Irish SMEs have increasingly been innovating and adopting new measures to help cope with the fallout of Brexit by establishing new supply sources for goods and negotiating new agreements with buyers and suppliers.
This is according to the SME Ireland Confidence Tracker for the third quarter of 2019, published by Bibby Financial Services Ireland. The SME Confidence Tracker is a national survey of over 200 small and medium sized enterprises across the Republic of Ireland, conducted on a bi-annual basis.
The research shows that 38% of SMEs say they have established new supply sources, while 32% have negotiated new agreements with buyers and suppliers. One third say they have applied for some form of business funding in the past six months.
The proportion of SMEs exporting and importing has increased in line with this, by 8% and 6% respectively, compared to the first quarter of this year. However, the survey also revealed that, while almost two-thirds (64%) of Irish SMEs believe Brexit will have a negative impact no their business, a third of businesses have not prepared for it in any way.
The report’s findings also indicate that there has also been a dramatic drop in confidence in the Irish SME sector over the past 12 months, with the average planned investment of €80,000 for the next three months representing a 40% drop when compared with the third quarter of 2018. In addition, less than half of all SMEs surveyed expected sales to increase over the next three months.
Half of all SMEs not intending to invest cited the uncertainty arising from the UK’s exit from the EU, while 45% also pointed to an uncertain economic environment within Ireland. For those that are investing, a need to reduce operating costs and increase efficiencies was cited as the primary reason by 30% of businesses, followed by a need to stay ahead of competitors.
The survey also found that over a third of SMEs (35%) suffered a bad debt over the previous 12 months, with the construction and transport sectors most likely to be affected. SMEs were asked if they had applied for business funding over the past. Of the third that had done so, most had applied either to a bank or for a government grant.
Speaking this week, Managing Director at Bibby Financial Services Ireland, Mark O’Rourke said, "It’s clear that Irish SMEs are cutting their cloth to suit their needs and attempting to insulate themselves as much as possible from the fallout of Brexit. Even with a withdrawal agreement in place, Brexit is set to hugely disrupt existing business and export practices and add further costs and red tape to businesses importing and exporting to the UK."
He added, "While it’s certainly encouraging to see SMEs diversifying their approach, it’s crucial that more businesses begin to look beyond the UK and shift more of their imports and exports to other markets."