• Date

    11 May 2023
  • Category

Inflation the number one threat to Irish SMEs, Azets survey reveals

  • Inflation is the number one threat facing Irish SMEs, followed by the increasing interest rates & availability of talent
  • 43% of SMEs expect economic climate to worsen in the coming year
  • Innovation found to be the greatest opportunity for SMEs
  • Business leaders using cash and government supports or grants to fund their business

11th May 2023 - Azets Ireland, the professional services firm that specialises in supporting the needs of mid-market, entrepreneurial, owner-managed, and family-owned businesses, has today launched a new survey in advance of its annual conference in Dublin which reveals the main challenges facing Irish SMEs and the opportunities that lie ahead for the sector.

The Azets SME Pulse Survey undertaken by iReach, which featured 211 responses from senior SME decision leaders across Ireland between April and May 2023, found that inflation is the number one threat facing Irish SMEs at present (56%), followed by increasing interest rates (40%) and the availability of talent (34%).

Amid these challenges, 43% of SMEs are expecting the economic climate to worsen in the next 12 months with only 18% expecting an improvement. If economic uncertainty persists, one in three Irish SMEs (36%) are considering cutting jobs.

When questioned on the outlook for the business, 19% of SMEs expect their revenue and profits to increase in the coming year and 63% to remain the same, with only 18% anticipating a decrease. Furthermore, the survey highlights that 1 in 4 SMEs (25%) expect the tax burden to increase while only 1 in 10 (10%) think it will decrease.

Despite the obstacles SMEs are currently navigating, SME leaders believe that innovation provides the greatest opportunity for their business in the coming 6 months.

As businesses look to innovate over the coming year, the main sources of funding for SMEs are their own cash (24%) and government grants or subsidies (19%), with just 13% considering private equity, 9% considering bank funding and 4% venture capital. 46% believe that the government should provide additional grants and supports to help navigate the challenges of the coming year and 35% call for additional funding for upskilling and skilling initiatives.

The Azets SME Pulse Survey also reveals that only 1 in 5 Irish SMEs are currently measuring their carbon footprint. The main challenge for the SME sector in progressing their ESG goals is the costs involved..

Neil Hughes, CEO of Azets Ireland said: “It’s clear from our latest survey that inflation is proving to be a significant challenge for SMEs throughout the country. Every aspect of doing business is becoming more expensive and rising prices is putting a squeeze on already tight operating margins.

“This is impacting sentiment in the sector with 4 in 10 SME leaders expecting the economic climate to worsen in the next 12 months. Given the numerous challenges facing owner-manged and family businesses in Ireland, there is likely to be a greater number of SMEs needing support in the face of financial difficulty. 

“Despite lingering uncertainty and the slow progress in advancing sustainability, it’s encouraging to see SMEs remain optimistic about the future of their business and committed to driving innovation to fuel growth. It is this focus on transformation that will be key for Irish SMEs as they continue to build their resilience and adapt to a rapidly evolving world. Our growing team of specialists at Azets Ireland will be relentless in meeting the specific needs of Ireland’s entrepreneurs and supporting the growth ambition of SMEs in every sector.”

With the SME sector the backbone of the Irish economy, these findings point to areas where additional government policies and support could deliver the greatest impact for firms who employ more than two-thirds of all private sector employees.

Over 200 leaders from entrepreneurial, owner-managed, and family-owned businesses are gathering in Dublin for the Azets Ireland annual conference to exchange ideas and insights on what fuels growth during these rapidly changing times. Guest speakers include Fergal O’Brien, Director of Lobbying & Influence, Ibec and members of the Ireland under-20s Grand Slam winning rugby team.

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