13 May 2019 | 11.40 am
Taking The Pulse Of Laid Back Micro Businesses
Ireland's micro firms average 3.1 employees
13 May 2019 | 11.40 am
Size matters when it comes to analysing business trends in Ireland. While there are reams of studies on SMEs, there’s precious little research on micro-businesses employing one to nine people. This cohort comprises c.105,000 businesses in Ireland, or 45% of the country’s enterprise population.
University College Cork and UK Enterprise Research Centre surveyed 1,500 of the cohort to find out what makes them tick. The main conclusion: most micro-businesses start small and stay small, and the business owners wouldn’t have it any other way.
That’s not surprising, as this micro universe spans plumbers, shop owners, builders, hairdressers, architects, designers, artists, lawyers, accountants and a myriad of services and small manufacturing ventures. For seven out of ten of them, keeping the business ticking over will do just fine. However, the UCC/ERC research also found that there is some ambition coursing through the mainstream, with one in four of the micro cohort stating that they want to build a national or international firm.
Four out of ten micro-business owners are growing their business with a view to exiting. In the west of the country, this objective was expressed by 80% of respondents, while in Dublin the figure was 45%. Micro-firms in the Galway, Mayo and Roscommon region are amongst the most ambitious in the country, while enterprises in the border region tend to have a low ambition profile, according to the report’s metrics.
In terms of personal ambition, two-thirds want to be able to retire comfortably, while half the business owners told the survey researchers that want to build a business that they can hand on to their family. The main personal motivations for starting a small business are identified as individual freedom to adapt their own approach to work, as well as greater flexibility for personal and family life.
Overall, the profiles of business ambition are broadly similar in Ireland and the UK, and a little lower than their micro-business owner counterparts in the USA,” says UCC economist Jane Bourke (pictured), co-author of the report. “Government policy is to grow small business but this may not be what small business want.
“Individuals’ personal ambitions suggest a rather different set of priorities, with a marked emphasis on ‘freedom’ and ‘flexibility’. This is consistent with much of the research literature on self-employment and entrepreneurship which stresses the financial as well as the non-financial benefits of being your own boss.”
The study also examined digital technology adoption. Four out of ten micro-businesses use web-based accounting and cloud computing, while uptake of e-commerce (34%) is higher in Ireland than in the UK and the US. In relation to organisational innovation, one in four small enterprises claim to have introduced new business models or forms of organisation in recent years.
IRELAND’S 105,000 MICRO BUSINESSES
• On average, micro-businesses have 3.1 employees and have been operating for 25 years.
• The ratio of male to female owners is approximately 2:1.
• Around half are home-based, three out of four are family-owned.
• Typically, the founder is not the only member of the firm’s leadership team, though the average size of the leadership team is 1.8.
• 85% of micro-businesses traded profitably over the period 2017 – 2018. For 45% turnover increased, 10% reported a decline and for the balance turnover was static.
• Four out of ten sell goods or services to international markets. On average, overseas sales account for 12% turnover.
• Half of Irish small firms use external finance from banks or other lenders. This is considerably higher than the UK and US. One in five have sought additional finance over the last year.