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Last Updated: Dec 19th, 2007 - 13:17:15 |
Report of the Small Business Forum is published; 97% of all businesses in Ireland are SMEs but only 3% have more than 50 employees
By Finfacts Team
May 16, 2006, 15:07
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Recommendations Made Across Three Key Focus Areas:
- Create a better environment for small businesses
- Stimulate growth
- Inspire Entrepreneurship
The Report of the Small Business Forum, Small Business is Big Business, was published today and officially launched by Minister for Enterprise, Trade and Employment, Micheal Martin T.D. at an event in Dublin Castle.
The Small Business Forum, chaired by Joe Macri, MD, Microsoft Ireland was established by Martin in July of last year to consider the current environment in which small businesses operate and to advise on the appropriateness and adequacy of the public policy responses in place to support small business.
Speaking at the launch of the Forum’s Report, Micheál Martin said: “The vibrancy of the small business sector is critical to Ireland’s future economic success. With 97% of all businesses in Ireland being classified as small, employing almost 800,000 people it is obviously important to the overall vibrancy of the economy that we ensure that we are doing as much as possible at all times to support their continued growth and development.
Last December, research by Bank of Ireland suggested that, while the short-term outlook for Irish SMEs is buoyant, increased emphasis must be placed on ensuring that small businesses make the transition to medium enterprises if the sector is to sustain wealth creation and continue to drive economic growth.
Only 3% of Irish SMEs are medium size with more than 50 employees. Overseas expansion and exporting are dependant on businesses growing to a medium sized enterprise, yet the research indicates that only 7% of Irish SMEs intend to expand abroad in the next twelve months. This contrasts sharply with the UK where medium enterprises, which employ 30% of the workforce, are the powerhouse of the economy.
Micheál Martin said at the launch today that the Forum has presented me with a comprehensive set of proposals designed to enable the small business sector to achieve its full potential and enhance the significant contribution the sector already makes to the economic well-being of this country. I am delighted to confirm that I am seeking to implement all the recommendations that fall within my Department’s remit, including:
- raising the standard of management capability through the establishment of a Management Development Council
- providing Knowledge Acquisitions Grants
- making Innovation Vouchers available to small business
- providing funding to allow small businesses avail of an ICT audit
- developing an National Entrepreneurship Policy
- developing networks of Business Angels
- compiling and publishing comprehensive data on the small business sector
Over the coming months and I will work closely with my Government colleagues to look at an implementation path for the remaining recommendations.
“In order to ensure that the implementation process is as seamless as possible I intend to invite the members of the Forum to remain in place to act as a body in respect of the implementation of the Report,” the Minister said.
Commenting on the launch of the Report, Joe Macri, Forum Chair said: “Through the wide ranging consultation process conducted it was clear that there are a number of common issues and challenges which are common to all small businesses regardless of sector. The focus of the Forum members was to produce a series of recommendations that when implemented will address these issues and make a real difference to the future growth and health of the small business sector. The sector is the potential engine of growth for the future of the Irish economy and it is critical that plans are put in place now to create an environment that will allow the sector to grow and flourish.
“We are delighted that the Report has been so positively received by the Minister and that he is fully supportive of the recommendations made by the Forum. The Forum members look forward to providing the necessary support to the Minister and his officials over the months ahead to help move the implementation process forward.”
Forum Information
The thirteen member forum, comprised of representatives of the small business sector and owners and managers of small businesses, has consulted widely with all stakeholders within the sector and carried out extensive consultation and research in order to prepare the comprehensive report which was published today.
A total of 15 recommendations are included in the final report. The recommendations address ten priority issues which were identified throughout the consultation process and all fall under three focus areas; create a better environment; stimulate growth and inspire entrepreneurship.
www.smallbusinessforum.ie
Members of the Small Business Forum
1. Mr Joe Macri (Chair)
MD, Microsoft Ireland
Dublin
2. Mr James O’Sullivan
M&P O’Sullivan
Co Cork
3. Rita Shah
Shabra Plastics and Packaging Ireland
Co Monaghan
4. Professor Frank Roche
Smurfit School of Business
Co Dublin
5. Dr Joan Buckley,
Family Business Centre
University College Cork
6. Mr Des Cummins (SFA representative)
National Recycling Limited
Co Dublin
7. Daniel Hickey (ISME representative)
All in All Ingredients Ltd
Dublin
8. Ms Jacqui McNabb (CCI representative)
County Carlow Chamber of Commerce
Carlow
9. Rosemary Sexton
Enterprise Ireland
Dundalk
Co Louth
10. Mr Michael Johnson
Dunlaoghaire/Rathdown CEB
Dublin
11. Mr Conor O’Mahony
Small Business Unit
Department of Enterprise Trade and Employment
Dublin
12. Ms Breda O’Driscoll
Ultrasonic Scientific Limited
Dublin
13. Ms Mary Bennett
The Treasure Chest
Galway
A copy of the report is available here.
Launch of “Small Business is Big Business”
the Report of the Small Business Forum
Address by Micheál Martin, TD
Minister for Enterprise Trade and Employment
on Tuesday, 16 May, 2006 in Dublin Castle
I am pleased to be here today to officially launch the Report of the Small Business Forum. I established the Forum because I believe that a balanced enterprise strategy has to include many elements. While we must have strategic priorities, we simply cannot afford to overlook the huge contribution to our economy and society made by small businesses. What this report does most effectively is to show the importance of small businesses as employers and contributors to growth and also to point to specific areas where public policy can help them to further prosper.
With almost 800,000 people employed in small firms, not to mention the €10 billion which they pay in taxes to support public services a comprehensive analysis of their situation and needs was clearly required. I believe that the Forum has done its work well and given us the basis for moving quickly forward.
Context for the Report
It is important to see a report such as this within the relevant context. The overall economic situation of our country, of course, provides the most important context. Our businesses, of all sizes, need pro-enterprise tax policies and an attention to macroeconomic conditions. The Government is fully mindful of this – there is no doubt that the surest way to undermine the progress which we have seen in recent years would be to take it for granted, to believe that the only questions remaining are how to distribute resources.
In terms of more detailed policy, the Enterprise Strategy Group’s Report is being implemented to ensure that we create a more supportive environment for the entire enterprise sector. Substantial reorganisations are being implemented, and a range of programmes are being created and reoriented to meet the many challenges of an increasingly globalised economy.
It was as a result of the ESG’s report that I decided that there was a need to look at issues specific to the small business sector. Together with a general brief, the Forum was set a number of specific areas to address such as growth potential and access to finance. I am very happy that the Forum has completed its work quickly and comprehensively and I would like to thank the Forum members on behalf of the Government for their hard work. In particular I would like to acknowledge the work of the Chairperson Joe Macri and thank him for seeing through his commitment as Chair of the Small Business Forum.
Of course the secretariat of any group is key and I would like to acknowledge the great work of Forfás in general and Marie Bourke in particular.
The importance of Small Business
The report is extremely valuable in the many ways in which it improves our understanding of the many elements, which make up the small business sector. It includes all the courageous individuals who are running small manufacturing operations, high tech start-ups, the many shopkeepers, hairdressers, accountants, architects, solicitors, doctors, dentists, hoteliers, restaurateurs, plumbers, electricians and all the other diverse businesses that operate throughout the economy.
The research carried out by the Forum show conclusively that this is an essential sector in our economy and society and that it is deserving of significant further support through public policy. However, in researching the small business sector, the Forum encountered some serious deficiencies in the data available on the sector. The Forum has recommended the compilation and publication of an annual statistical release, which would present up to date, robust and relevant data on the sector. The Central Statistics Office is currently engaged in an extensive profiling survey as part of a process to improve the quality of data available. Once this is complete, a full business register containing a range of information on enterprises across the majority of sectors will be in place
Analysis
I asked the Forum to place a particular focus on the potential of small business to contribute to economic growth. In this regard, I think the conclusions of the Forum can be summarised in three challenges:
- We need to have a business environment that is supportive of business generally;
- We need to encourage and support those who want to grow their businesses; and
- We need to encourage more and better start-ups.
It is important to say, that it will always be the hard-work and entrepreneurial skills of individuals, which lie at the heart of the success of our small firms. What the state can do is to provide relevant supports where necessary and to identify and reduce harmful practices.
Better Regulation
In terms of the general business environment, I believe that the Forum is right to focus on regulatory burdens – and especially on how these tend to fall disproportionately harder on small businesses. From the Government’s perspective the watchword in our approach to regulating companies has to be proportionality.
It is a simple fact that modern government can respond easiest to many public demands by producing a regulatory solution. I want to make it clear that I do not accept that all regulation is bad - a decent society, which seeks to uphold standards, needs regulation. But some regulation is badly targeted and disproportionate. Further, it is to no one’s benefit when regulation undermines job creation and the successful operation of enterprises for the sake of a marginal or negligible public good. Quite simple, this is an area where the system needs to raise its game. The Government has introduced a new programme of Regulatory Impact Analysis (RIA) which is now a requirement for all new major regulatory proposals. This should help limit an unnecessary growth of new and more onerous regulations.
The next stage is to find ways of actually reducing the regulatory burden. The recently established Business Regulation Forum (BRF) has been set the job of being a standing dialogue between Government and business on regulatory reform. Its role is to propose changes necessary to ensure that existing or proposed regulations affecting business, meet the criteria of proportionality and effectiveness. The Government wants this approach to give us a measurable reduction in the regulatory compliance burden for businesses and I encourage businesses to use it as an active way of addressing their concerns.
I welcome the proposals on regulation made by the Forum. We have already agreed to increase the threshold for audit exemption to €7.3m. This will be provided for in the Companies, Investment Fund, Takeover and Consumer (Amendment) Bill, which I will be bringing to Government shortly. Once the legislation to give effect to this change has been enacted, virtually all small companies will be exempt from the requirement to have their accounts audited. Many companies will probably continue to opt for an audit but at least this will now be a commercial decision rather than a regulatory imposition.
Local Authority Charges
The Forum has also identified the increasing burden that local authority charges represent for small business as a significant issue. I very strongly support the point that the business community should only pay its fair share. I believe that hat many local authorities could be more responsive to the concerns of businesses and I intend to forward the Forum’s recommendation to all County and City managers. Development charges typically affect a small business just at the point where it is trying to expand its business. While none of us expect local authorities to subsidise businesses, it does seem reasonable that they should confine their development charges to the direct costs associated with the specific development. I have raised this matter at Government level and Minister Dick Roche is cognisant of these concerns.
Infrasructure
I also welcome the Forum’s stress on the importance of infrastructural development. We also all know that the unprecedented success of the Irish economy has placed a tremendous strain on our infrastructure and it must continue to be a priority for investment. The Transport 21 plan published late last year shows how an integrated programme for modernising our infrastructure over the next decade. We are now spending some 5% of GDP each year in pouring the concrete and laying the energy and telecom grids needed for a modern economy. This high intensity investment programme will continue under a new National Development Plan that will run for 7 years from next year. It is our intention that the interests of small businesses will be fully reflected within this new NDP.
Stimulating Growth
The Forum has identified four key areas where action is needed to help those businesses that want to grow their businesses - areas that need to be addressed if the sector is to deliver on its full potential. The areas are:
- Improving access to finance
- Developing management capability
- Stimulating innovation
- Driving adoption of ICT.
Access to Finance
Access to finance for growing businesses continues to be a problem. The enterprise agencies such as Enterprise Ireland and the County and City Enterprise Boards have a range of instruments that are very important in addressing the financing gap. However, notwithstanding these interventions, the Forum has identified a number of actions that it feels should be taken to improve the situation. It recommends that financial institutions be encouraged to provide European Investment Fund guaranteed loan finance to small business. I am determined to follow-up on this idea and I intend encouraging the banking community to respond favourably. I also support the Forum’s recommendation to further develop a network of Business Angels in order to encourage investment by private individuals in early stage business. I recently announced the establishment of an Enterprise Ireland led pilot Business Angel Scheme, which they are implementing in co-operation with InterTrade Ireland and the Business Innovation Centres.
The Forum has also recommended significant changes to the tax-based Business Expansion and the Seed Capital Schemes. Taxation matters are primarily a matter for the Minister for Finance and I will be bringing these proposals to his attention
Developing Management Capability
The performance, effectiveness and prosperity of the small business sector is determined by the quality of the management skills of our owner/managers. There is plenty of evidence to show that those who seek to develop their management skills through training and other means tend to be more successful, more productive and more profitable. However, managers everywhere tend to be “too busy” to seek out help in developing their skills.
The Forum has rightly recognised that we need to encourage more owner/managers to access the developmental programmes that are available. The Forum has also recommended the establishment of a Management Development Council to ensure that that the available training programmes adequately cater for the needs of owner/managers. I have asked my officials to work with the relevant State agencies to implement these recommendations. We will also be seeking the active support and cooperation of the small business community in making this happen.
Stimulating Innovation
Technological progress is a key driver of economic growth. Research and development is central to this progress. The Forum has concluded that relatively few small businesses have the technical expertise or the financial resources to develop, absorb or exploit new scientific or technological knowledge. They felt that the use of existing knowledge, adoption of existing technologies and current best practices are more relevant to most small businesses. In short, they felt that innovation, in all its senses, should be the focus of small business. As means of getting small business to focus more on being innovative, the Forum has recommended the introduction of an Innovation Vouchers scheme. I intend to work with state agencies including the County Enterprise Boards to develop and implementation scheme for this initiative. I will also be asking Enterprise Ireland to implement the Knowledge Acquisition Grants scheme. I intend finalising actions in this area by the end of this year.
Drive Adoption of ICT
Last year I announced a detailed strategy aimed at encouraging and assisting SMEs across all sectors of the economy to use ICT to maximise their competitive advantage. The Strategy set out a range of actions needed to further the development of eBusiness. The Forum was anxious to support the objectives of the strategy. It concluded that a lack of awareness about the potential contribution of ICT to the business is a major obstacle to more widespread use and adoption. To address this awareness issue, they recommend that the State should provide access to a subsidised ICT audit. I am happy to confirm that work will begin immediately to develop a programme along these lines and I intend announcing further details later this year.
Encouraging more and better start-ups.
The economic and social benefits of entrepreneurship are well established by research. Entrepreneurship is important in terms of employment, wealth creation, stimulating innovation, regional development and even personal development and satisfaction. We are very fortunate in Ireland to be scoring very highly in terms of an entrepreneurial society. Research by the Global Entrepreneurship Monitor shows that Ireland remains one of the leading countries in Europe in terms of entrepreneurship and is fast approaching the levels of early stage entrepreneurial activity prevalent in the United States.
Against this background, one is tempted to ask why do we need to take any action on this topic. The answer is simple: we need to sustain the stream of new entrepreneurs starting businesses, we need to see new businesses replacing businesses that close down for whatever reason and we need to see new businesses driving economic growth in the future.
There are a wide range of programmes and initiatives throughout the country to promote entrepreneurship. However, as the Forum’s report highlights, these initiatives are happening in a somewhat uncoordinated manner and without having a central policy objective to guide them. I agree with the Forum’s recommendation to establish a National Entrepreurship Policy and intend to implement this recommendation in consultation with the Minister for Education and other Ministers.
Implementation
I can confirm that I am asking the members of the Forum to serve on the group to review implementation of the reports recommendations and progress in achieving the Report’s core objectives. This Report was born out of a partnership between the main stakeholders and we will drive it forward as a partnership. The recommendation calls for meetings to be held every six months and I will look forward to meeting with the Forum next November to review what I am confident should be significant progress.
Finally, I would like to say again that the small business plays a vital role in our country and it is central to ensuring that we protect and build on our recent successes in the years ahead. The 250,000 owners of small businesses in this country are an essential part of our success story. What I want is for government to provide a supportive environment within which they can do what they do best – innovate and meet public needs. Their skills and hard work will always be the factor that makes the different, but we can and must do more to reduce unnecessary burdens and provide appropriate supports. Today we are setting out a comprehensive agenda to achieve this. I and the Government are determined that action will be equally comprehensive and fast.
Thank you.
