Investing in sales skills can pull small business out of slump

Macroeconomically, the Netherlands is doing well. Recently published CBS figures show economic growth of 4.8 per cent in 2021. Very different is the situation of small businesses, which have been hit hard by a sharp downturn in business results. As a result, the number of expected closures has doubled from 2.6 per cent to 5.9 per cent. This is according to figures from the fifth Small Business Index (KB-Index), a survey by Qredits, ONL and the Hogeschool van Utrecht i.s.m. Cultuur+Ondernemen among more than 1,500 entrepreneurs in the small business sector. Among other things, investments in sales skills should turn the tide.

Business wages and confidence under pressure

"The financial situation of entrepreneurs in the small business sector really worries me and deserves attention," says ONL chairman Hans Biesheuvel, referring to the new figures of the KB-Index for the last quarter of 2021. Rightly so, as these figures paint a bleak picture. Falling business profits are sinking below pre-coronagraph 2019 levels, with far-reaching implications for entrepreneurial wages. Only 40 per cent of entrepreneurs earn more than the minimum wage. 18 per cent are below it and 42 per cent have wages below welfare level. Among other things, this leads to 40 per cent struggling to pay bills on time and entrepreneurial confidence dropping 10 points to +11.

Declining net margins increasingly worrisome

Besides the worrying financial situation of small businesses, the survey points to sharply declining net margins among a majority of entrepreneurs. "An increasingly acute problem," says Lex van Teeffelen, lecturer at Utrecht University of Applied Sciences. "Also in this quarter, net margins fell sharply among a majority of entrepreneurs. Together with high inflation, this ensures that entrepreneurs expect to invest even less in the first quarter of 2022 than in the fourth quarter of 2021. As a result, a growing group of entrepreneurs is developing into marginal businesses. Especially in the hospitality, retail and cultural sectors, which have been hit hard by recurring lockdowns." Of these sectors, the cultural sector participated in this edition for the first time. Titia Haaxma, director-director of Cultuur+Ondernemen observes, "The cultural sector has been hit hardest of all while investing the most. A relatively large proportion of self-employed people in the cultural sector invest as much as 25 per cent of their turnover in their business. That seems nice, but it is not."

Sales training can give Small Business powerful boost

The survey results offer little cause for optimism. Nevertheless, the report is not just pessimistic and, above all, gives perspective. For instance, it comes up with several recommendations for growth and recovery. Recovery by converting tax debts into subordinated loans. And growth by investing in sales skills of entrepreneurs. After all, the more expert in sales, the higher the quarterly sales and growth expectations, according to the survey. At the same time, 30 per cent of entrepreneurs say they are not good at selling. "So there are opportunities there," stresses Elwin Groenevelt, general manager at Qredits. "As an entrepreneur, you can be the ceiling of your own success. The research shows a clear link between entrepreneurs' sales skills and their turnover and short-term growth expectations. As a social lender, we train entrepreneurs on marketing and sales. Contributing to sustainable entrepreneurship in this way is very important to us. "About the KB Index This is the fifth publication of the Small Business Index, a joint initiative of Qredits, ONL for Entrepreneurs and the Digital Business & Media Knowledge Centre of Utrecht University of Applied Sciences.

Good to know

Cultuur+Ondernemen is a partner of the Small Business Index. Entrepreneurs without staff and less than ten employees represent 97 per cent of all entrepreneurs in the Netherlands. Together, they account for almost a quarter of all company profits and a third of employment in the business sector. As a barometer for this underexposed group, this index was developed, the results of which are published four times a year.

Small Business Index report Q4 2021_def