Nine in 10 Irish SMEs are confident about their business prospects this year, according to new research from Bibby Financial Services.
The 90% of Irish small businesses expressing confidence was the highest level among the nine countries in which SMEs responded to the 2023 Global Business Monitor, alongside Germany (90%), and ahead of France (89%) and the UK (87%).
Polish SMEs showed the lowest level of confidence at 79%. In Ireland, the transport, services and wholesale sectors are most optimistic about their prospects this year.
However, 71% of Irish businesses believe global economic conditions are worse now than during the Covid-19 pandemic or the global financial crisis.
Two-thirds of Irish SMEs (67%) claim they have experienced an increase in business over the last six months, behind Germany (73%) and the Netherlands (68%), while 18% state their performance has remained the same.
Slovakia registered the lowest increase in sales (43%), significantly behind the global average of 59%.
Some 72% of Irish SMEs expect their revenue to increase over the next six months, the second highest total globally, while 20% expect it to stay the same while 8% expect sales to decline.
The Irish figure is ahead of the global average expectancy for sales to increase (64%), with Germany the highest (75%) and Slovakia the most cautious (51%). There is also strong caution in the UK and the Netherlands, with 54% predicting only a slight increase in sales.
When it comes to sales expectations, the Irish construction sector has the most confident outlook for the next six months (80%), ahead of the global average for this sector of 64%.
More than three-quarters (77%) of manufacturing businesses are positive about an increase in sales, 5% ahead of the global figure for that sector. Wholesale takes third place at 74%.
For the year ahead, Irish SMEs see their key opportunities as attracting new customers (67%), building new supplier relationships (36%), taking on new staff (24%), renegotiating with existing suppliers (23%), and exploring new distribution channels (21%).
The main challenges were inflation/rising costs (64%) and energy costs (62%), in line with the other countries surveyed, followed by supply chain pressure (30%), interest rates and the cost of borrowing (27%), and the conflict in Europe (24%).
Access to finance is a challenge for 19% of SMEs, particularly for the construction industry (24%).
As a result, Irish businesses are taking a number of measures to navigate these issues: increasing customer prices (57%); reviewing supply chains for efficiencies (38%); and freezing recruitment plans (14%). 8% feel they don’t need to make any changes.
Furthermore, 62% of Irish SMEs have been impacted by either suppliers or customers going into administration in the past 12 months, in line with the global average of 62%, with the wholesale (79%) and manufacturing sector (74%) most affected.
88% of Irish businesses expect to invest this year, rising to 91% in manufacturing and 90% in wholesale, and the average amount SMEs expect to invest is €108,850.
The survey shows that the main areas of investment for Irish SMEs in 2023 are: marketing and sales (37%); staff training and development (34%); new staff (23%); digital technology and IT (20%); and machinery and equipment including commercial vehicles (17%).
"It is critical that SMEs can continue to access the finance they need to operate and grow," said Mark O'Rourke, managing director of Bibby Financial Services.
"This means considering a range of financing options that provide sustainable working capital and cashflow to help them overcome challenges and take advantage of opportunities that arise over the coming months.”
(Pic: Getty Images)
