Research

(Financial Literacy and Digital Tools)

The challenges and opportunities the project aims to address are based on the following findings;

- The importance of financial literacy for the survival rate of newly founded entities and importance of micro enterprises for economic development and job creation.

Essentially, running any business is based on the bottom line. The success of a business depends on the planning and tight management of budgets, balancing the books, and revising financial strategies as necessary. Effective financial management results in the intended outcome of initial business investment: The return on that investment in the form of profits for company owners and stakeholders. Moreover, financial literacy allows entrepreneurs to evaluate company performance and judge which aspects work well and are worth investment as well as which functions need improvement or are simply unnecessary or unprofitable.

The November 2017 EU report 'SME Performance Review' outlines that newly founded entities ‘created by self-employed, have survival rates typically between 30-60 % after the first five years. 'This clearly underlines that there is a high probability of failure for new entrepreneurs and is a worrying factor in consideration of the fact that in 2016, 30.6 million individuals were self-employed in the EU-28, accounting for 14 % of total EU-28 employment.

The same November 2017 'SME Performance Review' EU report also highlights that while data for the surviving firms show that the vast majority of firms created by the self-employed do not substantially increase employment in the five years following their creation, there is a sub-set of up to 20 % of firms that manages to increase employment by more than 5 employees. Hence, in combination with the sheer number of self-employed, this segment does have a sizeable impact on the economy, and especially on employment creation.' The Facebook-OECD ‘Future of Business Survey’ pinpoints that large firms have a more positive evaluation of the state of their business than smaller firm. The Eurobarometer survey (2015) also highlights that complicated administrative procedures, high delivery costs and identifying business partners were indicated as the major barriers for exporting. This presents a learning curve challenge to start up microentrepreneurs, which may be overcome with access to factual and useful data related to their business development.

- Digital tools and platforms in the internationalisation of micro enterprises.

The late 2015 European Commission Report 'A Digital Single Market Strategy for Europe -Analysis and Evidence' clearly outlines that the European market for mobile applications is growing fast and there is an increasing need for mobile application developers. However, there is a considerable lack of IT training, certification and experience in the European workforce. Europe lags behind its main competitors in ICT research and in digital innovation.

The OECD 2017 report ENTREPRENEURSHIP AT A GLANCE 2017, outlines that the development of affordable digital tools and platforms has provided new opportunities for micro enterprises to tap into foreign markets in a way that would previously have been unimaginable. Recent data from the ‘Future of Business Survey’, a Facebook OECD World Bank monthly survey of SMEs with a digital presence, show that individual entrepreneurs engage in exports as a major activity for their business, by capitalising on digital tools, despite their small scale. The survey also confirms previous findings that businesses that trade internationally are more confident in the current state and future outlook of their businesses, and are also more likely to have positive prospects of job creation.