Europe’s small firms are making a big impact

If you want to see the future, watch the small players at work.

The evidence of the growing power of startups and small businesses is everywhere. In many countries ride-share firm Uber has come from nothing to be a serious rival for established taxi companies. More recently, companies such as Stockholm-based Spotify, London-based Shazam and Berlin-based SoundCloud have changed the rules when it comes to digital music.

While success is to be admired, the typical small business faces big challenges during times of rapid evolution and growth. Attracting seed capital, developing a business plan and getting offerings to market are huge tasks that take both time and experience to complete.

Attracting and retaining talented staff is another big challenge. With startup numbers growing by the week, finding the skills needed to get a particular business off the ground can be very difficult. Many firms offer share options or other financial incentives yet still find themselves battling with rivals for the very best of the talent crop.

One London-based firm, Entrepreneur First, is taking a different approach to the challenge by recruiting talented IT specialists directly from university and then matching them with an appropriate business. According to the company, it has already supported the creation of more than 40 successful firms.

Meanwhile, cities across Europe are racing to become startup hubs in an attempt to attract fresh talent and investment. Cities are hoping to foster a Silicon Valley-like ecosystem of small firms that feed off each other and create long-term value for the country.

Read more on various startup hubs:

For example, in the Netherlands monitoring group Startup Juncture calculates some 75 small firms attracted investment of around $560m (£356.48m) in 2014, helping to establish a vibrant business ecosystem. Indeed, both Netflix and Uber have opted to place their European headquarters in Amsterdam.

To support bullish plans for growth, small firms need to also have the right IT infrastructure in place. Where once this would have required significant capital investment, now many are opting to embrace outsourced and cloud-based resources and take more of a “pay-as-you-grow” approach.

Rather than investing in expensive CRM and ERP systems, businesses can make use of on-demand offerings such as Salesforce.com and NetSuite. For firms requiring compute and storage resources, capacity can be rented from a range of cloud providers.

Startups have the potential to reshape the European business landscape and, with proper planning and execution, many may very well achieve this goal. The appropriate blend IT infrastructure pools will greatly enable them getting there.

Rob Bath is vice president of global solutions at Digital Realty.

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