Small Business Pain Research Report 2014
Avid Partners are delighted to present the first of our Annual “Small Business Pain” Market Research Reports which identify the Key Strategic Business Issues currently being experienced by Small Businesses in Ireland and the degree to which each factor is having a limiting effect on the growth of their organisation.
This report is based on the views of over 100 Business Owners and senior management representatives of the small business sector in Ireland and comprises of a mixture of industry types and company sizes. The research was undertaken by Avid Partners Accountants & Business Advisers to identify and catalogue the importance business owners are currently placing on the key issues impacting on their business.
Coming from a position of supporting small businesses in the management aspects of their operations on a day to day basis, Avid Partners experience first-hand many of the problems that small businesses face in driving their companies forward. This project was undertaken to investigate on a larger scale the current state of play within the SME Sector, specifically the issues that are holding small businesses back from achieving their true potential, as well as analysing the future trends of the sector going into 2015.
The results of the market research can be used by policy makers to address the needs of the small business sector and by the small business community themselves to understand the key issues impacting on their sector. Once identified small businesses can then develop strategies and actions to overcome these barriers to growth by addressing the key findings of this report and by building the conclusions into their business plans for next year.
We would like to thank you in advance for reading this report and we hope it is of assistance to small businesses and the sector as a whole in driving new prosperity into the SME business landscape. After all Irish business is shaped by small enterprises and it’s their efforts and entrepreneurship that drives the whole economy forward.
Executive Summary
Purpose of the Research
The research was undertaken to identify the key business issues that are currently effecting the small business sector in Ireland. Going into a new business year Avid Partners wanted to examine first-hand the problem areas that are holding back small business and suggest solutions to these problems that they and policy makers can use to assist the small businesses sector grow in 2015.
Key Findings
- Cash Flow was determined to be the most critical issue being experienced by small business owners. This was highlighted both through the survey and in the one to one interviews. Educating potential customers on the businesses products and the need for their services was also deemed to be a highly critical issue for small businesses.
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The levels of recovery and optimism trends do not appear to be evenly spread throughout the country. Variation was detected between small businesses in Dublin compared to the rest of Leinster and in larger cities and towns compared to more rural based enterprises.
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Accessing finance has not become easier for small businesses in 2014 despite the high profile campaigns promoting small business finance products and the perception that banks are “open to small businesses”.
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The majority of respondents to the survey are planning on growing their business through their own resources rather than bank loans suggesting a “slow and steady” approach to future growth. This suggests a lower risk appetite amongst the sector when it comes to investment in their company’ future.
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The biggest perceived threat to growth for small business is the stated high costs of doing business in the sector. Similarly the area that small business owners suggested government and support agencies should focus the majority of their resources was in seeking ways to reduce business costs and taxes.
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A lack of high quality available staff is not a critical restriction on growth for small businesses at the present time. There is evidence however that competition for top talent is starting to increase and small businesses need to be aware of this trend and factor it into their growth planning for 2015.
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Overall optimism for small businesses going into 2015 is high with the vast majority of respondents expecting to grow their businesses next year. This demonstrates a continued positive trend in the sector as most feel that the worst of the downturn is behind them.
Recommendations
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Small business need to pay particularly close attention to the area of cash flow and closely monitor this critical area on a continual basis. Cash Flow is not the sole domain of larger businesses and multi nationals. Monitoring should be done regularly either by the business owner themselves or with the assistance of an external financial advisor. Proper accounts should be maintained regularly (monthly or quarterly) and never only at the end of a financial year. Small businesses need to truly recognise that sales and profits are not the same thing and neither is a sale complete until the full invoiced amount has been received (booking a full sale based on a deposit). Costs always have to be closely monitored as do payments coming due and effective cash flow planning can go a long way towards addressing this key issue before it ever becomes a major problem.
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Growth is becoming more of a key focus for the majority of small businesses and for this companies need to create a greater emphasis around marketing. Such activity doesn’t just happen it must be planned for and implemented. Marketing doesn’t have to be an expensive endeavour suited only to larger companies. Every business can implement some proactive marketing strategies at low cost particularly in the areas of direct marketing, events marketing, public relations, online marketing, networking and referral programmes.
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When attempting to seek external finance small businesses would be well advised to seek some support from companies with experience in formulating such documentation, as despite the PR campaigns to the contrary banks are being very selective about who they loan money to. if any aspect of the application isn’t crystal clear odds are the request will be refused at an early stage.
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For regional businesses that are still struggling to come out of the recession and have less reasons to be optimistic going into 2015, a key piece of advice would be to seek as much external support as possible. If their businesses haven’t started to show signs of improvement by now then their current strategies may not be the right ones to be following and a new direction may be needed. It can be very difficult to see this when a business owner is so intrinsically attached to the current philosophy so that’s why seeking external opinions are critical.
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Whilst a lack of high quality staff was not identified as a crucial issue for small business at the present moment, there is growing evidence to suggest that competition for the best talent is heating up going into 2015. As high quality talent is critical to the growth of small businesses it would be worth noting that for any small business thinking of taking on a new key staff member, early in the New Year may be a good time to start the process. Take action before competition becomes more intense as otherwise they risk competing with the larger organisations with larger pockets available to them to attract key talent.
Future Research
Avid Partners intends to conduct an annual “small business pain” research project and compare the results to previous findings in order to gauge trends and changing philosophies. This will aid the small business sector and provide a baseline reality for small business owners to know what’s really happening in their sector with a unique “snapshot in time” perspective on their industry.
Contact Avid Partners
We would be delighted to hear from you whether it is to discuss the implications of our research for your company or to discuss any area that may be causing some concern for your business. Call us on 0818 303087, email us at advice@avidpartners.ie or alternatively you can fill out the form below.
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