Operating costs and conduct of business/small and medium enterprises

Quotation: Rennings, K.. 2013: Introduction to the economic Impact Area Operational costs and conduct of Business/small and medium enterprises. Available at: http://beta.liaise-toolbox.eu/node/1178.

Description

Operating costs are the total costs of providing goods or services, which include the costs of supplies and utilities, the repair and maintenance of assets, salaries, benefits, marketing costs, and depreciation of fixed capital.
The profitability of businesses providing a good or a service is affected on the one hand by policy impacting the cost of those essential inputs, on the other hand by policy that stimulates or discourages market demand for the good or service.
Experience shows also that new policies, e.g. aiming at higher product quality or safety standards, can lead to changes of company administration, and partly makes re-organisation necessary. In particular in the case of SME such additional burden can quickly exceed their financial capacity and has therefore to be carefully adapted, without impairing the policy objectives.
The Impact Assessment Guidelines 2005 have been reformed in 2009. The questions of the area “Operating costs and conduct of business” have been reworded and divided, but nothing else has been changed.

This impact area is further specified by the taxonomy terms: Compliance Costs for Business, Factor Costs for Business, Business Access to Finance, Investment Cycles, Markets for Products or Services, Regulation of Business, Business Opening or Closing and Different Treatment of Products or Businesses.

Relevant Policies

The European Commission is working to implement the Europe 2020 strategy, the EU´ strategy for smart and sustainable growth. Therefore the DG Industry and Enterprises is responsible for two flagship initiatives:

  • “An industrial policy for the globalization era” to improve business environment, notably for SMEs, and to support the development of a strong and sustainable industrial base to compete globally
  • “Innovation Union” to improve framework conditions and access to finance for research and innovation so as to ensure that innovative ideas can be turned into products and services that create jobs and growth.

Under these two activities the European Commission wants to meet the following goals:

  • Favourable framework conditions for European Industry
  • Support to the adjustment, restructuring and sustainable development  of industrial sectors
  • Access for European industries to third country markets
  • Innovation through improved framework conditions and support measures
  • A business environment which is favourable to SMEs and entrepreneurship
  • Access to finance for SMEs and innovation
  • Operational use of EU earth observation-based services (GMES)

Additionally SMEs are supported by the programme “Competitiveness and Innovation Framework Programme” (CIP) which funds SMEs with €3.6 billion over the period 2007-2013.
For more information on the treaty provisions and relevant policies adopted by the community, please refer to http://europa.eu/pol/enter/index_en.htm
This text is for information only and is not designed to interpret or replace any reference documents.

Legal basis for the Commission to act

Treaty establishing the European Community: Art. 157
The Community and the Member States shall ensure that the conditions necessary for the competitiveness of the Community's industry exist.” To reach this goals the European Community is engaging in speeding up the adjustment of industry to structural changes, encouraging an environment favorable to initiative and to the development of undertakings throughout the community particularly small and medium-sized undertakings, — encouraging an environment favorable to cooperation between undertakings, and especially fostering better exploitation of the industrial potential of policies of innovation, research and technological development.

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Related Terms

Compliance Costs for Business

Factor Costs for Business

Business Access to Finance

Investment Cycles

Markets for Products or Services

Regulation of Business

Business Opening or Closing

Different Treatment of Products or Businesses