Small Businesses In Europe Managed By Boomer Entrepreneurs
The European economy is built on small business. In fact, 94% of employed individuals in the European Union work for firms that hire fewer than 10 people. Additionally, the people running these small businesses, are in most cases baby boomers.
For example, approximately 25% of family businesses in Italy are owned by individuals that are older than 70. Fewer and fewer young entrepreneurs are running small firms, while the individuals who founded small businesses decades ago are holding onto them.
This poses an issues as large firms produce more economic productivity and pay higher wages. However, those who have the firms that are in a prime position to expand rely on outdated financing resources, such as bank loans.
Older entrepreneurs do not know much about financing expansion through private equity or bonds. This gap in knowledge will have large impacts on the European economy.
“Companies that only had bank financing were more vulnerable and more prone to go bust during and immediately after the financial crisis [in 2008-9],” said Kris Boschmans, a policy analyst at the Organization for Economic Cooperation and Development.