Action plan for entrepreneurship

A Community action plan is proposing a series of measures to promote entrepreneurship in order to help entrepreneurs fully realise their ambitions and provide them with a business climate conducive to entrepreneurship. For, although 47% of Europeans express a preference for self-employment, only 17% actually realise their ambitions.

ACT

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 11 February 2004 entitled "Action Plan: The European agenda for Entrepreneurship" [COM(2004) 70 final - Not published in the Official Journal].

SUMMARY

Taking account of the reactions provoked by the publication of the Green Paper on Entrepreneurship, this action plan proposes a set of measures to promote entrepreneurship in order to help entrepreneurs fully realise their ambitions and provide them with a business climate conducive to entrepreneurship.

The Action Plan sets out the key objectives to be achieved by the European Union (EU) and Member States' policy-makers in the following five strategic areas:

Fuelling entrepreneurial mindsets

In order to inform as many people as possible about entrepreneurship, the Commission intends to foster entrepreneurial mindsets among young people through educational activities (such as presenting role models) in schools. The Commission calls upon the Member States to integrate entrepreneurship education into all schools' curricula, arrange awareness campaigns, offer training material, organise training modules for teachers and, together with business organisations, involve entrepreneurs in teaching programmes.

Encouraging more people to become entrepreneurs

According to the Eurobarometer, although 47% of Europeans say they prefer self-employment, only 17% actually realise their ambitions. Encouraging more people to become entrepreneurs means:

• Reducing the stigma of failure. A better understanding of business failure, including distinguishing between honest and dishonest bankruptcies, is needed in order to tackle the stigma of failure. The Commission will gather practical information on early warning signs of financial difficulties, reasons for failure, barriers to starting afresh and portraits of failed and restarted entrepreneurs. This information should be used in promotional campaigns or teaching courses and should help reduce the stigma suffered by failed entrepreneurs. The Commission is planning to prepare, together with an expert group, self-evaluation tests for entrepreneurs to assess their financial condition, including information on existing support and procedures aimed at rescue from failure;
• Facilitating business transfers. Given that it is possible to become an entrepreneur with a reduced risk of failure by taking over an established firm rather than building an enterprise from scratch, the EU should ensure that such enterprises do not close because of obstacles in the tax and legal environment or the lack of a successor. The Commission will foster implementation of the Recommendation on Business Transfers;
• Reviewing social security schemes for entrepreneurs. In order to determine more precisely the influence of social security on the attractiveness of entrepreneurship, the Commission is planning to present an overview of social security schemes for the self-employed and business owners, including their spouses and other dependants, and the effects of transition from one status to another. Based on this, the Commission will ask the Member States to define the areas in which they intend to take action and will then organise an exchange of experience involving external experts about how best to make progress.

Taking account of demographic ageing and the fact that the age group that is most active in setting up businesses (25-34 years) will be less visible in the future, the action plan calls on the Member States to react quickly.

Gearing entrepreneurs for growth and competitiveness

The EU has taken a whole range of initiatives to enable small and medium-sized enterprises (SMEs) to make the most of the opportunities offered by the knowledge-based economy. It has, for example, reserved 15% of the budget for the 6th Framework Programme for RTD for SMEs. It has also extended the scope of the Block Exemption Regulation to R&D aid granted to SMEs. Focusing more specifically on entrepreneurship, this Communication proposes:

• Providing tailor-made support for women and ethnic minorities. The Commission intends to promote access to top-class support and management training for entrepreneurs from all backgrounds, including groups with specific needs, such as women and entrepreneurs from ethnic minorities. In this context, the Commission plans to assist the national and regional authorities to address those areas where the needs of female entrepreneurs are still insufficiently met, notably access to finance and entrepreneurial networks, and to identify and evaluate policy measures with a view to identifying good practices to assist ethnic minority entrepreneurs;
• Supporting businesses in developing inter-enterprise relations. The Commission will reinforce the role of the European support networks 'Euro Info Centres (EICs)' and the 'Innovation Relay Centres (IRCs)' by involving them in promoting business cooperation and ensuring streamlined delivery of all EU-wide support services, not only by these networks, but also by the Business Innovation Centres (BICs).

As noted in the Green Paper on Entrepreneurship, too few fast-growing enterprises, or "gazelles", which are the key drivers of innovation and entrepreneurial dynamism, emerge in Europe. Entrepreneurial growth rarely happens by chance: entrepreneurs primarily seek inspiration from successful role models. The Commission will therefore seek good policy practices for disseminating as role models and providing suitable support to potential gazelles.

Improving the flow of finance

The Commission helps to improve the financial environment for enterprises, especially SMEs, through its financial instruments and by bringing together SMEs and financial players to allow the exchange of good practice and make for a better mutual understanding among SMEs and the financial community.

This Communication proposes creating more equity and stronger balance sheets in firms. The Commission intends to use its financial instruments for SMEs to facilitate entrepreneurial growth by stimulating the supply of both debt and equity finance. It also plans to intensify its actions to improve the availability of venture capital, "business angel" finance, and investments by private individuals ("micro-angels").

The Commission also plans to analyse the impact of State aid and remedy possible market failures in the provision of funding for SMEs, particularly young and growth-oriented ones.

Creating a more SME-friendly regulatory and administrative framework

The Internal Market has made the life of businesses, particularly SMEs, much easier. However, its completion remains a priority, as there are still a number of obstacles that need to be removed. The Commission is continuing to promote the involvement of SMEs in standardisation. It also wants more effective consultation of SMEs to allow them to give their opinions on new initiatives at an early stage of the decision-making process and about the adequacy of existing regulations and practices.

This Communication also proposes reducing the complexity of complying with tax laws. An enterprise operating in an intra-European environment has to comply with different national tax laws and regulations, which can become an obstacle to cross-border activities, particularly for SMEs. To simplify and reduce tax compliance procedures related to direct taxation, the Commission intends to launch a pilot scheme whereby SMEs can apply 'Home State Taxation'. This should lead to considerable savings and efficiency gains for qualifying SMEs.

For several categories of business-to-consumer transactions, application of VAT at the place of consumption means traders have to be identified and make returns and payments in every Member State where they carry out taxable transactions. This is burdensome for traders within the Internal Market. The Commission intends to propose a 'one-stop-shop' system to enable firms to deal with one single tax authority, in their own language, and to benefit from a single set of compliance obligations.

REPORT ON THE IMPLEMENTATION OF THE ACTION PLAN

In September 2006 the report prepared by the Commission (PDF) concluded that most of the initiatives presented in the action plan had in the meantime been implemented.

As an example, Community funding for measures to help businesses has increased, and access to funding has been made easier. Progress has also been made in the field of entrepreneurship education by offering people from a very young age a real chance to acquire basic commercial expertise and develop their personal qualities and general skills such as creativity, sense of initiative, self-confidence and sense of responsibility.

The action plan has thus proved to be a valuable tool in achieving the aim of promoting entrepreneurship. The initiatives to which it has given rise are now continuing under the Community SME policy.

See also

For more information on the action plan for entrepreneurship, please visit the website of the Directorate-General for Enterprise and Industry.

Last updated: 11.09.2007