgarian <strong>SME</strong>s have neverapplied so far for a loan (45 per cent <strong>of</strong> <strong>SME</strong>s). This may be caused ei<strong>the</strong>r by <strong>SME</strong>s owners’fears related to inadequate financial training, or by considerations <strong>of</strong> avoiding financial risk, inparticular with sole proprietors. This results in higher level <strong>of</strong> security, but also in lower returnon equity. It is indicative <strong>of</strong> <strong>SME</strong>s probability <strong>of</strong> success when applying for a loan is that hardly13 per cent <strong>of</strong> submitted projects are approved. According to ESTAT Agency surveys <strong>the</strong> majorreasons for <strong>the</strong> high number <strong>of</strong> rejections are: inadequate collateral, poor financial condition,lack <strong>of</strong> clarity in <strong>the</strong> project. Bank lending remains a costly <strong>and</strong> hardly accessible source formost <strong>of</strong> Bulgarian <strong>SME</strong>s. Also, <strong>the</strong>re is poor awareness <strong>of</strong> <strong>the</strong> opportunities provided byEuropean funds among <strong>SME</strong>s <strong>and</strong> lack <strong>of</strong> capacity to develop projects <strong>and</strong> draw money from EUfunds. Therefore, it is important to extend <strong>the</strong> rank <strong>of</strong> <strong>the</strong> alternative financial sources.Bulgarian <strong>SME</strong>s are still passive in penetrating <strong>the</strong> international market <strong>and</strong> dealing withcompetitive pressure. The reasons for this could be sought in <strong>the</strong>ir insufficient experience(many companies are comparatively new <strong>and</strong> are trying to establish <strong>the</strong>mselves on <strong>the</strong> internalmarket first as establishment on international markets takes time), as well as <strong>the</strong>ir productionorientation (most companies, especially small <strong>and</strong> micro-enterprises, are engaged in trade,services <strong>and</strong> construction, which are internal market oriented), <strong>and</strong> also in low competitivenessbecause <strong>of</strong> labor, material <strong>and</strong> energy intensive production <strong>and</strong> low technological level.The business community's general opinion is that <strong>the</strong> level <strong>of</strong> knowledge <strong>and</strong> skillsacquired by students throughout <strong>the</strong> system <strong>of</strong> education, including secondary vocationalschools, fails to meet <strong>the</strong>ir needs. It is both necessary to introduce more business-relateddisciplines in school curricula <strong>and</strong> use modern forms <strong>and</strong> methods <strong>of</strong> teaching <strong>and</strong> to ensure<strong>the</strong> active partnership between businesses <strong>and</strong> educational institutions in order to improve <strong>the</strong>quality <strong>of</strong> entrepreneurial education <strong>and</strong> training <strong>and</strong> create incentives for business start-up.Setting up <strong>and</strong> implementing a policy <strong>of</strong> targeted <strong>and</strong> efficient training in entrepreneurial skillsin Bulgaria represents a complex process which requires, among o<strong>the</strong>r things, pooling toge<strong>the</strong>r<strong>the</strong> efforts <strong>of</strong> all interested players: <strong>the</strong> state, educational institutions, <strong>the</strong> business world <strong>and</strong>students <strong>the</strong>mselves. The clear distribution <strong>of</strong> responsibilities for each <strong>of</strong> <strong>the</strong>se groups <strong>of</strong>stakeholders, <strong>and</strong> <strong>the</strong> establishment <strong>of</strong> an effective system to ensure <strong>the</strong>ir motivatedinvolvement are necessary <strong>and</strong> important prerequisites for a successful policy.There is a need to enhance <strong>the</strong> public-private partnership in providing information <strong>and</strong>consulting services to <strong>the</strong> small <strong>and</strong> medium-sized business. Organizations in support <strong>of</strong>business are not very popular <strong>and</strong> trustworthy among <strong>the</strong>ir members <strong>and</strong> beneficiaries; <strong>the</strong>39