80% of Irish SMEs continue to invest in their business, despite threat of Brexit
- Average spend of €110,000 will be invested by SMEs over next three months
- Main areas of focus are staff training and development (42%), digital and IT capabilities (33%), and additional machinery and equipment (33%)
- 71% of SMEs calling for Government to implement tax breaks to help deal with Brexit
Despite the threat of Brexit, 80% of Irish SMEs continued to invest in their business as the original 29 March deadline approached, with the main areas of investment being staff training and development (42%), digital and IT capabilities (33%) and additional machinery and equipment (33%). This is according to the latest SME Ireland Confidence Tracker, published by Bibby Financial Services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.
In addition, almost half of Irish SMEs expect to see either a slight (37%) or significant (12%) increase in sales in Q2 of 2019, despite the uncertainty regarding the outcome of Brexit. A further 38% expect their sales to remain steady.
However, the research found that Brexit was still having a negative effect on SMEs’ confidence, with sales expectations trending downwards since Q3 of 2018, when two thirds of SMEs anticipated an increase in sales.
The focus on investment is set to continue into Q2, with an average spend of €110,000 planned by SMEs over the next three months.
A reduction in operating costs is the major driver of this planned investment, cited by 27% of businesses, followed by a need to keep ahead of competitors (23%) and replace equipment or technology that has deteriorated (19%).
Significantly, of those SMEs that have no plans for investment in the next three months, 55% cite the UK’s exit from the EU as the chief limiting factor, followed by domestic economic uncertainty (38%), and cashflow issues (34%).
There is also continued dissatisfaction with the amount of state support provided for SMEs ahead of Brexit, with 63% believing the government should have done more to assist the sector, and 71% identifying a need for tax breaks. Additional measures cited include the need for a lower VAT rate or additional mentoring.
The SME Confidence Tracker, produced by Bibby Financial Services Ireland, is a national survey of over 200 small and medium sized enterprises across the Republic of Ireland, conducted on a bi-annual basis. The full report is available here: https://www.bibbyfinancialservices.ie/about-us/news-and-insights/reports/2019/sme-confidence-tracker
The survey also found that over a third of SMEs (34%) have suffered a bad debt over the past twelve months, although this figure is down 5% since Q3 of 2018, with the average length of time taken to receive payment remaining steady at 33 days.
Mark O’Rourke, Managing Director at Bibby Financial Services Ireland, says: “The most recent Brexit extension will only extend the uncertainty for Irish SMEs, while the risk of a disorderly Brexit and the damage this would do to the sector also remains on the table.
“It’s clear from our research that, in the face of these challenges, Irish SMEs remain largely optimistic about the potential for growth, and are focusing on investment in order to grow and future-proof their businesses as much as possible.
“At the same time, however, there is continued concern over the amount of support SMEs have received from the government, and any disruption to cashflow and working capital will present a serious threat to businesses’ profitability. Many SMEs are unaware of the range of financing options available to them – including invoice financing – that can offer them greater support and flexibility in everyday operations and in growing their business.”
Bibby Financial Services Ireland’s funding portfolio includes invoice discounting, factoring, export finance, foreign exchange services and specialist funding for a range of sectors.
Bibby Financial Services Ireland is part of Bibby Financial Services Group, an independent financial services partner to over 10,000 businesses across 14 countries. The Irish operation was established in 2006 and has an expert team of 30 employees based in Sandyford, Dublin.
For more information about Bibby Financial Services Ireland, please visit: www.bibbyfinancialservices.ie
Find us on Linkedin or follow us on Twitter @BibbyFinanceIE
For further information, please contact:
Breda Brown/David Clancy
Unique Media
Tel: (01) 522 5200 / 087 248 7120 (BB)
Methodology
The SME Confidence Tracker is a composite index based on SME sales performance over the past three months and expected sales performance over the following three-month period.
The tracker charts the confidence of owners and senior decision-makers of businesses in manufacturing, construction, wholesale, transport and services sectors. Respondent businesses have an average of 19 employees.
The SME Confidence Index for 2019 Q1 is 67, a slight decrease from the 2018 Q3 score of 73.
Research was conducted from 14th February to 15th March by Critical Research via a mixed methodology approach, with the majority of interviews being conducted via CATI and the remainder online.