A new report from Bibby Financial Services Ireland has found that 87% of SMEs are planning to invest in their business over the next 12 months. This study is based on a poll of 200 Irish SME owners and decision makers across the manufacturing, construction, wholesale, transport and services sectors. Respondent businesses had an average annual turnover of €3.2m.
The majority of businesses (84%) also say they are either confident or very confident about their business prospects for the remainder of the year and into 2022, with 54% identifying new customers as a top area for growth. Meanwhile, 35% of businesses say they don’t believe a return to pre-pandemic levels will recover until after the first quarter of 2022, with this sentiment felt strongest by transport and wholesale businesses who believe that demand will not return until at least August 2022.
Notwithstanding growing optimism, key fiscal and operational challenges still remain for Ireland SMEs. Twenty nine percent say suppliers have gone into administration, liquidation or receivership, rising to 43% for those in the construction section and 41% for wholesalers. Other key challenges include increasing business costs (32%), overcoming Covid-19 safety protocols (29%) and renegotiating new rates with customers and suppliers (28%).
Further demonstrating the supply chain impact of the pandemic, more than one in ten (12%) say they have withheld payments to suppliers, with those in the transport sector (19%) most likely to have held back these payments. While subsequent impact on the flow of payments between Irish businesses is expected, its effects are likely to be long-standing.
The statistics show that an average investment amount of €114,338 is planned per business, with the top three areas of investment identified as:
Staff training and development (39%)
Digital technology and IT (39%)
Recruitment of new staff (34%)
Commenting on the research, Managing Director of Bibby Financial Services Ireland, Mark O’Rourke said, "As businesses recover and get back on their feet, its concerning that a third say their greatest challenge is rising business costs, while almost a quarter say they need cash flow support more than ever before. As a result, the private and public sectors need to remain focused on providing any required financial support to enable SMEs to do what they do best - drive employment, boost output, and fulfil consumer demand."
He added, "This help comes in many forms, be it through the provision of funding to unlock cashflow, supporting businesses in overcoming the complexities of trading overseas in a post-Brexit world or helping SMEs to understand changing customer behaviours and transitioning to digital operating models. The research ultimately shows that a diverse range of financial tools including invoice finance will help companies grow and prosper into 2022."