Is support for the digitalization of micro-enterprises just a facade?

One entrepreneur amused me by citing the example of a ‘micro-member’ of his family, alluding to micro-enterprises, small, medium, and large companies. He has a four-month-old child and writes: ‘As a father, I am organizing the allocation of non-repayable funds to support my little micro-member: an acceptable expense is a large beautiful school bag, a set of books with covers, a three-tier pencil case with colored pencils, markers; there is also geometric equipment. To give him a little more push, I will spend at least 2000 euros on all this. How can I not be generous towards my little beloved micro-member? Support is support.’ To explain, the entrepreneur’s sarcasm lies in the fact that the government says it will support (also) micro-enterprises through the Call for the allocation of non-repayable funds ‘Support for the digitalization of SMEs in the process of industrial transition of Croatian regions.’ However, the seemingly generous amount of a minimum of thirty thousand euros in eligible costs for each project (a maximum of 120 thousand euros) is actually a significant barrier for micro-enterprises to receive support. This means that a company can apply for a project in which it plans to invest at least thirty thousand euros, which is really great for all those medium, and even small companies that will be able to plan such projects. But what about micro-enterprises, especially those that are just starting out? Well, it doesn’t really matter whether they are starting or not because there are very few that can design projects for at least thirty thousand euros.

Beautifying the Call

Thus, at least several micro-enterprises emphasize that they commented on the government’s call for companies to apply for digitalization support during e-Consultations. So, the one with the ‘micro-child’ suggests that the minimum amount of non-repayable funds for micro-enterprises be lowered to just one thousand euros, questioning which of them, i.e., a newly established micro-enterprise, spends thirty thousand euros on cloud business or licenses. He also concludes that it turns out that micro-enterprises are mentioned in the whole story purely to ‘beautify that call, serve marketing purposes, while the real goal is someone else.’ I will not claim that there are hidden goals, but it seems to me that this proposal is reasonable. As it seems reasonable to consider his other proposal, which is more written in the form of a comment, but it doesn’t matter, let it be considered. Namely, if there was a real intention to go with larger amounts of non-repayable funds, why was the list of eligible costs not expanded, the entrepreneur wonders, simultaneously commenting that the author of that call ‘put effort into the list of ineligible costs, while it seems that ideas ran out for eligible costs…’

Another entrepreneur believes that the minimum amount of non-repayable funds for micro-enterprises should be lowered to ten thousand euros, and for small enterprises, he proposes fifteen thousand euros. He also claims that a micro-enterprise does not spend thirty thousand euros a year on software, licenses, hardware, cloud computing, digital strategies, education, and consulting. Such conditions limit newly established micro-enterprises and those older than three years (the condition is up to three years of operation).

Children’s Needs

The third entrepreneur warns that this is not only a problem for micro-enterprises but also for those selling digital solutions. He advocates for lowering the threshold to ten thousand euros, believing that in that case, the call to entrepreneurs would encourage spending on digital solutions and believes that more micro-enterprises would strive to acquire those solutions primarily from domestic providers. Furthermore, he continues, this call additionally encourages investments in newly established companies. However, if the minimum threshold remains at thirty thousand euros, this entrepreneur also does not see a micro-enterprise that can meet that condition, especially a newly established one whose focus is on surviving the first three years in the market, i.e., paying salaries, which constitute the majority of the cost mass.

Let’s return to the entrepreneur who joked about buying school supplies for his four-month-old child. He concludes: ‘Ah, the only problem is that this micro-member currently only needs baby food and diapers…’ I think the message is clear, so we are sending the entrepreneurs’ complaints to the Ministry of Regional Development and the European Union Funds for their information.

POST SCRIPTUM

One entrepreneur states that, according to DZS data from March 2024, out of a total of 180 thousand legal entities in Croatia, more than 160 thousand (89 percent) are micro-enterprises. Furthermore, according to Fina’s data from 2023, there are 137 thousand micro-enterprises operating in Croatia, and their average annual income is 135 thousand euros. ‘This means that this competition implies that the average micro-enterprise spends about 22 percent of its annual income on digitalization, which is not realistic at all,’ claims the entrepreneur.