Europe should tear down digital walls to help SMEs prosper

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Modern digital technology has completely changed the way Holzconnection runs its business and has been central to the company's success. [Holzconnection / Facebook]

This article is part of our special report Cross-border business in the digital era.

European SMEs operating in cyberspace need better legislation to facilitate cross-border trade and the Digital Single Market is the best platform to address the issue, writes Alf Nagel.

Alf Nagel is the manager and CEO of German furniture firm Holzconnection.

Borders have been a constant theme of the company I run in Germany, Holzconnection. And because of where I grew up, they’ve been a constant theme of my life as well.

Barriers and borders, of course, had a very different meaning in Europe when we started in West Berlin in the 1980s.

We’ve always wanted to be a different kind of company. We started out because there was no Ikea in those days to provide people with customised furniture that could be adapted to meet their particular needs; Berlin’s high rents made sure that our bunk beds were a really popular product.

So we wanted to be a new and modern type of carpenter, a carpenter 2.0.

In those days, the company’s success depended on having physical shops and getting customers through the doors. Getting ourselves known in Germany was difficult enough, let alone thinking about selling to other countries as well.

The modern digital technology that we now have access to has completely changed the way we run our business and has been central to our success. Even though there are still many barriers to doing business across Europe, it has helped bring down many of those borders and barriers.

We at Holzconnection have brought our expertise into the 21st century and an important part of that was developing an online store in addition to our 12 ‘bricks and mortar’ locations.

This has made a real and tangible difference to the business.

Through online marketing and platforms such as Facebook, we’ve been able to build our customer base for both our online and offline stores. We’ve increased sales by 25%, attracted more newsletter subscribers and had 30% more visitors to our retail stores, all of which allowed us to expand our business, hire new colleagues and create jobs.

As any business owner will tell you, growth and success really depend on reaching new customers and that’s what going digital has helped us achieve, particularly in reaching customers outside Germany.

Today, our online presence is vital and has been the driving force of the company over the past 5 years. We have shifted virtually all our marketing activities online and this is helping us sell our products not only in Germany but to many other customers throughout Europe.

But setting up shop in cyberspace to reach customers in other countries has not been an easy task and still continues to hold back too many entrepreneurs. My experience is that selling products or services in different European countries is difficult when there are so many different laws and rule books.

When our company started to do business in France, Austria, and Switzerland, a significant part of our resources and efforts was spent dealing with local legislation for shipping and complying with different rules on issues such as return policies.

What European SMEs like ours need from Europe, first and foremost, is the oxygen to grow. Europe needs to ensure that important legislation affecting digital cross-border trade is as similar as possible across the EU.

Big companies have the resources to deal with such bureaucracy. Smaller companies don’t, and that often discourages them from exploring new opportunities and new markets.

That’s why we think the EU Digital Single Market is a vital opportunity to try to make things easier for small companies that want to use digital technology to grow their business and create jobs across borders.

European SMEs should repeat this message over and over and should continue to communicate their needs and wishes to the national and European politicians. That’s the message I have delivered at this week’s Future of Business summit, jointly hosted by Facebook and the Lisbon Council.

Helping European SMEs like ours to get their innovative products and services to customers in different European countries, cutting down on the complexity and costs, and opening the doors for cross-border trading for online companies – that is what the Digital Single Market is all about.