89% of Munster SME’s are confident about business prospects over the next 12 months despite considerable challenges ahead – new research from Bibby Financial Services Ireland

  • 93% of Munster SMEs say they are planning to invest in their business over the next year

 

  • Top three concerns for Munster businesses over next year are energy prices (49%), economic issues due to geo-political events (38%) and inflation / rising costs of raw material (38%)

 

  • Top three opportunities involve attracting new customers (67%), building new supplier relationships (42%) and taking on new staff (33%)

 

  • 36% of Munster SME’s use a credit card to finance their business – a concerning figure considering this is a high-cost funding option

 

89% of Munster SME’s say they are confident about business prospects and opportunities over the next 12 months despite the considerable challenges ahead, according to research conducted by Bibby Financial services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.

 

The research shows that 53% of SME’s in Munster expect their turnover to increase over the next year. 40% say their turnover will stay the same while only 7% expect a decline in sales. Of those who say they expect their turnover to increase, 54% say it will increase between 6% and 10%, while 25% say it will increase between 11% and 20%.

 

The results very much demonstrate a stoic resilience amongst the Munster SME community despite the fact that they are dealing with a lot of economic volatility thanks to a range of domestic and international hurdles that are largely outside of their control.

 

When it comes to investment plans, 93% of SMEs in Munster say they are planning to invest in their business over the coming 12 months, with just 7% saying they have no plans to invest. Some of the key areas for investment are:

 

  • Staff recruitment (40%)
  • Machinery and Equipment (33%)
  • Staff training and development (31%)
  • Retaining Staff (29%)
  • Digital Technology and IT (27%)
  • More renewable energy options (16%)

 

Although the majority of SMEs are quite positive facing into the next annual period, challenges and concerns were noted, with a sense of growing uncertainty about the looming challenges ahead. Energy prices (49%), economic issues due to geo-political events (38%) and inflation / rising costs of raw material (38%) are stated as the top three concerns for Munster businesses.

That said, SME resilience shone through when asked about opportunities in the year ahead. Attracting new customers (67%), building new supplier relationships (42%) and taking on new staff (33%) are seen as the biggest opportunities for Munster SME’s in the next 12 months. 22% say trading internationally is an opportunity, while 7% cite Mergers and Acquisition activity as a prospect.

 

When it comes to financing their business, 84% of Munster SMEs surveyed by Bibby Financial Services say they use a form of external business finance. Among the most popular forms of financing are:

  • Business loans (38%)
  • Credit cards (36%) – slightly higher than the national average of 30%
  • Overdrafts (29%)
  • Private equity (27%)
  • Invoice Finance (9%)

 

Given the fact that business loans, credit cards and overdrafts require a business to take on even more debt – at a time when they don’t need it – SME’s should be considering more sustainable and long term solutions such as Invoice Finance, a facility that offers businesses access to money outstanding from their unpaid invoices, helping them to access income they have already earned but not yet received.

 

Unlike a loan, credit card or overdraft, Invoice Finance does not involve ongoing monthly repayments. This revolving credit option means that once your invoices are paid, you can just continue the cycle – upload your invoices, draw down, use the funds and simply repeat. In addition to assisting with cashflow, it’s worth noting that Invoice Finance can also be utilised to fund a range of other growth scenarios such as investing in infrastructure or equipment, funding Research and Development, financing an expansion, Mergers and Acquisition activity or simply stabilising a business during turnaround.

 

49% said that the level of finance available was a key attribute they considered when choosing a finance provider, while 47% said a ‘relationship-based approach’ was important, with 31% stating that the ability to apply online was important.

 

Chasing unpaid invoices is the top financing issue for almost one third of Munster SME’s (33%) followed by the effective management of day-to-day cashflow (31%) and managing the risk of a customer non-payment / bad debt (22%).

 

Of Munster SME’s who have had to open a new business account due to the imminent departure of KBC and Ulster Bank, 50% said they found it hard to find a ‘human’ to talk to discuss their issues, while 50% said changing technology was difficult as they had to use different apps. 33% said that they had to reapply for an overdraft, which was time consuming and caused cashflow problems.

 

Stephen McCarthy, Head of Business Development at Bibby Financial Services Ireland, says:

“All Irish businesses, including those in Munster, are once again bracing themselves for further economic volatility thanks to a range of domestic and international hurdles that are largely outside of their control. However, rather than showing a business population anxious about the challenges they are facing, the result of our survey demonstrates a stoic resilience amongst the SME community in Munster.

 

The package of measures announced by the Government to support businesses and households is extremely welcome, and will help address some of the pain points in the short term, but the question now is whether it will it go far enough to ensure the long-term survival of many businesses. Only time will tell the true extent of the impact on the business landscape.

It’s important to acknowledge the resilience of Munster SMEs and their ability to adapt and change – coupled with the wide-ranging support available from the private and public sectors – and hopefully this will fuel Munster SMEs who continue to play a pivotal role in Ireland’s overall economic solidarity over the coming months.”