SFA
COST COMPETITIVENESS
A few years ago Ireland was the fifth most competitive economy in theworld, the countrywith the highest economic growth, lowest inflation, highest job creation and the largest exporter as a percentage of GDP in the world.We are now in 21st position according to the IMDCompetitiveness Report. While small Irish businesses have taken a series of actions to
regain cost competitiveness within their own businesses, many costs remain which are outside their control as they are government controlled. In the SFA’s Annual Business Costs Survey, the top five issues were: 1.Electricity costs 2.Local authority charges 3.Other energy costs (ie gas) 4.Transport costs 5.Compliance/regulatory costs. In the absence of reductions in these costs, small businesseswill
continue to have to further reduce the costs that are within their control, and this will inevitablymean a further loss of jobs.
INFRASTRUCTURAL REQUIREMENTS
Economic recovery can only be achieved through a competitive enterprise sector and capital investment enhances the productivity and competitiveness of Irish small business – and both directly and indirectly supports and creates employment. Almost all elements of the Irish economy have changed radically
since the National Development Plan 2007–2013 was launched. It is now necessary to have a review of the plan to ensure that continued investment ismade in infrastructure and that the socio- economic objectives of the plan reflect the newrealities in Ireland’s economy. There are several areas of infrastructure needs that cannot be
neglected, including information and communication networks, power generation,water and waste. TheGovernment’s sole enterprise policy is currently resting on
the concept of the “smart economy”. However, the digital environment in Ireland clearly doesn’t support the delivery of this by small businesses, that still struggle to gain access to broadband services and at the speeds necessary to behave like “smart businesses”. The Government must champion the delivery of a vastly
improved digital environment, as this will be the single biggest enabler of innovation in small Irish companies.
MANAGEMENT CAPABILITY
Overcoming the problems ofmanagement development in SMEs is fundamental to improving the capability and capacity of Irish owner-managed businesses. Research in both Ireland and the EU has identified that small
businesses face common problems in management development and training provision,despite sectoral and regional differences.
A clear factor inhibiting small Irish business is a lack of
management competency, both in training and personnel development,and a lack of awareness of the need formanagement development,particularly in indigenous industrieswhere standards are set by local and short-term considerations rather than by international best practice standards and competition. Research by the SFAsuggests small companies understand the
contributionmanagement development and training canmake to business growth and to company success, but that they often lack the practicalmeans to translate that recognition into action. While the current economic environment hasmeant companies
have removed their focus from training, the Q2 2010 SFA Business Sentiment Survey shows 37pc of survey respondents indicated that in the next three months they will be training and upskilling staff. This is a positive sign as small firms are again recognising the
importance of training and arewilling to invest in this critical area. Ensuring all staff have the necessary skills to assist them in developing innovative new products and processes, and sales techniques, will assist them to trade out of this recession and becomemore innovative and sustainable.
PUBLIC PROCUREMENT
The public procurement market in Ireland is estimated to be in the region of €15bn per annum. In an era where private sector contracts aremore difficult to come by, there is renewed interest in this sector from small business. Yet 32pc of respondents to the SFA’smost recentQuarterlyBusiness Sentiment Surveywho sold goods or services to the public sector rated the process as “poor”, with some 21pc rating it as “very poor”. Only 30pc rated it as “good”. One of the main concerns highlighted by small firms is the
bureaucracy associated with current public procurement procedures.Tender documents can be lengthy with unnecessary information being sought.They often require extensive financial and technical information which SMEs cannot always fulfil, as theymay not have the in-house expertise and as a result the costs of preparing a submission are excessive. While some progress has beenmade in this area, actions which
may allow greater access include: Dividing tenders into smaller lotswhere possible (unbundling) The process should recognise the SME environment Reducing the cost and administrative burden of entering the tender process.
The small business sector has shown time and time again that
given the right economic conditions, owner managers will, with confidence, invest,create and grownewbusinesses, thereby creating new employment and overallGovernment revenue. TheGovernmentmust remember that thismodel of creating a
supportive environment for indigenous small business has been and will continue to be the cornerstone of our economic success.
VOL 3 ISSUE 3 2010 OWNER MANAGER 47
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