- 26% of Connaught SMEs will invest over €50,000 each over the next 12 months
- 40% of Connaught businesses looking to private equity to fund M&A, MBO or MBI activity
The significant majority of businesses in Connaught (80%) say they are either confident or very confident about their business prospects for the remainder of the year and into 2022 according to a new report from Bibby Financial Services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.
The statistics show that 25% of businesses in Connaught are planning to invest over €50,000 ver the next year, with the top three areas of investment identified as:
- Staff training and development (32%)
- Digital technology and IT (32%)
- Machinery and equipment (36%)
Meanwhile, over a third (36%) of SMEs in Connaught are planning to invest in new machinery and equipment over the next year, with 64% identifying new customers as a top area for growth, compared to 46% in Munster and 55% in Leinster.
As businesses continue to plan for accelerating profit, many are turning to alternative finance to fund growth. However, just 20% of Connaught SMEs are considering M&A, MBO or MBI activity over the coming months, compared to 43% in Munster, 37% in Leinster and 40% in Ulster. 40% of these Connaught SMEs, meanwhile, are considering private equity to funds any of these proposed transactions.
Notwithstanding growing optimism, key fiscal and operational challenges still remain for Connaught’s SMEs. 28% of businesses in the region had to write off bad debt worth over €14,000 since the pandemic began, while 30% of Connaught companies say it is taking between five and six weeks to get paid.
Key findings show:
- 28% of SMEs in Connaught are concerned about rising business costs compared to 32% in Leinster and 30% in Munster
- Just 16% of SMEs’ suppliers in Connaught went into administration compared to 33% in Munster and 29% in Leinster over the past year demonstrating resilience through the pandemic
Nationally, the Bibby Financial Services Ireland report also states that almost four out of ten (38%) SME’s say they will require additional funding into 2022 as they look beyond the pandemic and return to growth.
Such funding will be vital to ensure businesses can deal with inflation, overcome supply chain disruptions, ramp up recruitment to fulfil demand, and invest. As a result, considering solutions from the private sector that protect against bad debt and offer access to working capital will provide SMEs with certainty of payment and sustainable sources of liquidity.
The pandemic has also offered businesses an opportunity to reflect, with some entrepreneurs and business owners deciding it’s time to restructure, refocus, innovate and grow, while others have come to the conclusion that it’s time to exit their business totally. Over a third businesses (36%) nationwide say they are considering merger and acquisitions opportunities in the coming months, while one in ten (9%) SME owners are considering a management buy-in, rising to 19% for wholesale and 33% for transportation businesses. When it comes to funding transactions, SMEs owners consider private equity, business loans and invoice finance as the top three ways to finance merger or acquisition activity.
Stephen McCarthy, Head of Business Development at Bibby Financial Services Ireland, says that although times have certainly been more testing than ever before, he believes Connaught SMEs are now on the cusp of a strong recovery as we look towards 2022.
“SMEs generally are showing significant resilience after such a turbulent few months, and are remaining positive despite the challenges that still lie ahead. Our new report shows there is genuine light at the end of the tunnel both for businesses and the economy. The time has come to begin to move forward with confidence.
However, as businesses recover and get back on their feet, its concerning that 28% say their greatest challenge is rising business costs, while 38% of SMES say they will require additional funding into 2022. 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.
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.”