Typical SME problems made worse by Brexit, survey finds

The typical problems facing small and medium-sized enterprises (SMEs) – rising costs, regulation and cashflow – have been made more acute in Ireland because of Brexit, a survey by Bibby Financial Services has found.

The group’s latest global business monitor found nearly half of Irish SMEs cited rising costs as their greatest challenge, compared to a global average of 42 per cent.

The survey of more than 2,300 businesses across 13 countries also found that Irish SMEs were more likely to be struggling with cashflow than their international competitors, with well over a third (38 per cent) highlighting it as a significant issue, and less than half expecting a growth in sales in 2020.

The report also highlighted the SME sector’s outlook when it came to the impact of geo-political uncertainty. Some 72 per cent of Irish businesses said they felt Brexit was the biggest threat to global growth, followed by the political situation in the US and the rise of protectionist economic policies worldwide.

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Trading internationally

Of those Irish SMEs trading internationally, the UK represented best value and the greatest opportunity, followed by the US and Germany, Spain and France.

However with Brexit on the horizon, almost 40 per cent of Irish SMEs said they are considering export markets beyond the UK but the vast majority (82 per cent) feared some form of challenge in trading internationally, most notably currency fluctuations.

Despite the cloud of Brexit hanging over the Irish economy, the survey found Irish SMEs were the fourth most optimistic about the performance of their domestic economy, with 57 per cent believing it to be good, albeit this was down 10 per cent on the 2017 survey.

The strong performance of the Irish economy, particularly as it nears full-employment, has also caused challenges for SMEs, with 50 per cent describing it as “difficult” or “very difficult” to find qualified staff.

More than half (53 per cent) of SMEs reported a growth in sales over the last year, and, looking ahead, and despite the increasing likelihood of a no-deal Brexit, 49 per cent of SMEs expect sales to increase in the next 12 months.

Key concern

Availability of finance was also a key concern, with only 21 per cent of respondents considering it excellent or good, down from 33 per cent in 2017, and an increase in the number of businesses rejected for external finance (19 per cent in 2019, up from 10 per cent in 2017).

“The strong performance of the Irish economy to date has meant that Irish SMEs continue to be largely optimistic about trading in post-Brexit domestic and international markets when compared to their international competitors,” Mark O’Rourke, managing director at Bibby Financial Services Ireland, said.

“However there is a risk that underinvestment in preparation for Brexit will have a damaging effect on the sector and for Irish businesses, with few SMEs having the resources to put specific contingency plans in place.”