Small Business

Empowering small businesses across Europe to thrive

November 30, 2023 | By Mark Barnett and Payal Dalal
Strive EU
Small businesses are the backbone of their communities, serving local needs, employing local people, and generating wealth in their local economies.

Across Europe, small businesses are a powerhouse of entrepreneurial spirit and resilience, weathering the many challenges of recent years. Despite difficult economic and political conditions with inflation and rising interest rates, and the outsized impact of the COVID-19 pandemic on small businesses, many remain optimistic about their role in our growing digital economy.

While a Mastercard survey of small businesses across Europe in summer 2023 saw 55% of small businesses expecting growth in the year ahead, they were also clear about the obstacles that stand in their way, including an increased reliance on digital technology and AI, a greater focus on sustainability, and the challenges of building a happy, productive workforce. To reach their goals, small businesses must be given the help and support they need — and with the backing of Mastercard Strive EU, we hope they’ll have every chance to grow and thrive.

Embracing a digital future

Digitization has transformed businesses in recent years, whatever their size, but there are significant inequalities[1] between large and small companies when it comes to digital adoption. Despite a gap between big players and smaller firms, many small businesses do feel ready to participate in a digital economy — altogether, 82 percent of those surveyed are either very or somewhat prepared, compared to only 2 percent who feel completely unready.

Technology and digital tools are viewed as a key driver for growth. We’ve found that 40% of businesses view using technology and modernizing their organization as a way to improve and expand their business.

Many of those surveyed have already begun a journey of modernization and technological adoption, with the COVID-19 pandemic as a key driver for making these changes. Use of finance and invoicing software, cloud-based services and project managing tools have all increased in recent years as businesses adapted to changing work environments and customer demands. Small businesses have also changed their approach to payments to keep up with changing attitudes, embracing a variety of options including cards, digital, and cash. Digital payments are now the preferred payment option for 25% of small businesses.

The uptake of AI and machine learning is another key development and a huge opportunity for small businesses. However, taking full advantage of tools like AI requires support, mentoring and education so that these businesses can recognise the benefits.

Pushing towards sustainability

Another change that small businesses must wrestle with is a drive to become sustainable. While facing challenges affecting their bottom lines, from increasing competition to stabilizing their supply chains, more than one in ten (14 percent) still cite becoming more sustainable as the biggest challenge their business in facing.

The pressure is driven by consumers, who increasingly look for more sustainable options in what they buy, and who they buy it from. More than half of consumers in a Mastercard survey[2] said they would prioritize spending with brands who reveal their carbon footprints, showing the value of transparency and prioritizing business practices that put the planet first.

Investing in people

While technology and sustainability both pose challenges — and opportunities — for small businesses, the single largest issue highlighted by respondents to the survey is the difficulty in finding and retaining good employees. Altogether, 29 percent of small businesses flagged it as their greatest challenge, showing the importance of finding and developing good people, and focussing on their wellbeing.

The pressures of small businesses, where multiple responsibilities can fall to just a few people, means that creating a healthy working environment can be difficult. One of the potential solutions to addressing both the search for talent, and improving employee wellbeing, is training and education for staff. 42 percent of businesses surveyed said they saw this as a useful avenue to help them improve their workforce, and grow their offering.

Striving to help

With these challenges, SMEs need greater access to funding, mentorship, and guidance.

This is where Mastercard Strive can make a difference. Since 2021, Mastercard Strive, a portfolio of philanthropic programs supported by the Center for Inclusive Growth, has developed partnerships and delivered grants that help small businesses thrive in the digital economy, whether through accessing capital, growing their networks, or building their skills and knowledge.

The new Mastercard Strive EU program will extend those opportunities as we look to support and build local partnerships that benefit local communities and the wider European economy. The Strive EU Innovation Fund will provide grants of up to €500,000 to power 10 to 15 innovators build solutions and tools to help European SMEs access finance, operate safely and effectively in the digital economy, and navigate consumer and regulatory pressures on ESG. The program will also include a Small Business Council, bringing together policymakers, civil society, the private sector, and small businesses to share perspectives and amplify promising models.

Whether it’s a mother and daughter food truck, or a bustling factory, SMEs come in all shapes and sizes. Despite their differences, many of the challenges they face are the same, and they’re challenges that we can help them overcome. Together, we want to make sure that small businesses remain at the heart of their communities and have what they need to fulfil their full potential.

Learn more about Strive EU





Mark Barnett and Payal Dalal

Mark Barnett is president of Mastercard Europe

Payal Dalal is senior vice president, social impact at the Mastercard Center for Inclusive Growth

Media Contacts

Suman Hughes, Mastercard