German SMEs are the backbone of the economy and a key driver of innovation and growth. But the challenges of the coming years are too great to rest on their laurels. We take a look at how the “NextGen SMEs” can prepare for the future and what steps are necessary to do so.
Promoting innovation and driving digitalization
Innovation is the key to sustainable success. SMEs should therefore increase their focus on creating innovative products and services in order to meet the changing needs of their customers. Collaboration with start-ups and research institutions can also play an important role here. Policies are needed that create the right framework and incentives to facilitate investment in research and development.
Digitalization offers enormous opportunities for SMEs. Companies should therefore actively drive forward the digital transformation by optimizing their processes, using new technologies, and developing digital business models. This often requires an adjustment of the corporate culture, which stands for openness and promotes knowledge building.
The expansion of modern infrastructure, especially in the area of digital networking, is crucial for promoting digital transformation and ensuring its success. Here, too, there is an urgent need for action to support investment in digital infrastructure and innovation.
Improving the regulatory environment and reducing bureaucracy
A transparent and stable regulatory environment is crucial to ensuring long-term planning security and facilitating investment. To strengthen competitiveness, policymakers must improve conditions for businesses by, for example, reducing bureaucratic hurdles, facilitating access to financing, and promoting free trade. We need structural reforms to generate long-term growth. This will also enable us to regain momentum, decisiveness, and clarity.
Sustainable economic policy through secure, affordable energy and performance incentives
Significantly higher investments are needed to meet the challenges of the dual transformation. This makes it all the more important to take sensible measures to promote sustainable economic policy in order to achieve long-term sustainability goals and strengthen the competitiveness of the economy. Businesses and individuals depend on a secure, affordable energy supply. Higher energy costs compared to other countries around the world pose a major challenge. So do demographic change and the shortage of skilled workers in certain industries. If we look beyond the EU’s borders, we see that people work less in the EU than elsewhere. Incentives to increase employment would be an important lever.
So what can we do?
“Without a change in mindset and self-expectations, we don’t stand a chance.”
Stefan Fritz, entrepreneur, investor, blogger, and author with clear positions, points out concrete ways in which small and medium-sized businesses could be more innovative: impact entrepreneurship as a new aspiration and incentive.
The future viability of small and medium-sized enterprises requires the commitment of the companies themselves, active support from national governments, and close cooperation at the European level. In order to increase its growth potential and compete globally, Europe must bring about a genuine turnaround. It needs a change of perspective and our determination to take action.
Germany and Europe are well positioned. They have a strong entrepreneurial backbone, sustainable business models, committed founders, educational and research institutions that are respected beyond their borders, and solid investors and financiers. Opportunities lie in growing high-tech industries such as the digital economy, which we are focusing on for the future with our PRIMEPULSE portfolio companies and partner network.