THE IMPORTANCE OF SMALL BUSINESSES IN THE REPUBLIC OF CROATIA AND THEIR ROLE IN DISTRIBUTIVE TRADE

Small businesses, made up of companies and crafts, are an extremely important segment of the Croatian economy. Its contribution to overall employment, revenues and share in the overall number of entrepreneurs is exceptional. On the basis of size, about 95% of all Croatian companies were categorized as small companies between the years 1993-2003. About one hundred thousand crafts are registered in Croatia, which employ about 2.5 people on average. Small businesses realized 45.4% of revenues in 2003. They show a marked concentration in four segments of economic activities. They are: trade, real estate turnover, processing industry and construction. Small businesses are concentrated according to territory. Accordingly, about 73% of all businesses are located in five Croatian counties. Small businesses are plagued by a number of problems. The key problems are found in entrepreneurs lacking in know-how and the lack of warranty funds. Most small businesses are found in the segment of distributive trade, which is particularly fragmented. Fragmented trade becomes an easy prey to foreign competition, which has reached the Croatian market through the internationalization process.