RDAsRDAs and and SMEsSMEs, EURADA , EURADA ReviewReview

İzleme ve Değerlendirme Birimiİzleme ve Değerlendirme Birimi

Orta Karadeniz Kalkınma Ajansı

The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.

— Robert E. Lucas, Jr. *(1988)

* http://en.wikipedia.org/wiki/Robert_Lucas,_Jr.

CONTENTSCONTENTS

i. Analysing the enterprises’ needs

ii. Support services to SMEs

iii. Financing SMEs at regional level

Entrepreneurshipiv. Entrepreneurship

v. Stimulating internationalisation

vi. SME support system in Turkey

vii. SMEs in EU and Turkey

viii. Recommendations

IntroductionIntroduction

i. The raison d’etre of a regional development agency is itscontribution to the creation of an environment that is favorubleto regional economic growth.

ii. … the action of the regional development agencies can only be ii. … the action of the regional development agencies can only be efficient if it is based on the regional analysis of the SME’s trueneeds and the businessman’s true motives.

iii. There is often a sizeable difference between an SME’s obvious, expressed and true needs.

Analysing the enterprises’ Analysing the enterprises’ needs needs

i. There is no easy way of describing what an SME is and to matchneeds to specific programmes.

ii. The needs of enterprises with less than 50 employees arefundamentally different from those of enterprises employing upfundamentally different from those of enterprises employing upto 250 persons.

iii. The result is that different instruments must be implementedaccording to the size of enterprises.

iv. The SMEs do have individual needs of support to establish or to grow.

Analysing the enterprises’ Analysing the enterprises’ needs needs

i. The needs for any kind of company are COMPETENCE-CAPITAL-CONTACTS.

ii. The needs that are familiar to manager(mostly owner) verymuch in the short run and the awareness for the long run is not much in the short run and the awareness for the long run is not very strong.

iii. Consequently , the SME demands services and support for doingbetter business in the short run and there is a market supply in that area.

iv. The role of the public sector must be to fill the gaps of the market, interventions of that sector must aim at creating newservices by the SMEs.

Analysing the enterprises’ Analysing the enterprises’ needs needs

Resource : EURADA

Analysing the enterprises’ Analysing the enterprises’ needs needs

i. Therefore, pilot projects and dissemination projects arenecessary in order to open the market for private sector.

ii. Moreover venture capital markets (business angels, seed capitaland regional venture capital) are not sufficiently developed.and regional venture capital) are not sufficiently developed.

Support services to SMEsSupport services to SMEs

i. …the multiplicity of intermediate organisations

ii. We have the undeniable advantage of adressing all companies in our geographical area whereas most other intermediaries veryoften act only on behalf of their members.often act only on behalf of their members.

iii. …multidisciplinary approach, morever executing regional publicpolicies at regional level ..

iv. A tendency among development agencies consist in focusing in their geographical area of competence. Increasing cooperation to offer internationalisation services to SMEs ?

Support services to SMEsSupport services to SMEs

Notion of support for companies include 7 main categoriesaccording to EURADA members;

i. Informationi. Information

ii. Awareness

iii. Training

iv. Advice

v. Assistance/hands-on management

vi. Financing

vii. Enterprise real estate

In order for these services to SMS to be efficient, they have to be complementary.

Support services to SMEsSupport services to SMEs

Support services for companies can be implemented using fourdifferent but complemantry approaches;

i. Global

ii. Sectoralii. Sectoral

iii. Common to certain types of businesses

iv. Individualised

It is becoming clear that range of services to SMEs has to be specialised and adjusted to company life-cycles..

Creation-Start-up-Growth-MaturityTransmission,Clustering,Diversification

Support services to SMEsSupport services to SMEs

Creation

Awarenessi. Awareness

ii. Training

iii. Business plan consultancy

iv. Financial consultancy

v. Enterprise real estate

vi. Assistance

Support services to SMEsSupport services to SMEs

Start-up

Financial engineeringi. Financial engineering

ii. Management and marketing consultancy

iii. Enterprise real estate

iv. Assistance

Support services to SMEsSupport services to SMEs

Growth

Awareness of internationalisationi. Awareness of internationalisation

ii. Financial engineering

iii. Advice

iv. Training

v. Assistance

Support services to SMEsSupport services to SMEs

Transmission Clustering Diversification

Awarenessi. Awareness

ii. Training

iii. Business plan consultancy

iv. Financial consultancy

v. Assistance

Support services to SMEsSupport services to SMEs

Resource : EURADA

Support services to SMEsSupport services to SMEs

i. In order to be credible and to increase their visibilitydevelopment agencies should become professionals (ISO 9000 Certification ?) and have established partnerships with Certification ?) and have established partnerships with specialised bodies

ii. In the short run it will be certainly usefull to invest in awarenessand consultancy in emerging fields (e-commerce, economicintelligence, venture capital funds etc.)

iii. One of the useful interventions of the intermedaries is reinforcement of business cooperation both at regional level(clusters, industrial districts, value chain) and transnational level.

Support services to SMEsSupport services to SMEs

We can present the following advantages in this field;

i. Reaching the local business community

Learning local business dynamicsii. Learning local business dynamics

iii. Identifiying organizational resources and local experts

iv. Cultivating personel relationships

v. Screeming and assessing potential partners

vi. Forming a match with a company

vii. Supporting the companies after the relationship begins.

FinancingFinancing SMEsSMEs at at regionalregionallevellevel

Agencies invest more and more in the offer of services linked to the notion of financial engineering. Depending on the national legislation, RDAs manage or own shares of financial products such as:

i. Regional business angel networksi. Regional business angel networks

ii. Guarantee funds

iii. Start-up capital funds

iv. Regional venture capital funds

v. Factoring enterprises

vi. Micro-credits

vii. Loans without interests and/or guarantee

viii. Loans for women entrepreneurs

ix. Transnational venture capital funds

FinancingFinancing SMEsSMEs at at regionalregionallevellevel

Agencies need to develop a supply chain concept in the field of SME financing ;

i. Banks divide markets into types of customers instead of intofinancial productsfinancial products

ii. A region needs a true infrastructure to financially supportcompanies along the same lines as investment in infrastructure

iii. Advice on business plans and good practices in theirrelationships with banks.

EntrepreneurshipEntrepreneurship

Traditionally, development agencies have tackled entrepreneurshipfrom the following angles:

i. Economic: … creating businesses in commercial sector

ii. Economic development: … part of an overall regionalii. Economic development: … part of an overall regionaldevelopment agency.

iii. Social/cultural: to increase the awareness of the population

iv. Financial: by introducing various forms of financial engineering

EntrepreneurshipEntrepreneurship

Start-up cycles can be summarised as follows:

i. Awareness of the businessman spirit

ii. Identification of a vocation to be a businessman

Validation of the company concept/projectiii. Validation of the company concept/project

iv. Materialisation of a desire to create a company

v. Training and advice

vi. Own funds/outside financial support for the company

EntrepreneurshipEntrepreneurship

In practice development agencies can undertake projects aimed at:

i. Stimulating entrepreneurship in their region, including with children, teenagers, as well as graduates or undergraduates

ii. Training and advising would be entrepreneursii. Training and advising would be entrepreneurs

iii. Helping them formulate their business plan

iv. Subsidising start-ups

v. Seeking to offer venture capital

vi. Supporting take-overs, transfer of ownership when heads of companies are close to retirement

vii. Fosttering unniversity and other spin-offs

viii. Analysing needs that are not met and determining where thereis scope for new business activities

EntrepreneurshipEntrepreneurship

In practice development agencies can undertake projects aimed at:

i. Stimulating entrepreneurship in their region, including with children, teenagers, as well as graduates or undergraduates

ii. Training and advising would be entrepreneursii. Training and advising would be entrepreneurs

iii. Helping them formulate their business plan

iv. Subsidising start-ups

v. Seeking to offer venture capital

vi. Supporting take-overs, transfer of ownership when heads of companies are close to retirement

vii. Fosttering unniversity and other spin-offs

viii. Analysing needs that are not met and determining where thereis scope for new business activities

EntrepreneurshipEntrepreneurship

Key actions required at a regional level to foster creation of start-upsare:

i. Providing an intelligencce service on new business opportunities, particularly on high growth areas through research, internationalparticularly on high growth areas through research, internationalworkshops etc.

ii. Ensuring that emerging skills match emerging opportunities

iii. Promoting the idea of enterprise to groups and individuals with high skills and a capacity for entrepreneurship

iv. Providing a better service to emerging entrepreneurs by way of advice, targeted informatio, management and technology services

v. Ensuring funding is available at the level required

EntrepreneurshipEntrepreneurship

In order to create a strategic and coherent approach we can use the methodology successfully applied in Regional Innovation Strategyprogramme:

A bottom-up approach: it will be demand driven based on A bottom-up approach: it will be demand driven based on dailogue with all the pprincipal actors

A regional approach. A consensus between all of the regionalactors which takes into account the national and internationalcontext will be necessary

A strategic approach: both short and medium term actions will be included.

StimulatingStimulating thetheinternationalisationinternationalisation of of SMEsSMEsThe concept of internationalisation currently covers more than a single sale:

A. Commercial/Financial

- Plain exporting- Agent and distributor

- Franchising- Franchising

- Co-contracting

- Joint venture

- Acquisition or participation

B. Industrial

- Joint production

- Subcontracting

- Joint tendering

- Licence

-Techonogical development

- Techonology tranfer

C. Inward investment or strategic relocation

StimulatingStimulating thetheinternationalisationinternationalisation of of SMEsSMEsThe concept of internationalisation currently covers more than a single sale:

A. Commercial/Financial

- Plain exporting- Agent and distributor

- Franchising- Franchising

- Co-contracting

- Joint venture

- Acquisition or participation

B. Industrial

- Joint production

- Subcontracting

- Joint tendering

- Licence

-Techonogical development

- Techonology tranfer

C. Inward investment or strategic relocation

StimulatingStimulating thetheinternationalisationinternationalisation of of SMEsSMEs

A vast range of services can be offered:

i. Information (market/sector info) and promotion (organisingcontact missions ) services

ii. Training services (speecific seminars, establishing contacts viaii. Training services (speecific seminars, establishing contacts viaexporters’ clups)

iii. Custom tailored services

iv. Specialist collective services

StimulatingStimulating thetheinternationalisationinternationalisation of of SMEsSMEs

Selecting enterprises for internationalisation:

i. Types of enterprises (the winners, the survivors and local market suppliers)

ii. Attitudes towards internationalisation (the complacent, theii. Attitudes towards internationalisation (the complacent, theinterested and the fearful)

StimulatingStimulating thetheinternationalisationinternationalisation of of SMEsSMEs

Resource : EURADA (Example of Scottish Trade International)

SME SME supportsupport systemsystem in in TurkeyTurkey

Finance Advice Training RTD Innovation Internationalisation

KOSGEBDTMHAZİNE

X

X

X XX

HAZİNETÜBİTAKSAN-TEZKalkınmaAjanslarıTTGV

X

XX

XX

X

XX

X

Not: Sol sütundaki kurum ve destek programı adları gözden geçirilebilir. Ulusal inovasyon sistemi incelemelerinde ve bunun bölgesel yansımaları analiz edilirken her bir kurumun veya destek aracının/programının bütün sistem içerisinde yerinin “net” olarak tanımlanması faydalı olacaktır. Bu açıklama bir sonraki “slide” için de geçerlidir.

SME SME supportsupport systemsystem in in TurkeyTurkey

Creation Start-up Growth Internationalisation

KOSGEBDTMHAZİNETÜBİTAK

X X X

XX

XX

TÜBİTAKSAN-TEZKalkınmaAjanslarıTTGV X

X

XX

X

SMEs in EU and TurkeySMEs in EU and Turkey İşletme Sayıları İstihdam Yaratılan Katma Değer

TR AB-27 TR AB-27 TR AB-27

Sayı Pay Pay Sayı Pay Pay Milyar € Pay Pay

Mikro 2 150 529 %92.8 %91.8 3 518 642 %38.1 %29.7 51 %12.7 %21.1

Küçük 151 034 %6.5 %6.9 2 847 259 %30.8 %20.7 93 %22.9 %18.9

Orta 12 157 %0.5 %1.1 1 181 237 %12.8 %17.0 64 %15.7 %18.0

KOBİ 2 313 720 %99.9 %99.8 7 547 138 %81.7 %67.4 208 %51.3 %57.9 KOBİ 2 313 720 %99.9 %99.8 7 547 138 %81.7 %67.4 208 %51.3 %57.9

Büyük 2 475 %0.1 %0.2 1 693 879 %18.3 %32.6 197 %48.7 %42.1

Toplam 2 316 195 %100.0 %100.0 9 241 017 %100.0 %100.0 405 %100.0 %100.0

Kaynak: SBA Fact Sheet, DG Enterprise and Industry, European Commission, 2008.

RecommendationsRecommendations

i. “All animals are equal but some animals are more equal thanothers”* : Some SMEs are different from others!

ii. The role of the public sector must be to fill the gaps of the market. market.

iii. “Aggregate otherwise separate interventions to add value.” **

* Quoted from G. Orwell.

**Quoted from OECD LEED Principles for development agencies.

RDAsRDAs and and SMEsSMEs, EURADA , EURADA ReviewReview

İzleme ve Değerlendirme Birimiİzleme ve Değerlendirme Birimi

Orta Karadeniz Kalkınma Ajansı