A number of newsletters have been issued in relation to the INBETS project. These newsletters have provided an introduction to the INBETS project, emphazising diverse elements of the project, such as: Transfer Models, Finance Models, Educational Program and Political Strategy.

The Newsletters can be accessed here:

INBETS Newsletters
NEWSLETTER ONE: INBETS+: AN INTRODUCTION After the official conclusion of the INBETS project with its final conference on March 19th, 2021, a follow-up project called INBETS+ was officially kicked off with a workshop on 23rd March 2021. The main objective of the INBETS+ project is to strengthen the institutional capacity of existing small and medium-sized business (SME) support organisations for business transfers in the Baltic Sea region. Business support organisations who specialise in SMEs, and which SMEs are often members of, already offer valuable support to SMEs undergoing business transfers, however, they often lack the institutional capacity to offer the full support which is particularly needed by SMEs. The project aims to facilitate successful business transfers, increase innovation, and secure jobs by permanently strengthening the institutional capacity of existing business support organisations (BSOs). A big variety of partners from nine countries is involved in the project, namely the Baltic Sea Academy Baltic Sea Academy e.V (Germany), the Latvian Chamber of Commerce and Industry  (Latvia), the Estonian Chamber of Commerce and Industry, ECCI, (Estonia), the St. Petersburg Foundation for SME (Russia), the Association of SMEs support centers of the Kaliningrad region (Russia), the Foundation Drivhuset Skaraborg, Stiftelsen Drivhuset (Sweden), the IBC International Business College (Denmark), the Gdańsk University of Technology, Politechnika Gdańska (Poland), the Vytautas Magnus University (Lithuania), the Vocational Academy Hamburg, Berufsakademie (Germany) and the Satakunta University of Applied Sciences (Finland). The project specifically targets existing SME BSOs, primarily intermediaries like chambers, SME associations etc. and complementary business-oriented institutions of higher vocational education and training (academies, colleges), who, in addition to their qualification tasks assume the role of promoters of business transfers. These academies, which train entrepreneurs and already have cooperation with SMEs, supplement BSOs in some regions, and can close gaps in regional support. Nevertheless, BSOs play a vital role in facilitating business transfers, as they take on a number of tasks ranging from awareness raising, to establishing contact between owners and successors, assessing the company, aiding with financial options to offering consultations on various transfer models. While initial support for business transfers within BSOs is already available in Germany, Slovakia, Sweden and Finland, it is largely not available in Estonia, Poland, Lithuania, Latvia and Russia. Still, the number of retiring owners has dramatically increased over the last decade, thus making the need for business transfer support within BSOs more urgent than ever before. In the future, BSOs and respective training facilities must therefore be able to fulfil tasks, such as supporting SME business transfers, training their own staff to become transfer coaches, continuing to stay up to date with current developments and implementation of transfer models and tools, and enabling future entrepreneurs and successors to gain the required qualifications. The project partners will work together to develop and implement the missing tools, funding models and support programmes for specific target groups. The implementation of these will already begin during the project so that concrete promotion and consultations of SME business transfers is already taking place in all nine regions during the project period. A further important aim is to ensure a high level of sustainability in order to secure the continuation of the work after project end. For this reason, appropriate framework conditions, prerequisites and financing are being created in all regions, which are bindingly concluded in written agreements with all partners involved. On top of that, it is essential to also create the most supportive environment for the BSOs to do their work. This is done through the strengthening of SME business transfer policies and by expanding support of public administrations at regional and national levels, as well as extending and facilitating the financing of SME business transfers. In all countries, the promotion of new companies has been a political priority. However, business transfers have not been sufficiently dealt with and are generally not covered by funding programmes. Due to the aging of the current owners on the one hand and the decline in the number of young entrepreneurs on the other hand, the securing of company transfers has recently become a political issue of great importance. The problem hereby is that comprehensive public programmes or support exist only in individual countries and there is a complete lack of an overarching, EU-wide policy. On top of that, international exchange in this policy field is non-existent. Thus, the INBETS+ project will develop political support programmes for innovative business transfers which will put a particular focus on increasing the numbers of young entrepreneurs through information and training, stimulating entrepreneurship and ensuring access to clearly underrepresented target groups of possible successors, i.e., women, workforce of companies, immigrants (particularly in Germany, Denmark, Swede and Finland) and skilled workforce that moved abroad and should be motivated to return (particularly in Estonia, Lithuania, Latvia, Poland and Russia). Another focus will be placed on developing policies that ensure sufficient financial support, tax relief and the granting of public guarantees, as well as establishing further support systems for SMEs’ intermediary bodies like business organisations in coaching and promotion activities. In order to do so, public programs, policymakers and administrations are intensively involved during the project implementation to develop comprehensive strategies and action programs with individual target groups. The INBETS+ project will therefore strengthen international cooperation on multiple levels, reaching from local to regional to multilateral cooperation. It will also target several groups within the project countries, including SMEs, BSOs, intermediaries, higher education facilities and policymakers to create an overall supportive environment for business transfers around the Baltic Sea region. Overall, the project will therefore enable an increasing number of successful business transfers which will not only strengthen the national economies in the partner countries around the Baltic Sea region but will also immensely contribute to the overall economic stability of the EU and Europe as a whole. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 1 – Overview Did you know that small and medium-sized enterprises (SMEs) make up 99.8% of the EU’s companies? Not only do they constitute the vast majority of all EU companies, but they also generate almost 60% of the EU’s GDP and provide 70% of all jobs across the Union. As they are such a vital part of the Union’s economy, the EU has increasingly been paying attention to the preservation of these SMEs within the European economy. Part of the support offered by the EU comes in form of the INBETS project which stands for “Innovative Business Transfer Models for SMEs in the Baltic Sea Region”. The project currently assists 14 project partners and 68 transfer partners in nine countries (Denmark, Finland, Germany, Latvia, Lithuania, Estonia, Poland, Russia and Sweden). Hereby, special attention is paid to the transfer of firms and businesses across the EU, as approximately 450.000 firms across the EU are being transferred to a new owner each year. Not only do business transfers provide an excellent opportunity for economic growth, but successful transfers are also vital for both job security and creation. However, despite the importance of smooth and successful business transfers for economic growth not only for the participating countries but also across the EU, one third of all estimated transfers in the EU -representing 600.000 job- are likely to fail due to a lack of awareness, knowledge, and regulatory frameworks. Additionally to the lack of knowledge, business transfers also fail because of family conflicts and other non-economic reasons (making up 63% of failed business transfers) as a lot of SMEs are family businesses. This is problematic because more jobs are lost as a result of these failed business transfers than there are jobs being created through new business start-ups. It is therefore vital that the EU offers support to SME owners who are planning to or are in the process of transferring their business as the EU’s main economic force is at stake, especially so as less than half of the Union’s member states can currently provide adequate frameworks to support their local SMEs in this endeavor. The INBETS project is split into several sub-categories which focus on project management, potential finance and transfer models, capacity building and promotion within regional structures, (further) education and the development of political strategies and transfers. The project aims to target and support not only the already existing workforce in SMEs, but also under-represented groups particularly at management level such as immigrants and women. This is particularly important as a more diverse workforce can increase the yield of SMEs and satisfaction among the workforce. Additionally, returning workforce (people who received their education or worked abroad for a period of time and then return to their home countries) and (young) people currently undertaking vocational courses and degrees at higher education institutes such as universities will be encouraged and supported to take over existing businesses rather than starting their own firm or business startup. The finance and transfer model part of the project aims to establish and provide six best practice models and blueprints each for both financing models and new innovative financing strategies, as well as business transfer strategies. The project aspect of capacity building and promotion of SMEs, on the other hand, aims to not only build SMEs’ ability to accomplish smooth and successful transfers, but also to build regional and inter-regional support structures and networks for SMEs and potential takeover parties within and outside of the SMEs. Another essential part of the project is the recruitment and training of potential entrepreneurs who could take over the SMEs. For this reason, the project provides training for entrepreneurship and successors, as well as curricula for (young) people who are currently studying related subjects at schools and higher education institutes. Finally, while all of these project components are important for the successful implementation of the project, the inclusion and support of local policy makers and administration is vital to secure long-term support for SMEs and to improve business transfers across the EU. Therefore, projects like INBETS will not only provide the much-needed support to SMEs to stay in business and preserve 600.000 jobs across the EU but will also sustain European economic growth and cooperation in the long run. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 2 – Transfer Models Business transfers are highly complex processes which are often made even more difficult when the businesses are family run or have no clear successor. Therefore, the INBETs project aims to provide a variety of business transfer models which can be used by SMEs. A big part of the consultation process with SMEs is to find a business transfer model which suits the SME and can be consulted and relied upon during the takeover process. An excellent example of such a business transfer plan is the Family Business Transfer Plan as SMEs are often family businesses. Model 1: Family Business Transfer The “Family Business Transfer Model” identifies six important steps to enable a smooth and successful business transfer for family-owned SMEs where the future owner of the SME is a family member. At the start of the process, it is important to identify and understand the different generations’ goals and to identify potential cross-generational goals and themes. In a next step, SMEs are advised to evaluate the senior generation’s future income needs and to further analyse and evaluate the company’s financial history to gain insights into potential future transactions. Afterwards, it is important to evaluate which transfer path and methods are the most suitable for the company and, additionally, evaluate the existing tax structures within the company in order identify potential issues and opportunities arising from the business transfer. In a final step, it is vital to develop an agreement which is acceptable for all parties involved, particularly when more than one owner is involved. Model 2 – One Or More External Entrepreneurs When one or more external parties are involved in the business transfer, it is important to clarify the expectations for the takeover on both sides: the external parties and the owner. Afterwards it is essential to consult experts who can do assess the financial situation of the SME and establish the company’s value. Before the financing negotiations it is helpful to review various scenarios with a team of experts in order to make an informed decision which is acceptable for all parties. To secure a successful takeover, it is important to set up and regularly review structures which ensure the smooth running of the business. Model 3- Takeover by company executives/ management team Another business transfer model is the model for an SME being taken over by the company’s executives or management team which also happens on a regular basis. At the start of the process, it is essential to identify the intentions and expectations of all parties involved. This important for the second step which is the development of a strategic plan which takes into account the current economic and financial situation of the company. Furthermore, the parties involved should identify measures and plans for the company’s future, as well as identify the human resource needs of the management of the company. In order to have a successful business transfer, it is vital to develop a training plan for each individual member of the management team, as well as considering to contact a specialist for human resource management to assist with the transfer process. Finally, it is important to identify potential consequences of failure within the transferal process for all parties involved in order to avoid failure. Model 4: Takeover by a Workers´ Cooperative Also particularly common is a business transfer to a workers cooperation or existing employees. In order to have a successful business transfer to a workers’ cooperation, it is vital to engage in research on business management and transfers before starting the process. Furthermore, it is important to evaluate the abilities of the company’s executives and to offer advice and succession options workshops when necessary. The good preparation of the successors is vital in order to have a smooth and successful business transfer. This can be done by offering financial, business and industry, as well as cooperative training for employees. To avoid future hiccups, it is also essential to determine financing options and review current business and management plans in order to develop future ones. Finally, the final price needs to be negotiated and the business ownership transferred. However, the project highlights the need to offer training and support for current employees after the business transfer to make the transfer as easy and accessible for all employees. Model 5  – Takeover by Another Company If the SME is being taken over by another company, the current owner should define their personal goals and balance them with his financial goals in order to find the best possible exit strategy. Furthermore, it is vital to understand the range of value for the business which usually depends on the prospective buyer. In this scenario, there are three possible primary purchasers: financial groups (recapitalisation), industry buyers (acquisition) and initial public offerings and it is important to examine all three options and decide which one is the best for the owner. Afterwards, the current owner should assemble financial records and present them to potential buyers. It is important to note that the takeover process is a highly complicated and time-consuming one and it is thus vital to invest time and money in the right team of advisors in order to secure a smooth and successful business transfer for the SME. INBETS Success Stories Since the start of the project, several SMEs have received both business transfer consultation and financial consultation, in particular in relation to the financial part of a business takeover. For instance, a joinery company which had existed for over 35 years received information on finance and business planning (approx. 21.000 h) which led to a smooth and successful transfer of the business to an external stakeholder for both the owner and the three employees. Another great example of the INBETs project aiding SMEs with their business transfers is the successful takeover through an already existing employee of a hair salon after approx. 15.000h of consultation. A slightly bigger SME with a single owner and five employees (a dental laboratory) was successfully transferred to an external buyer who, due to the excellent consultation over the course of two years, could keep all five employees on. The consultation was provided mainly in the form of general business consultation and in financial consultations (loan). Particularly helpful, according to both the new and previous owner, as well as all employees, was the assistance and consultation provided after the business transfer which ensured that the business stayed successful after the takeover had taken place. These three examples alone show that both general business consultation, as well as financial consultation, can play a vital role in ensuring the successful transfer of SMEs across the EU. Projects like INBETS are thus essential to securing the survival of SMEs across the Union and contribute to the economic stability of all EU member states. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 3 – Finance Models One of the most challenging features of running a successful SME is the financing aspect. However, SMEs often struggle to access appropriate support features and networks and further lack the necessary financial literacy. Hereby, it is important to not only give SMEs access to different instruments, but to assist them in identifying the most useful ones for their business and to correctly identify advantages and risks of the offered methods and resources. A big barrier to successful financial investment of SMEs is the quality of their business plans and investment projects. Thus, the development of equity finance for SMEs is often hindered by the lack of “investor-ready” companies. Equity finance refers to all financial resources that are provided to firms in return for an ownership interest. However, SMEs are generally ill-equipped to deal with investor due diligence requirements due to a lack of entrepreneurial skills and capabilities. A framework which offers development tools and instruments, e.g. in the form of training in mentoring, is therefore vital to aid SMEs increase their financial and investment abilities and potential. Moreover, such a framework can aid SMEs keep up with the ever-changing landscape of financing models, balance the unequal information infrastructures within the financial market and help reduce financial costs for SMEs. Indeed, an increasing concern about the lack of entrepreneurial skills and capabilities and low quality of investment projects is driving more policy attention to the demand side, although supply-side policies are still prevalent. This includes measures such as training and mentoring. The INBETS project allows SMEs in the Baltic Sea region to access this vital support. There are many different ways in which business transfers can take place in relation to finances. For this reason, the INBETS project has developed a number of financial models for business transfers which can aid SMEs with the financial side of their business transfer which is often the most challenging part. Finance Model 1- Buyout: Experts speak of a buyout when equity investments are made where a company or an asset or parts of the company are bought from the current owners (stakeholders) of the company. Usually, a group of investors, either the already existing management or employees of the company or external stakeholders, pool their resources to buy shares of a business from the current owners. Important to note is that selling to existing employees can be much quicker than transferring a company to an external stakeholder. This is made even more complicated as the number of parties involved in the transfer process increases. Therefore, SME owners usually tend to focus primarily on potential buyers they are familiar with as they will know the new owners and know that their business is being passed onto a group they know and trust. On top of that, it is usually the easiest, quickest and least risky way to step up into an ownership role for interested buyers. Nevertheless, it is important to support SMEs to also find suitable buyers within but also outside of their own company as buyouts are also an excellent opportunity to involve not only the younger generation, but to also increase involvement of underrepresented groups within SMEs such as women and immigrants. Of course there is a difference between a management buyout and an employee buyout. As mentioned above, SMEs generally lack financial expertise and literacy. This lack of knowledge and practice can be more of an issue with employee buyouts as management level staff may have greater expertise and experience compared to general employees. Additionally, it is often easier for management level employees to acquire the financial means to buyout an existing company which is a general problem for business transfers. For this reason, the EU is hoping to assist already existing employees to takeover SMEs rather than starting their own ones to preserve jobs and help the European economy grow in the long run. Finance Model 2- Loans: Another widely established financing model for business transfer comes in the form of loans. Loans are understood as an amount of money that is being borrowed and must be paid back, usually together with an extra amount of money that the borrower has to pay as a charge for borrowing. Loans and the conditions of loans and their payback rates differ in funding and pricing between different providers, mainly banks, depending on the suggested business model and source of the funds. The loans further vary with industry of the SME which is being acquired, the offered collateral and the internal legal and financial structures of a company. Therefore, it is common to negotiate loans and to do research on different loan providers in advance to ensure a successful business transfer. Financing a business transfer in the form loans has many perks but also a number of downsides, like every finance model. While loans generally have the advantage to be fixed, they usually take a long time to arrange and the paying back of loans may jeopardise future investments. Loan financing without guarantees usually results in higher interest rates and involvement of lenders (e.g. family members) within important business decisions which might lead to the failure of business in the long-run and could damage relationships. In contrast to unsecured loans, loan financing with guarantees (e.g. bank loans) usually run more thorough credit assessments and require more detailed business strategies and financial plans and expertise. However, this requires SMEs to have good financial literacy skills and experience which is often not the case with SMEs. Additionally, banks often require a high collateral and have high interest and payment rates which particularly smaller businesses are unable to pay. This, again makes it more difficult for employees in non-management positions, as well as immigrants, women (due to the gender pay gap) and young people without extensive financial literacy, assets and experience to take on secure loans and thus, in turn, regularly leads to business transfer failures. For this reason, it is so essential to provide SMEs and their employees not only with expertise and training to expand their economic and financial capabilities, but also to provide regulatory structures and networks for SMEs and potential SME buyers in order to prevent SME takeovers from failing to secure local and European economic growth and prosperity. Finance Model 3: Co-financing by the Transferor Co-financing is often provided by a transferor to ensure that the business transfer is successful. The advantage of this form of financing is that there are no hard and fast rules, as the pay-out’s level is dependent on a number of factors, including the size of the business. This can be used to bridge the gap between differing expectations from the successor(s)/buyer(s) and transferor(s)/seller(s). However, there are a number of key considerations, aside from the cash compensation, which needs to be taken into account. For instance, it needs to be determined who the crucial members of the organization are and whether an earnout is extended to them. Additionally, the parties involved need to negotiate the length of the contract and the executive’s role with the company post-acquisition. The agreement should also specify the accounting assumptions that will be used going forward. Although a company can adhere to generally accepted accounting principles (GAAP), there are still decisions managers have to make that will have effects on the entire business. For instance, assuming a higher level for returns and allowances will lower earnings. The advantage of this kind of financing is that no partner is needed for the transfer. On top of that, modalities and collateral can be regulated during the negotiations which helps to eliminate uncertainty for the buyer. Another perk of having a transfer solution is the fact that a transferor may offer better conditions as they are interested and invested in the company’s future and its further development. On the other hand, the continuous interest of the transferor in the business may lead to conflicts in the future. Other finance models: Of course, there is a wide variety of financing models available to SMEs wishing to transfer their business. On top of the already introduced models of loans, buyout and co-financing by transferor, SME transfers can also be financed through silent partnerships, high-net-worth individuals and crowdfunding. A silent partner is an individual whose involvement in a business is limited to providing capital to the business. The investor is often also known as a limited partner, since their liability is typically limited to the amount invested in the partnership. In this form of financing one or more parties take an equity stake in a company, but without assuming any liability to the company’s creditors. Another form of investment can come from high-net-worth individuals, who are looking for investments with reasonable risks and reasonable returns and are focused on long-term capital appreciation. Both of these traits are well matched by investing, for example, in family businesses. Instead of merely relying on one or a small number of investors, another way to finance a SME transfer is through crowdfunding. Crowdfunding is a technique to raise external finance from a large audience, rather than a small group of specialised investors, where each individual provides a small amount of the funding requested. Crowdfunding generally takes place through social networks, with the entrepreneur detailing the business activities and objectives, in some cases in the form of a business plan and requesting funding under specific terms and conditions. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 4 – Education Business transfers are difficult and SMEs are often not properly prepared to take this step. Thus, a vital part of the INBETS project is the (further) education and capacity building programme which aims to enable SME owners and potential successors to be equipped for a smooth and successful business transfer. Four of the partner countries (Denmark, Germany, Finland, and Sweden) already have strong capacities for the promotion and advice of SME transfers by business Support Organisations. However, Estonia, Latvia, Lithuania, Poland, and Russia are currently less equipped to support their SMEs with their transfers. For this reason, the EU fosters international cooperation on this issue through the INBETS project which will help these five countries improve their support for their local SMEs. For instance, the more experiences countries can help with the development and coordination of plans to provide business transfer services more permanently. A continuous exchange between all partner countries can provide the five less experienced countries with precious knowledge that, in turn, can widen their capacity to support their local SMEs. The aim of the INBETS project is to examine, further develop and design innovative and transferable models and tools for facilitating small and medium-sized enterprises (SMEs) business transfers, make them widely available and implement them in companies. A good way to do this is by strengthening the institutional capacities of existing business support organisations (BSOs) for successful business transfers by qualifying permanent staff of BSOs as transfer coaches.  A particularly crucial part of the ongoing development of resources is the qualification of consultants for business transfer within the business support organisations, as well as the staff of other institutions who assist with the business transfer. For this purpose, a Train the Trainer programme has been developed, tested, evaluated, and finalised. The programme has been introduced to 18 colleges and universities from nine countries, which are involved as project or associated partners. This enables these higher education institutions to develop and implement the Train the Trainer programme so that qualified personnel will be available in all regions of the Baltic Sea Region to support business transfers continuously further. The target groups of the Train the Trainer programme are teachers and lecturers from universities and colleges, chambers, training institutions, etc., who are involved in the training of entrepreneurs and, additionally, advisers to Chambers and other business development agencies involved in advising, coaching and promoting business transfers and start-ups. The main learning objective is to give these people the skills they need to become permanent qualified business transfer coaches. The programmes will enable them to get an overview of the main topics of entrepreneurship education and to be able to assess which competences are necessary for the communication of this content. A requirement for the programme are already existing pedagogical skills and experience that will be refreshed and supplemented by the training on pedagogical issues of entrepreneurship education. By the end of the two-day training programme, the participants will be able to independently carry out training and coaching on the basis of the introduced curricula and teaching materials. These newly trained participants can then pass on their knowledge to other colleagues and staff in their respective institutions who, in turn, can then assist SME owners and prospective buyers and entrepreneurs with their business transfers. The INBETS project will thus not only ensure improved support for SMEs in the Baltic Sea region, but will further contribute to Europe’s economic growth and will boost international cooperation in multiple areas. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 5 – Political Strategy The successful transfer of SMEs is vital to Europe’s economic growth and the preservation of jobs. Nevertheless, the political support for SME transfers has been inadequate in many BSR countries, and important groups of potential successors are simply excluded in many regions. For this reason, the INBETS programme wants to achieve positive changes in all SMR countries by implementing a comparable, comprehensive support of SME transfers by the public authorities, and to additionally unleash new target groups as SME successors, significantly increasing the number of entrepreneurs. The aim of the INBETS’ policy strategy and action programme is to create comparable framework conditions and promotions in all Baltic Sea Region countries. The main output consists of a policy strategy program to strongly support SME transfers to ensure the innovative continuation of the enterprises and the maintenance of the jobs. Across all Baltic Sea region countries, four groups have been identified to be particularly underrepresented as business successors. The groups are women, already existing SME employees who run a company individually or collectively, foreigners, and specialists who have migrated abroad (brain drain). Figure 1: Underrepresented groups in SME succession and takeovers In order to build a supportive environment for SME transfer, the current political program includes strategies for four overarching thematic priorities that are of outstanding importance for the entire Baltic Sea region. These include ensuring the next generation of entrepreneurs and their qualification, as well as securing the financing of business transfers and a comprehensive service and consulting network for business transfers. While a lot of Baltic Sea Region countries have already developed comprehensive and effective programmes, as well as the infrastructure to promote and ensure business transfers, five partner countries (Poland, Lithuania, Latvia, Estonia and Russia) still need some assistance to establish equally well working structures. This is due to the fact that the vast majority of SMEs in the Eastern European countries was founded only after 1990 which has resulted in few business transfers (especially compared to the other countries in the Baltic Sea Region) in the first two decades or so. However, due to the growing number of SMEs and a growing number of SME owners wishing to retire, the support that the INBETS project can provide is especially important and urgent. The goal of the project is to increase particularly the number of young entrepreneurs by 5% annually. In order to achieve this goal, and to additionally increase the numbers of female and immigrant, as well as returning entrepreneurs, the EU is aiming to build up the support framework for SME transfers which is currently missing in the Eastern European countries. As SMEs provide the Union with indispensable economic power, the INBETS project will support them by providing financial and technical support and further enabling multilateral knowledge exchange. This support is primarily provided through a multi-level entrepreneurial training programme aimed at all four underrepresented groups, as well as ensuring that the required funding is available to SMEs planning a business transfer. A crucial part of the INBETS project is the sharing of already existing knowledge and experience on best practices for SME support by countries like Germany with those countries who are in the process of building their own SME support network. Not only does this sharing boost international cooperation between EU and non-EU partners, but also eliminates the need for creating new structures and support strategies from scratch. In order to enable this cross-country knowledge exchange, the establishment of a Baltic Sea Region-wide centre of competence for start-ups and business transfers is highly important. Such a centre will be able to act as an interface between the different countries, regions and institutions and can provide administrative assistance for struggling regional centres. Women and SME leadership and takeovers: Women are less likely to take over SMEs and other forms of businesses and the EU wants to change that. According to extensive research, the key factor limiting women’s professional activity is their engagement in home and family duties which is reflected in the time they spend doing unpaid work compared to men. Although both women and men generally do paid work for similar hours, with men usually working slightly more in paid jobs, in most partner countries women do between one and two hours more unpaid work per day. On top of that, women are generally less economically active and underrepresented on management boards. This is due to the fact that there still exists a segregation at the workplace, both horizontally (women are typically concentrated in underpaid and insecure jobs) and vertically (women are less likely to be promoted and rise to top managing positions), despite the fact that women lack neither education and expertise nor management and leadership skills. Figure 2: Reasons for the lack of female SME successors The type of companies and businesses which have seen the highest increase of women in management positions has been family businesses. This is because family businesses often offer women more independence, flexibility and greater job security. Nevertheless, the number of young women who take over family businesses remains low and usually only happens when there is no male possible successor. However, there are a number of actions that can be taken to increase the number of women in management positions in SMEs and particularly in family businesses (most SMEs are family businesses after all). For instance, desirable actions are the promotion of women’s achievement, encouragement of more diverse workplaces, as well as removing barriers to women’s progress and overcoming gendered stereotypes. Employees: Another often underrepresented group in business transfers and takeovers are already exciting employees, particularly those not in management positions. This is due to social and business hierarchies which prevent employees from even just voicing their intent to take over a business. However, employees make excellent potential successors for SMEs, particularly in cases where there is no willing successor or no successor at all in the owner family of the company. For starters, already existing employees already have experience with the business and are well acquainted with the business, the branch, their colleagues and stakeholders. Furthermore, they have also already created contacts who will be able to assist them in their new role as CEO of a company. Due to their experience they also won’t struggle to create further new contacts and establish themselves as entrepreneurs.  On top of that, employees will have the necessary skills and are familiar with processes, routines and phases of the SME and know the organisational structures of the company. However, they may need further entrepreneurial and financial training which the INBETS project is aiming to provide. Thus INBETS project will develop and provide a number of tools for the evaluation and development of entrepreneurial competences, as well as tools for evaluating the value of an employee’s own knowledge and experience and a ‘matching tool’ to bring together potential investors and employees interested in acquiring a company. Immigrants While more and more people acknowledge the importance of having entrepreneurs with foreign origins, the numbers of immigrants who take over businesses is still comparatively small. This is despite the fact that for example in Germany more than 740,000 immigrant entrepreneurs contribute more than two million jobs to the economy. Additionally, successful SME takeovers can significantly contribute to the immigration of often highly skilled refugees. Unfortunately, immigrants often struggle even more to access support services and networks compared to their local counterparts as they have to overcome bureaucratic and formal hurdles. They need increased support in three particular areas, namely faster recognition of their skills and qualifications, additional education to even out capability gaps compared to local entrepreneurs, and improved information and communication. There is a stark need to provide immigrant entrepreneurs with more support, not only for the already existing immigrant SME owners, but also to attract more potential immigrants who are interested in acquiring a business. On top of that, iIn most Baltic Sea Region countries, the number of younger workers will decrease by up to 30% by 2030. For economic reasons alone, immigrants could be very welcome in many EU countries. However, excessive reliance on certificates, legal regulations and bureaucratic processes severely hampers the start of self-employment for immigrants. The formal and bureaucratic recognition of qualifications is often a major obstacle that prevents highly skilled migrants from being able to work in the host country. In order for EU countries to be able to offer adequate support to immigrants, especially those interested in becoming entrepreneurs, the INBETS project developed an action programme to support migrants made up of five phases: Brain-Drain and Remigration: While migration of workers is not a new phenomenon, it has undoubtedly become easier and more popular since the EU has made free movement of labour one of the four economic freedoms for EU citizens. At the same time, demographic challenges within the EU such as population ageing, a decreasing fertility rate as well as an overall decline of labour force have caused a notable competition for skilled workforce. Skilled workforce who has emigrated abroad, commonly referred to as brain drain, represents one potential target group in order to close the SME successors gap. In 2019 alone, 12.9 million people of working age (20-64) migrated within the EU and the numbers have been increasing over the past few years. The reasons for brain drain are often a combination of so-called pull and push factors. Undoubtedly, economic factors are most influential when it comes to migration, especially within the EU. Many skilled workers leave for higher wages, faster economic growth and high per capita wealth in foreign countries as well as better educational and professional opportunities. Moreover, easiness to access the labour market and overall higher employment rates are factors. Administrative barriers, economic depression (e.g. death of enterprises) can be push factors. On top of economic factors, socio-cultural factors and the quality of live also play a big role for emigrants. For instance, cultural factors such as a gender-biased mentality and income inequality are push factors, as well as adequate health care and social security as well as physical and technological infrastructures are listed as main factors, but also the overall political environment. According to the 2019 Annual Report on Intra-EU Labour Mobility, the main sectors of employment for emigrated workers are wholesale and retail trade, transportation and storage, accommodation and food service activities sectors. The brain drain effect has had a number of negative consequences on EU countries that the INBETS project is trying to address and counteract. The biggest negative effect of brain drain is the resulting shortage of labour force and a reduction of the stock of human capital, which in turn leads to a limited capacity for innovation and technology development, reduction of wages, tax income and consumption. Hence, the result is an overall decreasing economic growth, higher costs of goods and reduced productivity. Research has shown that BSR countries differ immensely regarding migration dimensions and types of migration as well as policies in place in order to promote return migration. While in Germany, Denmark, Finland and Sweden brain drain is not a big problem, Lithuania, Latvia and Poland urgently need to deal with the fact that a considerable number of skilled workers is constantly leaving the country. In fact, the Baltic countries have witnessed several massive emigration waves during certain periods – the Nazi and Soviet occupation, the collapse of the Soviet Union in 1990, the entry into the EU in 2004 and the 2009 global financial crisis. The United Nations estimates that the Baltic country population number will keep shrinking so that by 2050 Latvia’s population could decrease by 22 percent, Lithuania’s population by 17 percent and Estonia’s population by 13 percent. Thus, strategies to bring back emigrants as SME successors could be one way to anticipate the negative effects of brain drain and would further counteract the increasing issue of lacking successors for SMEs. Remigrants have a strong potential to become successful SME successors for various reasons. For example, they approach business with an international approach and often bring with them an international network of contacts. For this reason, the INBETS project has come up with two particular measures to encourage remigration within EU countries, a family programme and a business programme. The family programme encompasses integration and support programmes for partners and children of people wishing to move back to their home countries in order to make them feel more welcome and to encourage young people to remigrate. This support can be provided in the form of cost support, easy and fast provisions of residency permits which should also be offered in English. For the business programme, the project aims to build special remigration business support networks, as well as an increase in the digitalisation of the market and services and encourages international cooperation. With a combination of these programmes and the exchange of knowledge, expertise and experience, the EU will take a significant step towards not only increased preservation of jobs and businesses, but also towards increased multilateral cooperation and economic growth across Europe and around the Baltic Sea Region. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]
Newsletter 6- Final Conference After nearly four years of working together on making business transfers easier and more successful for SMEs, the INBETS project came to a close with its final conference. On March 19th, 2021, the INBETS Final Conference was held online on Zoom. The conference, which had been planned to be held in Hamburg in person, was instead held online, managing to bring over seventy people from across Europe came together to listen to a great variety of different presentations and to have discussions about the different topics afterwards. After a few welcoming words by the organiser of the conference, Dr Max Hogeforster from the Baltic Sea Academy, the conference was kicked off by two informative and inspirational welcome talks by Lucyna Kaminsk, a policy officer working at the European Commission and Tomas Urban from the Ministry of Economy in Lithuania. Particularly enthusiastic support received Anders Nystedt from thew Grönlunds Plåt AB (Sweden) who presented a first-person account of what it means to go through a business transfer. Mr Nystedt’s talk was followed by presentations on the importance of international cooperation for the topic of business transfers (Maxim Balanev, Russia), a brief introduction to the business transfer- and financing models which had been developed over the course of the project (Svea Horn, Germany). Another great achievement of the INBETS project is the comprehensive website which has all the results and a lot of useful information for both SMEs and those seeking to help SMEs with business transfers. The website was presented by Harpa Dögg Fridudottir (Denmark) and was followed by a talk on the need for training for future entrepreneurs and successors (Gintarė Pauliuščenkaitė, Lithuania). Afterwards, Max Hogeforster (Germany) gave a talk on the developed political strategies that can be employed across Europe to build better support networks and ecosystems for SMEs wishing to go through a business transfer. The second half of the conference served to get a deeper understanding of the different actions who were targeted as part of the INBETS project: female successors (Anita Richert-Kaźmierska, Poland), employees as successors (Kari Lilja, Finland), immigrants as successors (Uwe Schaumann, Germany) and returning workforce as successors (Piret Potisepp, Estonia). Following this great variety of topics and different inputs, the conference participants were split up into three groups for break out sessions, during which the different aspects of business transfers were enthusiastically discussed. Overall, the conference received great feedback by all participants and was seen as a suitable ending to a very successful project and a good substitute for the planned in-person conference. The avid conference participants reflected the great interest in European, cross-border cooperation on important issues such as business transfers and showcased the strong relationship between the partners who managed to pull off such a successful project despite the aggravated circumstances caused by the corona pandemic in the last year of the project. The newsletter can be accessed as a pdf file here (it is also possible to click on the picture below to download the file) […]