10 biggest issues facing small Irish businesses today
It’s no secret that running a small or medium-sized business is hard, wherever you choose to do it. But for Irish SMEs in particular, there are all sorts of common challenges and hurdles, regardless of which industry you operate in. Yes, the Irish economy is relatively strong, but that doesn’t automatically mean everything’s rosy.
The increased cost of living, high rents and slow wage growth have all taken their toll on the finances of many Irish households over the last few years, as well as businesses. It has meant that potential customers or clients may not have the same levels of disposable income that they used to have, and this can affect businesses dramatically.
Unfortunately, at the same time the financial backing needed to start-up a company has skyrocketed. Overhead costs, rent, insurances and regulatory compliance are now all very major considerations. This combined with the explosion in popularity of online shopping means that smaller, local businesses with narrower margins can really struggle to stay afloat. Indeed, it can easily feel like tax breaks, benefits and resources all too easily flow towards international corporate goliaths and away from local small Irish businesses that need it.
Here we take a look at the challenges faced by Irish SMEs in a modern day, global business world.
Brexit is taking a deep toll on all businesses in general, and Irish ones are no exception. The British public’s vote to exit the European Union has meant huge uncertainly, resulting in issues securing funding in particular. It’s also lead to cautious spending across a range of targeted markets. On top of that, UK nationals that work in Ireland, as well as Irish nationals that work in the UK, are still unclear long term about whether they can stay. Social security arrangements and pension schemes are likely to have been impacted, with companies large and small having to consider the possibility of work permits and visas being required for existing staff.
Then of course there’s the exchange rate. Brexit uncertainty has meant sterling’s value has decreased sharply, which is already affecting businesses in the Irish Republic. Imports are rapidly becoming cheaper, which is good news for business that buy supplies from the UK, but exports are now more expensive. This means that companies looking to sell to UK customers from their Irish base are going to take a substantial hit.
2. Cash flow
The one major issue facing the majority of SMEs across Ireland is cash flow irregularity which in turn makes forecasting the hard times incredibly difficult. Whether a small business is brand new or well established, cash flow problems can quickly affect profitability, financial arrangements and reputation.
After the 2008 financial crash, many businesses had to be rebuilt from the ground up. However, SMEs particularly found that limited cash flow seriously affected not only their expansion plans but their immediate viability. Nowadays, although the effects of the financial crash are less stark, banks are still very wary about lending to smaller businesses. Indeed, money for SMEs in general can be hard to come by.
3. Staffing issues
For Irish SMEs, hiring, training and keeping good employees can be a minefield. Often when they take staff on, the brightest, most qualified and most driven team members don’t stay long before they’re tempted away by bigger competitors. With Brexit looming, SMEs may well also find they lose staff who now need work permits to stay.
Dealing with the competition is part and parcel of running a business but it’s something that many struggle with. SMEs specifically run the risk of clients leaving to go elsewhere, particularly if larger companies are able to undercut them.
5. Regulations and guidelines
When it comes to governmental laws and guidelines nothing stands still – this is particularly the case with employee laws, health and safety and compliance. Although such updates are essential for workers and clients alike, they are often time-consuming and expensive to implement, especially for SME where resources may be limited.
Many Irish businesses may struggle to build a loyal customer base, especially in the very beginning. This can present a major challenge when it comes to cash flow and profit.
There really are never enough hours in the day and this is especially the case for managers of SMEs. Looking after a smaller company can be incredibly busy and managers tend to have a large number of responsibilities to take care of. Fitting everything in and still having time for a life outside of work can often be nearly impossible.
8. Strategy and forward planning
When money and time are really stretched, it’s easy to get so engrossed in the day-to-day tasks that planning for the longer term goes out the window. Finding the time and budget to develop a future business strategy is vital - but not easy.
Marketing is at the heart of a business’ success in getting their message across. However, it requires a unique set of skills, and often a team of people, that many small Irish businesses simply can’t afford.
10. Investing in growth
The only way an SME is truly going to thrive long term is to grow and innovate - but that requires cash. Research and Development (R&D) Tax Credits are a Revenue-backed scheme that’s designed to encourage innovation across all business sectors in the Republic of Ireland. Qualifying R&D expenditure claimed through this scheme will attract a 25% tax credit for offsetting against corporate taxes, as well as a lower rate of Corporation Tax of 12.5%. This means that Irish businesses that undertake eligible R&D activities can claim a Revenue refund of €37.50 for every €100 worth of R&D spent. This effectively means that R&D Tax Credits reduce the cost of R&D by up to 37.5% in real terms - a massive leg up for SMEs especially.
Interested in finding out more? Talk to the R&D tax relief experts today
Submitting a successful R&D Tax Credit claim to the Revenue is often a complex process and mistakes can be very expensive.
Whilst many accountancy firms have some dealings with R&D tax reliefs, here at Tax Cloud (part of Myriad Associates), we specialise entirely in the R&D claims field. This means we can offer the very best, up-to-date guidance so you can be safe in the knowledge that everything is as it should be.
Also don’t forget to try the Tax Cloud calculator. With sections for both businesses and accountants it’s a handy tool designed especially to show companies in the Republic of Ireland what R&D Tax Credits they can claim.
For more information or further advice, feel free to call us on +353 1 566 2001 or use our contact page and we’ll get right back to you.
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