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Our Survey Says

Ciara Battigan

Please excuse my use of the that classic Family Fortunes phrase! We are delighted to finally have the bandwidth and budget to do our own research on SME Financial Health. We think there is not enough discussion on the financial health and resilience of SME’s in Ireland. We are not expert data story tellers but this is what we can highlight as some of the key findings across each the main areas that we researched. The main point for me is that although certain cohorts of the SME Sector are strong, setting aside a cash buffer etc, many are not. This is something we should be addressing through public policy intervention. You can download the full report here.

Financial History/Access to government supports

  • 86% of Small Business’ have their taxes up to date with 94% saying their accounts are up to date. These % drop as businesses get smaller.
  • 3/5 Small Business’ make a small or good profit – which means that 39% of all Small Business’ only break-even or make a loss. Hospitality businesses clearly show that they struggle to make a profit more than most.
  • Over half of small businesses continue to feel the long-term impact of COVID. 
  • Over 1/3 of Small Business’ did not avail of any government Covid supports while currently only 28% are availing of current government support. Only 22% of small businesses are availing of the Temporary Business Energy Support scheme.

The key story here is that small businesses are doing a great job keeping their taxes up to date but that a large number are only just keeping their head above water. It also clearly shows the challenges that businesses have faced accessing the energy support scheme. Hopefully we will see energy prices come down and the need to access this scheme will recede.

Liquidity

  • 51% of small businesses describe their cashflow as fair or poor (rising to 63% for very small businesses).
  • 63% of hospitality businesses consider their cashflow to be only fair or poor. 
  • 1/3 are not up to date on their financial obligations. 
  • 30% of Small Business’ do not have short-term credit limit.
  • Of those that have a credit limit 1/4 max out some of the time.

The big story here is the number of businesses that are not keeping their financial obligations up to date and overall the liquidity picture is not good for many small businesses.

Financial Security/Literacy 

  • Only 1/5 have a management succession plan in place. 
  • Only 45% have a cash buffer in their business which tallies with our liquidity findings.
  • Although 2/3 have access to affordable credit that means 1/3 of Small Business’ still cannot access affordable credit. 
  • Positively 83% segregate their personal and business accounts.
  • The survey showed strong understanding of the financial dynamics in their businesses with 90% understanding their gross margin among other financial metrics– this is despite 63% not having any formal financial education.

We were really delighted with the results here around understanding the key financial metrics in the business. This is really positive. However only 45% have a cash buffer – this makes small businesses fragile when things go wrong. 

Current issues 

  • 2/3rd of Small Businesses believe government does not understand them when formulating government policy. 
  • 79% of businesses are impacted in a big or very big way by energy prices. 
  • Similarly the cost of supplies and raw materials impact 78% of businesses in a big or very big way. This hits 96% in hospitality sector.
  • Almost half consider their businesses impacted by Brexit and rising interest rates.
  • 1/4 businesses consider a big impact from changes to sick pay entitlements and pension auto-enrolment.

The big story here is the number of small businesses who just don’t believe government understand them. We have observed a number of very well meaning policy initiatives that are making it harder to run a small business and there needs to be more of an allowance of the impact of these policy initiatives. 

Outlook 

  • Only 1/4 believe their own business will do better in the future.
  • 4/5 say it is getting harder to keep their business going with 86% of hospitality businesses saying this. 
  • 68% need more clarity on pension auto-enrollment.
  • 53% don’t know how to make their business greener.
  • 51% need more clarity on sick-pay entitlements. 

The key message here is the very small number of small businesses who believe their business will do better in the future. I think its also interesting to see that only 47% know how to make their business greener.

Thank you for taking the time to read our findings. We hope you found some useful information that will give you insight into the SME Sector and to help your business succeed.