SMEs Investing Despite Brexit

16 Apr 2019 | 09.32 am

SMEs Investing Despite Brexit

Bibby Financial Services survey tracks SME confidence

16 Apr 2019 | 09.32 am

Brexit uncertainty continues to worry Irish SME owners but it hasn’t stopped them from investing in their businesses or anticipating further growth, according to new research.

The insights are contained in the latest SME Ireland Confidence Tracker, which is published by Bibby Financial Services Ireland. More than 200 SMEs were surveyed for the report between February and March last.

The survey found that 80% of Irish SMEs continued to invest in their business as the original March 29 Brexit deadline approached. The main areas of investment were staff training and development (42%), digital and IT capabilities (33%) and additional machinery and equipment (33%).

In addition, almost half of Irish SMEs expect to see either a slight (37%) or significant (12%) increase in sales in Q2 of 2019, despite the uncertainty regarding the outcome of Brexit. A further 38% expect their sales to remain steady.

However, the research found that Brexit was still having a negative effect on SMEs’ confidence. Sales expectations have been trending downwards since Q3 of 2018, when two-thirds of SMEs anticipated an increase in sales.

The focus on investment is set to continue into Q2, with an average spend of €110,000 planned by SMEs over the next three months.

A reduction in operating costs is the major driver of this planned investment, cited by 27% of businesses, followed by a need to keep ahead of competitors (23%) and replace equipment or technology that has deteriorated (19%).

The survey also found that of those SMEs that have no plans for investment in the next three months, 55% cite the UK’s exit from the EU as the chief limiting factor, followed by domestic economic uncertainty (38%), and cashflow issues (34%).

State Support

There is also continued dissatisfaction with the amount of state support provided for SMEs ahead of Brexit. Some 63% of respondents believe the government should have done more to assist the sector, while 71% identified a need for tax breaks.

Additional measures cited include the need for a lower VAT rate or additional mentoring.

Other findings in the survey showed that one-third (34%) of SMEs have suffered a bad debt over the past 12 months. That figure is down 5% since Q3 of 2018, with the average length of time taken to receive payment remaining steady at 33 days.

Commenting on the survey findings, Mark O’Rourke (pictured), managing director at Bibby Financial Services Ireland, said that the most recent Brexit extension will only extend the uncertainty for Irish SMEs.

“It’s clear from our research that, in the face of these challenges, Irish SMEs remain largely optimistic about the potential for growth, and are focusing on investment in order to grow and future-proof their businesses as much as possible,” O’Rourke added.

“At the same time, however, there is continued concern over the amount of support SMEs have received from the government, and any disruption to cashflow and working capital will present a serious threat to businesses’ profitability.

“Many SMEs are unaware of the range of financing options available to them – including invoice financing – that can offer them greater support and flexibility in everyday operations and in growing their business.”

Bibby Financial Services Ireland is part of Bibby Financial Services Group, an independent financial services partner to over 10,000 businesses across 14 countries. The Irish operation was established in 2006 and has a team of 30 employees based in Sandyford, Dublin.

 

 

 

Comments are closed.