Small and Medium-Sized Enterprises in Ireland

1 Small and Medium-Sized Enterprises in Ireland Country Facts: Basic Information Ethnic Groups: Irish: , Other Official Name: Republic of Ireland White: , Asian: , Black: , Mixed: , Unspecified: Date of Establishment: 29 December 1937. Economic Data EU Accession: 1 January 1973. Currency: Euro since 1 January 2002. Time Zone: GMT. Inflation: (2010). Capital City: Dublin ( m 2009). GDP ($bn): (2010). Neighbouring Countries: Northern GDP (Purchasing Power Parity): Ireland (2010). Area: 68,890 km2. Real GDP Growth 2011: Population: 4,670,976 (July 2011). Real GDP Growth 2010: Territorial Division (26 regions): Structure of GDP: Agriculture 2%, Carlow, Cavan, Clare, Cork, Donegal, Industry 29%, Services 70%.

2 Dublin, Galway, Kerry, Kildare, Kilkenny, Laois, Leitrim, Limerick, Key Industries: Pharmaceuticals, Longford, Louth, Mayo, Meath, Chemicals, Computer Hardware and Monaghan, Offaly, Roscommon, Sligo, Software, Food products, Beverages Tipperary, Waterford, Westmeath, and Brewing, and Medical Devices Wexford, Wicklow Political Data drivers of the nation's economy while start-up procedures for SMEs: It State Organisation: Republic The Irish Times, has referred to SMEs takes only two weeks to start a as forming the "spine" of the Irish business in Ireland compared Political System: economy. As of 2010: to the EU average of 20 days. Parliamentary Democracy Additionally, the cost of setting Ireland was home to 230,000 SMEs.

3 President: Mary McAleese up a business in Ireland is limited Irish SMEs contributed over 10. Prime Minister: Enda Kenny to only .3% of per capita income billion to the Exchequer annually. while the EU average comes in at Membership of International Irish SMEs provided employment 7%. Organisations: EU, UN, UNESCO, to over 900,000 individuals. OECD, IMF, UNIDO, WHO, WTO, Procedures for hiring and laying- Irish SMEs made up over 90% of off staff are much simpler in INTERPOL, EMU, CE, IAEA, ICC. food manufacturing companies in Ireland than in other EU countries. the country. Definition for SME: There are approximately 20 SMEs SMEs enjoy a 65% share of The European Union adopted a public procurement contracts as per 1,000 inhabitants in Ireland , compared to the EU average of new definition for SMEs in 2005.

4 Which corresponds to only half of This definition is to contribute to 42%. the EU average. However, closer an improved business environment Entrepreneurship, in general, examination of the figures will show for SMEs and to promote is highly regarded among Irish that this is largely due to the overall entrepreneurship, investments people. Survey data shows that smaller number of businesses in and growth: 85% of Irish citizens agree that Ireland . Proportionally, the share of persons growing a successful The category of micro, Small and employment added and value added new business receive a high status Medium-Sized Enterprises (SMEs) to the economy by SMEs is similar compared to the 69% average for is made up of Enterprises which to the EU average, making their the EU.

5 Employ fewer than 250 persons and contributions to the Irish economy all which have an annual turnover not the more important and impressive. The proportion of state aid exceeding 50 million Euro, and/or devoted to SMEs in 16% in Ireland compared to 11% in the EU on an annual balance sheet total not Irish Environment for average. exceeding 43 million Euro. SMEs According to the new definition, an The EU has developed 10 principles enterprise is any entity engaged in for best practice in supporting the Challenges For SMEs an economic activity, irrespective of growth of SMEs. These include The current economic conditions its legal form'. existing on a global level have Entrepreneurship There are three types of SME: exacerbated the typical challenges Responsive Administration SMEs already confront.

6 1. Micro- Enterprises have fewer than 10 employees Finance SMEs are particularly vulnerable in 2. Small Enterprises have be- Skills and Innovation times of crisis as a result of a number tween 10 and 49 employees Internalisation of reasons: Down-sizing is often 3. Medium-Sized Enterprises not an option due to their already 2nd Chance have between 50 and 249 Small size; also, SMEs tend to be Think Small First less diversified in their economic employees Public Procurement and State Aid activities, have a weaker financial For further information regarding the structure, lower or no credit rating, Single Market Environment definition for SMEs and the objectives and fewer financing options. For further information regarding of creating an EU-wide definition, these guidelines, visit: http:// With the economic crisis starting the European Union has provided a back in 2008, Irish SMEs access to User Guide which can be accessed sme/ Small -business-act/.

7 Finance has become increasingly at: Ireland has incorporated a number limited. Despite various government policies/sme/files/sme_definition/. of these principles into its policies initiatives and lending programs, figures from the Central Bank show supporting Small businesses. bank lending to Small and medium - SMEs Contribution to the Consequently, Ireland offers an size Enterprises has continued to Irish Economy: environment which, in many ways, plummet. SMEs make an enormous contribution fosters the growth SMEs. Irish SMEs now face a double crunch: to Ireland . The Irish government has Ireland provides comparatively with dropping demand for goods recognized them as among the key straightforward and cheap Neither the European Commission nor any person acting on behalf of the European Commission is responsible for the use which might be made of the information contained herein.

8 The views in this publication are those of the author and do not necessarily reflect the policies of the European Commission. and services, their income has The government itself was one of enterprise Ireland (http://www. dropped while at the same time the key offenders regarding Late ). financial institutions are have Payments. Although Ireland had enterprise Ireland is the government tightened controls on credit adopted EU legislation limiting organisation responsible for the availability. As a result, SMEs have payment times to 30 days, the development and growth of Irish been unable to access to the required Regulations effectively allowed for Enterprises in world markets. In capital necessary to cover day-to-day self-exemption from the payment addition to information services, expenses.

9 Period since companies are allowed enterprise Ireland provides funding Payment times have increased, as to contractually agree their own and grant options to new and debtors are delaying payments for as terms. Government semi-states and established SMEs. long as possible. 64% of businesses large companies were effectively County and City enterprise Boards indicated in 2010 that late payment abusing their dominant purchasing ( ). impacted their cash flows and 48% of position and deciding what payment County and City enterprise Boards companies reported an extension of period they themselves wanted. New provide a source of support for credit terms taken by clients. When legislation for Ireland came into effect micro- enterprise in the start-up and smaller businesses are not paid on in 2011, targeting government bodies expansion phases, to promote and time, they themselves are unable such as the HSE, putting into place a develop indigenous micro- enterprise to pay their suppliers and the virus mandatory 15-day payment period.

10 Potential and to stimulate economic spreads. The costs of doing business It is too soon to asses the impact of activity and entrepreneurship at local increase as many companies have this reform. level. to resort to debt finance, such as The Department for enterprise , Small Firms Association (http://. overdrafts, in order to facilitate their Jobs and Innovation approved a ). cash flow requirements. Ultimately, guarantee for 400m worth of loans the most vulnerable businesses are to start-ups and SMEs in September The Small Firms Association provides forced to close down, resulting in 2011. The scheme is designed to give consultation services, information increased job losses. a boost to good businesses which the through its website, representation banks have failed to lend to and is and lobbying, and networking Additionally, while incomes have expected to come into effect by the services to SMEs.