Micro Enterprises are More Profitable: EU Report

The EU submitted a report on European SMEs profitability and turn over.

In 2007, in the European enterprises, the gross operating surplus adjusted to the self employed imputed wage accounts for 32% of profitability. It means that, the smaller the size of enterprise, the less profitable it is.

SMEs are found to be more profitable in small scale sectors such as hotels and restaurant and real estate, renting and business activities, than in large enterprises. These sectors profitability is found to be below the average of non – financial business economy. This is partly because of gross operating surplus including depriciation. In large-scale sectors such as mining and quarrying, electricity, gas and water supply, SMEs having niche markets are found to make profits of high margins. Whereas in other sectors of industry, SMEs’ profitability is less than LSEs. If the profitability measure is more than the non-financial business economy average, they are found to be more capital intensive.

Turn over and value added are the direct measure of SMEs contribution to economic wealth. Turnover of micro, small and medium enterprises is found to be equally distributed. It is about 4.5 thousand billion euro for each class size, in percentages it is roughly 20% for each sector. The distribution of value added for the same size classes is: 21%-19%-18%. The contribution to employment by the same class sizes is: 30%-21%-17%.

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