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Small family businesses in Europe struggle with digital era

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Relatives working at a family-run flower shop
Just 37% of family-run SMEs feel very prepared to operate in a digital economy according to the study | Photo: Amina Filkins

Europe’s small family businesses could be at risk of falling behind competitors as the economy becomes more digital, new research from Mastercard has found.

SMEs as a collective account for 99% of all European enterprises. The majority are family-run, according to the European Parliament, particularly micro businesses with less than 10 employees.

Despite their huge presence, just 37% of family-run SMEs feel very prepared to operate in a digital economy according to the study.  

Mastercard is a key enabler in the digitalisation of Europe’s SMEs, serving four out five small businesses or approximately 18 million small enterprises. It carried out the research in 15 countries to understand how small businesses are responding to Europe’s increasingly digital economy and society. The study polled 10,500 respondents from both family- and non-family-run SMEs, demonstrating that new strategies are needed to better help smaller family firms. 

Barriers to digital adoption 

Family businesses have rapidly adapted to the digital-first world ushered in by the pandemic, with nearly half (47%) increasing their use of digital payments. However, the research reveals that family firms are still uncertain about which digital resources and technology would work best for them.  

More than two-fifths (41%) said they wanted new digital tools to modernise their businesses, but a significant number (28%) were unsure of which solution would best support them.  

Other factors holding them back were concerns around privacy and security, which was less of a concern for non-family-run firms suggesting they may have better guardrails in place and therefore feel more reassured.  

Surprisingly, close to a third (30%) of family businesses said relying on an internet connection was a barrier preventing new digital solutions that could support their commercial activities.  

 

The role of family dynamics 

Being family-run presents distinct challenges for running a business that may also make modernising more complicated. One issue uncovered was resistance to change, with some employees thinking their family firm had a closed mindset to adapting with the times and trying new things (27%), with older generations seen as less likely to want to do so.  

Navigating relations between family members is also a unique factor at family businesses, with a fifth saying that personal relations with their relatives was the biggest hurdle to overcome at work. Interestingly, succession-planning was a key flashpoint for some, with a fifth reporting there was conflict over who would take over the business in the future.   

 

There was a strong desire amongst family-run firms to have more education, training and mentorship to help their businesses grow. More than two-fifths wanted to modernise the business through the better use of digital tools. This demonstrates that small family businesses have an appetite to upskill and move with the times, but need more help in order to do so, presenting a clear opportunity for support. 

“Small businesses are the driving force of Europe’s economy, employing 82 million  people and have shown remarkable resilience in tough times.  However, many SMEs, especially those that are family-run, need additional support to thrive in a changing world,” says Mark Barnett, president of Mastercard Europe.

On the whole, respondents were positive about working with their relatives and family firms were more optimistic they would grow in the coming year than non-family run businesses. However, the uncertainty of if and how to modernise, coupled with family dynamics, could increase the risk of some small family businesses eventually being outpaced by more adaptable competitors. 

EuroNewsweek is a dynamic news platform featuring lifestyle, sustainability, successful stories, tech, leadership, creative marketing, business, and the unstoppable people behind them.

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What is credit invisibility and how can it affect your finances?

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A woman paying groceries with cash
Only paying in cash will make it difficult to build a credit history and may make you may be credit invisible

If you’ve never taken out a loan or owned a credit card, you may be credit invisible. This means that financial institutions have no records to show that you’ve borrowed money responsibly in the past, which lenders largely rely on to approve you for financial products.

Everybody starts off with invisible credit. However, it can affect you in more ways than one, so it’s important to seek ways to build your credit history as early as you can. Here, we look at some of the effects of credit invisibility on your finances, and offer a few tips to start becoming credit visible.

Access to financial products

Before being approved for any kind of financial product in which you borrow an amount of money, a lender will run a credit check to ensure you have a good credit history. Usually, they’ll be looking to see that you have a high credit score – this would prove that you’ve borrowed money responsibly in the past, and have been able to continuously keep up with repayment obligations.

When you have no credit history for lenders to look at, it can make it harder to qualify for financial products. Your lender will know that you have no prior experience managing borrowed money, and therefore can’t for certain know that you’ll pay any amount back that you borrow. This can be true of all kinds of borrowing options, such as credit cards and loans.

Low limits, high fees

Ultimately, everyone starts off with limited or invisible credit history. So, there will always be a restricted number of financial products available to those looking to borrow for the first time.

However, you may not be offered the best deal if you’re credit invisible. For example, you might be offered a lower limit on a credit card you apply for, or a smaller sum of money on a loan. Plus, you’re likely to face higher interest fees than those who have a visible credit history.

Stagnated progression

Most people will need to borrow money from a lender at some point or another. Usually this will be to pay for a big life expense – you may be buying a house with a mortgage, or purchasing a car on finance. Having limited access to credit options can make goals like these much harder to work towards and obtain. Unfortunately, this could have a knock on effect on your overall quality of life.

Limited access to financial products means that you’ll largely have to rely on your own savings to make any big purchases – this could set you back years when it comes to owning a property.

How can you become credit visible?

Luckily, credit invisibility impacting your quality of life in the long-term is a worst-case scenario. As long as you take a proactive approach towards your finances, you can easily remedy your credit invisibility.

There are plenty of simple steps you can take to become credit visible – you can get on the electoral roll, link your current account to a credit reference agency, or take out a monthly mobile phone contract. These tasks won’t necessarily prove that you can borrow money responsibly, but they’re a good place to start.

Next, you’ll want to look into credit options. Taking out a credit card or loan with a low limit and a high interest rate can seem like an unappealing option, but as long as you can cope with the financial responsibility, it’ll be worth it in the long run. By sticking to your limit and repayment commitments, you’ll prove to your lender that you are a responsible borrower. In turn, this will be reflected on your credit report, and your credit history will begin to take shape. Using such a product responsibly is likely to boost your credit score rather swiftly, which can qualify you for further credit options. You may even find that after a set period of time, your lender is willing to increase your limit and offer a lower rate of interest on your product.

Getting started

Keen to start building your credit history? Do plenty of research on the products available to you before making any long-term commitment. To ensure that you can keep up with the financial responsibility, create a detailed financial plan for the best results.

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Extreme tourism market to reach $91 Billion

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Extreme Tourism Market to Reach $91.0 Billion
Mountain climbing held the highest extreme tourism market share in 2022 | Photo: Connor Moynihan

A recent report published by Allied Market Research forecasts that the global extreme tourism market, valued at $24.2 billion in 2022, could reach $91.0 billion by 2032.

The growing influence of social media is a powerful force surging demand in the extreme tourism market, which attracts travellers those leaving their comfort zones to engage in activities that are considered high-risk, adventurous, or unconventional, such as skydiving, bungee jumping, and rock climbing. Thanks to platforms such as Instagram and YouTube, serving visuals and tutorials breathtaking adventures,

Travelers, inspired by visually appealing content on platforms such as Instagram and YouTube, are actively seeking out thrilling experiences to share on their own social networks, driving a sense of Fear of Missing Out (FOMO) among younger demographics, compelling them to actively participate in adrenaline-pumping activities to create their shareable moments.

By adventure type, the mountain climbing segment held the highest market share in 2022, accounting for more the two-fifths of the global extreme tourism market revenue and is estimated to maintain its leadership status throughout the forecast period. However, the skydiving segment is projected to manifest the highest CAGR of 15.2% from 2023 to 2032.

25 to 45 years is the age group holding the highest market share since 2022, according to the report, accounting for more than two-fifths of the global extreme tourism market revenue. The segment is estimated to maintain its leadership status throughout the forecast period. However, by 2032 it will be below 25 years segment that is projected to have the highest CAGR: 15.3%.

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Petrol up 6p a litre so far this year in the UK

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Increase in the cost of wholesale petrol has squeezed the average retailer margin which has now reduced to 8p a litre | Photo: Engin Akyurt

Petrol went up nearly 2p (1.86p) a litre in March from 144.62p to 146.48p meaning the average price at the pumps has increased almost 6p since the start of the year, data from RAC Fuel Watch reveals.

Diesel rose by more than a penny from 154.68p to 155.99p (1.31p), making for three consecutive months of rises. A full 55-litre tank of petrol now costs £80.56 – up by £1 – and diesel £85.79, up 72p.

While the increase in forecourt prices was driven by a 5% rise in the cost of a barrel of oil (from $83.55 to $87.48) in March, a surge in demand for petrol in the United States ahead of the summer has caused the wholesale price of unleaded to rise to match that of diesel. This meant that by the end of March, a litre of unleaded cost 113.3p on the wholesale market, only a penny or so less than diesel at 114.69p. If this remains the case, the gap between the two fuels at the pumps should close from its current 7p in the next few weeks.

RAC Fuel Watch data shows the increase in the cost of wholesale petrol has squeezed the average retailer margin which has now reduced to 8p a litre, in contrast to 10.5p at the beginning of the month. The average margin on diesel is 11p, up by a penny over the same period.

Looking at the big four supermarkets which dominate UK fuel retailing, Tesco had the cheapest unleaded on 31 March at an average of 142.7p across its 511 forecourts, while Asda had the most expensive at 145p. Asda, which for many years prided itself on selling the lowest-priced supermarket fuel, also had a whopping 33p price difference between its cheapest and most expensive petrol. The grocer charged 139.7p at nine forecourts, four of which are in Northern Ireland, and 172.9p at junction 29A of the M1 near Sheffield – a Shell-branded site operated by Asda. Comparatively, Tesco had the smallest difference between its lowest and highest prices at just 6p (138.9p v 144.9p).

At the end of March Sainsbury’s sold the cheapest unleaded at 136.9p at two sites – one in Wolverhampton and one at Dungannon in Northern Ireland. Tesco, however, was charging its lowest price – 138.9p – at 30 separate forecourts. Asda, on the other hand, was only charging its lowest petrol price of 139.7p at nine of its 658 forecourts.

Sainsbury’s and Tesco were tied for the lowest average diesel price across their portfolios at 151.7p and 151.8p. Asda’s gap between its cheapest and most expensive diesel was 35.2p (147.7p at Torquay and two in Northern Ireland v 182.9p at the Shell-branded site it runs near junction 29 of the M1).

Tesco had the smallest gap of just 6p between diesel at its forecourts (148.9p v 154.9p) while Morrisons was also under 10p (145.7p v 154.9p) Sainsbury’s had the cheapest diesel at 142.9p, but this was only available at Andersonstown, near Belfast, in Northern Ireland. Tesco’s lowest price of 148.9p was, however, on offer at 45 of its forecourts.

BP and Shell-operated forecourts also have very large differences between their cheapest and highest fuel prices. For unleaded BP has a gap of 27p (142.9p v 169.9p) and Shell 26p (143.9p v 169.9p) across their 287 and 536 forecourts. For diesel, it is 30p for BP (149.9p v 179.9p) and 26p for Shell (153.9p v 179.9p).

“The rising cost of oil, combined with the pound still only being worth a meagre $1.3, has led to another month of misery at the pumps with the price of petrol going up 2p a litre. Sadly, this means the average price of petrol has gone up nearly 6p so far this year,” says RAC fuel spokesman Simon Williams.

“The data also reveals that Asda, Sainsbury’s and Morrisons only offer their cheapest prices at one or two stores whereas Tesco offers it at around 30 forecourts, albeit at a slightly higher cost. Its customers also have the comfort of knowing that there’s only 6p difference between its lowest and highest prices.

“Sadly, Asda appears not to be the force it once was in fuel retailing. Gone are the days when it used to announce big headline-grabbing pump price cuts when wholesale prices fell, along with a promise at the time that drivers would never pay more than a certain low price at any of its forecourts.

“On a more positive note, it’s good to see the average retailer margin on petrol come down from 10.5p a litre at the start of March to under 8p. While the cause is most likely to be the increase in the wholesale price of petrol, it could also be due to the CMA again raising concerns about higher retailer margins very publicly just last week.”

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