Specialist

SME Confidence Tracker 202287% of SME’s are confident about business prospects over the next 12 months – new research from Bibby Financial Services Ireland

Energy prices and economic issues due to geo-political events stated as top two challenges for SME’s over next 12 months


87% of Irish SME’s say they are confident about business prospects and opportunities over the next 12 months despite the considerable challenges ahead, according to research conducted by Bibby Financial services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.

The research shows that 54% of all SME’s expect their turnover to increase over the next year. 38% say their turnover will stay the same while only 9% expect a decline in sales. Of those predicting an increase in turnover, almost three in four expect an increase of up to 10%.

The results very much demonstrate a stoic resilience amongst the Irish SME community despite the fact that they are dealing with a lot of economic volatility thanks to a range of domestic and international hurdles that are largely outside of their control.
When it comes to investment plans, 89% of businesses say they are planning to invest in their business over the coming 12 months, with just 11% saying they have no plans to invest. When asked how much they plan to invest over the next year, the average figure quoted, excluding those with no plans to invest, was approximately €230,000.

Some of the key areas for investment are:

  • Staff recruitment (36%)
  • Staff training and development (32%)
  • Marketing / sales (29%)
  • More renewable energy options (24%)

Those with a turnover of between €10m and €25m have a slightly different focus for investment, with staff retention (37%) topping the list, followed by staff training and development (32%), digital technology and IT (32%) and more renewable energy options (32%).

Although the majority of SMEs are quite positive facing into the next annual period, challenges and concerns were noted. Currently, 55% of all SME’s say that increased energy bills are an issue for their business right now, while 49% mention the rising cost of raw materials due to inflation.

Looking ahead to the next 12 months, energy prices (53%) and economic issues due to geo-political events (45%) are stated as the top two items. The wholesale sector is particularly concerned about energy prices, with 70% of this cohort stating it as their biggest challenge for the next year. 33% predict that staff shortages will be an issue, while 19% say rising interest rates are a concern.

That said, SME resilience shone through when asked about opportunities in the year ahead. Attracting new customers (69%) and taking on new staff (37%) are seen as the biggest opportunities in the next 12 months. 23% say trading internationally is an opportunity, while 12% cite Mergers and Acquisition activity as a prospect.

When it fomes to financing their business, 82% of Irish SMEs surveyed by Bibby Financial Services say they use a form of external business finance. Among the most popular forms of financing are:

  • Business loans (38%)
  • Credit cards (30%)
  • Private equity (27%)
  • Overdrafts (26%)
  • Invoice Finance (16%)

Given the fact that business loans, credit cards and overdrafts require a business to take on even more debt – at a time when they don’t need it - SME’s should be considering more sustainable and long term solutions such as Invoice Finance, a facility that offers businesses access to money outstanding from their unpaid invoices, helping them to access income they have already earned but not yet received.

Unlike a loan, credit card or overdraft, Invoice Finance does not involve ongoing monthly repayments. This revolving credit option means that once your invoices are paid, you can just continue the cycle – upload your invoices, draw down, use the funds and simply repeat. In addition to assisting with cashflow, it’s worth noting that Invoice Finance can also be utilised to fund a range of other growth scenarios such as investing in infrastructure or equipment, funding Research and Development, financing an expansion, Mergers and Acquisition activity or simply stabilising a business during turnaround.

44% said that the level of finance available and a ‘relationship-based approach’ were the key attributes they considered when choosing a finance provider.

Chasing unpaid invoices is the top financing issue for almost one third of SME’s (32%) followed by managing the risk of a customer non-payment / bad debt (27%) and effective management of day-to-day cashflow (27%). SMEs with a turnover between €5 million and €10 million note that they find it most difficult to access finance (27%), while those with a turnover between €10 million and €25 million find it difficult to manage day-to-day cash flow (53%).

Of those who have had to open a new business account due to the imminent departure of KBC and Ulster Bank, 55% said they found it hard to find a ‘human’ to talk to to discuss their issues, while 36% said that incurring significant fees and cashflow problems caused by having to reapply for overdrafts were an issue.

Mark O’Rourke, Managing Director of Bibby Financial Services Ireland, says:
“Irish businesses are once again bracing themselves for further economic volatility thanks to a range of domestic and international hurdles that are largely outside of their control. However, rather than showing a business population anxious about the challenges they are facing, the result of our survey demonstrates a stoic resilience amongst the SME community.
The package of measures announced by the Government to support businesses and households is extremely welcome, and will help address some of the pain points in the short term, but the question now is whether it will it go far enough to ensure the long-term survival of many businesses. Only time will tell the true extent of the impact on the business landscape.
It’s important to acknowledge the resilience of Irish SMEs and their ability to adapt and change - coupled with the wide-ranging support available from the private and public sectors – and hopefully this will fuel SMEs who continue to play a pivotal role in Ireland’s economic solidarity over the coming months.”