Successful Innovation Winner – Business transfer marketplace

Autoocupació, regional member of Youth Business International (YBI) member Youth Business Spain, has won the YBI Global Youth Entrepreneurship Summit ‘Successful Innovation’ Award for their project ‘Reempresa’ – a business transfer marketplace. We spoke to Guillem Arís, Director at Autoocupació, about their innovation.

What is the problem you are tackling with this project?

During Spain’s difficult economic situation and high unemployment, starting a business was very challenging. At the same time, many small well-performing businesses closed because of a lack of succession. On the one hand, there are highly skilled people who want to own a company but don’t feel capable to start one from scratch.  On the other hand, there are people who own a well-performing business but don’t want to continue it. Business transfer is efficient, so is an effective solution for many people to become entrepreneurs and sell a business. Catalonia, like many other places, was missing a marketplace where buyers and sellers could meet and find support services to successfully transfer their businesses, reducing closures and increasing employment.

What is your innovative solution to this problem and how did you develop it?

Reempresa is a business transfer marketplace to reduce new businesses mortality by encouraging potential entrepreneurs to buy an existing business, reducing small business closure and job losses. It also provides free capacity development services.

The testing phase via a minimum viable product validated the idea and encouraged us to develop and scale the marketplace across Catalonia. There was a huge demand for capacity building services to help entrepreneurs negotiate a deal. The testing helped to identify potential customers, understand their needs and develop communications campaigns and services offers. For the outreach we conducted awareness-raising campaigns, not just to attract business owners and aspiring entrepreneurs, but also engage policy makers, funders and SME service providers.

What makes this innovation unique?

There was nothing available for self-employed people and microenterprises. Reempresa is the first structured, neutral and transparent marketplace to facilitate small businesses transfers providing trust between buyers and sellers. We created an innovative comprehensive system where buyers and sellers can find advice and training alongside the selling or buying process through a specialised team of advisors and trainers.

Were there any assumptions that you had to challenge in order to develop Reempresa?

When preparing the launch of Reempresa, we thought that around 80% of those wanting to sell their business would be wanting to go into retirement but this was only about 40%. Widening the categorisation of our target audience  meant we had to adjust our communication campaigns to reach other kinds of business owners wanting to sell their companies. We also expected that the main need of potential buyers and sellers would be to meet a counterpart to have a deal, and it was surprising that both needed capacity building services to help in the process. We developed these services, including training workshops and personalised programmes focused on areas like how to assess and value a company, how to deal with contracts and how to engage customers and employees in business transfer.

How did you connect the solution with trends, opportunities and threats in the sector?

According to the European Commission, every year, Europe is losing approximately 150,000 firms and 600,000 jobs due to inefficiencies in business transfers. It estimates that transfers affect up to 450,000 SMEs and 2 million jobs every year. Recycling is a global trend; our society promotes recycling of almost everything for environmental reasons. Recycling companies is the best way to maintain employment. Setting up efficient and structured ecosystems to promote small businesses transfers is a new trend in Europe to maintain jobs. Transeo, the European Association of SMEs Transfer, supported by the European Commission and with an increasing number of members across the EU is a very good example of this.

How did you deal with obstacles and how did these inform changes in the final product?

Ensuring flexibility to fit all delivery partners needs was a big time and financial investment but one of the main obstacles of the programme development was the technology. We thought we could use the same CRM Autoocupació was using to manage entrepreneurial support services, but there were many different features needed in terms of targets, activities and users. Reempresa works with two very different targets, with a portfolio of businesses to share externally and a key matching process, so we decided to develop a new CRM that is customised to Reempresa’s targets and activities.

How have you funded the innovation after the initial development?

Reempresa has established a unique public-private partnership, engaging different sources of funding and more than 100 different players like local public agencies, professional associations and trade unions as delivery partners working with the same technology and methodology, that has been a key factor to consolidate and scale the market place as the main reference for small businesses transfer in Catalonia. In order to insure long term sustainability for the innovation, we are working now on developing a new business model at an international level, based on a digital services offer, targeting medium-sized companies and mainly funded by buyers and sellers.

Tell us about the impact of your innovation and your achievements so far.

Reempresa is the first ecosystem for small business transfers in Catalonia and is now a global reference for other regions. It is a collective impact initiative to face a complex social challenge, engaging a range of stakeholders who are working together towards a shared mission. Over 11,000 potential entrepreneurs have received support (40% of whom were previously unemployed) and more than 5,000 businesses have been registered for sale. Over 2,000 successful business transfers have occurred, saving more than 6,000 existing jobs through an investment of more than €100 million. Three years after selling, 87.6% of the businesses are still running, 75% have increased their turnover, 31% have created new jobs and 61% have developed innovations in products or services.