Small and medium-sized enterprises (SMEs) in Spain face an overwhelming bureaucracy that hinders their growth.

The everyday reality of small and medium-sized enterprises (SMEs) in Spain is marked by a constant battle against bureaucracy that often seems to stifle their capacity for growth and survival. From the legal advisors who help these companies comply with regulatory obligations day by day, there is a clear sense that the regulatory burden is excessive. This phenomenon is particularly evident in a context where resources, both financial and human, tend to be limited, turning regulatory compliance into a monumental challenge. Ricard Gené, a partner at the law firm La Guard, highlights that more and more companies are tempted to ignore regulations, a decision that could lead to serious consequences. "It's tremendous. They don't have the economic or human resources to do it and expose themselves to fines," explains Gené, who criticizes the lack of appropriate categorization that adjusts legal obligations to the various realities of SMEs, which account for nearly 90% of the business fabric in Spain. This raises a dilemma: how can these companies thrive when they are forced to navigate a sea of complex and changing regulations? Fiscal and labor regulations are undoubtedly the most impactful for SMEs. Both sets of regulations apply immediately to almost all companies, resulting in an increase in the demands they must meet. SMEs, in addition to managing their daily operations, must keep labor records, implement equality plans, ensure occupational risk prevention, and comply with data protection regulations, among other obligations. For many, this set of requirements is overwhelming, especially in a sector where profitability is a constant struggle. The psychological impact of this regulatory burden is palpable. Javier Berrocal, a partner at Santiago Mediano Abogados, notes that compliance with labor regulations is generating a growing level of tension among entrepreneurs. "Labor regulatory compliance is becoming increasingly demanding, and the Labor Inspectorate is there," states Berrocal, who warns that a mistake can trigger immediate economic consequences. This sharply contrasts with the capacity of large corporations, which can face these challenges more easily. In this complex landscape, entrepreneurs are forced to professionalize, optimize every area of their business, and manage budgets rigorously. Rafael Viñals from GRA Consultores emphasizes that outsourcing compliance activities could be a viable solution to alleviate this pressure. However, he acknowledges that this option can be complicated for those who are barely managing to keep their business afloat in an adverse environment. The general perception among entrepreneurs is that new regulations are more obstacles than facilitators for the development of their activities. Despite this initial resistance, many choose to comply with regulations, aware that doing so is part of the game. However, the risk of trying to manage these controls internally can result in penalties and legal complications. The regulatory burden also impacts the strategic growth decisions of SMEs. Berrocal mentions that many entrepreneurs considering expanding their workforce are hesitant to take the step due to fears of the new obligations that come with exceeding a certain number of employees. This phenomenon is particularly noticeable in sectors where regulatory pressure is higher, such as agriculture, contributing to a paralysis in the growth of these companies. Adding to this is a worrying fact: the lack of resources in the Public Administration often forces SMEs to take on self-monitoring functions that should be the responsibility of the State. "The Administration tells you that if you don't incur that cost to control your own activity, you will be sanctioned," states Berrocal, worsening the economic situation for these businesses. Experts agree that it is necessary to simplify the regulatory framework and be more sensitive to the realities of SMEs. The intention is not to eliminate control but to rationalize it so that it does not become a brake on growth. Authorities must become aware of the problem and work towards a more unified regulation that reduces administrative burdens and facilitates the growth of SMEs. Small entrepreneurs, who often lack the necessary resources to carry out thorough regulatory oversight, find themselves at a crossroads. The solution seems to require a collaborative approach between the Administration and the business fabric, where both parties work hand in hand to create a conducive environment that allows SMEs not only to survive but also to thrive in the future.