74% of SMEs see positive outlook in 2016 – Magnet survey

Three in four businesses in Ireland have a positive outlook for the next 12 months reflecting greater confidence in economic recovery, according to the second annual Regional Business Barometer Study, commissioned by telecoms and cloud services provider Magnet.

The study, conducted by Amárach Research in January 2016, showed a total of 74% of businesses surveyed are fairly or very positive about their prospects this year, a significant increase in optimism from 61% in 2015. There is a corresponding drop in negative outlook to just 5% (from 13% last year).

Other findings of the survey are:

30% of businesses nationally said they are likely to open new premises this year, more than three times the amount this time last year (9%)

52% are likely to invest in IT infrastructure over the next 12 months, up from 30% in 2015

Finding employees with the right skills is an issue for 37% of businesses

62% surveyed believe the Government isn’t doing enough for SMEs versus 24% who do

The research was carried out among 540 businesses across eight regional authority areas in January 2016. There was a broad representation of businesses in the survey ranging, from micro businesses with 1-9 people employed right up to businesses with 250 people or more.

The overall positivity, however, is tempered by the Economic Recovery Indicator (ERI), which scores stages of economic recovery from 0-100. The index suggests that the stages of economic recovery remain uneven throughout the country.

The South-West is the country’s most optimistic region for businesses at 55, followed by South-East 54.6, Dublin 51.3, Mid-East 50, West 49.5, Midlands 47, North 46 and Mid-West 43. Overall, businesses are significantly more positive than the general population of who measured 43 on the recovery index.

Commenting on the research, Mark Kellett, CEO of Magnet, said:

“Magnet’s research is designed to produce an accurate barometer of the attitudes of key business decision makers across the country. The overall message coming back from them is a sense of momentum in economic recovery.

“The positive outlook is welcome but what is particularly striking is the high amount of businesses that plan to open a new premises in 2016. Opening a new premises involves a real commitment to continue growing your business which is a healthy indicator for the wider economy.

“As you would expect, there are ongoing issues and challenges also worth noting as an election looms. Most decision makers still believe the Government could do more to assist SMEs, in particular to help reduce the costs of running a business,” he said.

Reducing business costs was the single most cited response needed by the Government, according to 21% of respondents to the survey. The survey also revealed a lack of awareness by small businesses of the range of grants that may be available to them.

Just 11% could name the business technology grants that are available. Nationally, only 6% of firms had availed of the Enterprise Ireland Voucher worth €5,000, up from 3% in 2015. Only 4% of firms had availed of the Online Trading Voucher worth €2,500, up from 1% last year.

Speaking about the result Chairman for Amárach Research, Gerard O’ Neill said:

“At the start of last year, the SMEs we surveyed were optimistic but cautious. They wanted to see proof of recovery before committing to any investment – whether staff, IT or new premises. Twelve months later and most SMEs have the proof they need to go ahead with their expansion plans. There’s no doubt this shift in outlook and intentions will contribute to further growth in our economy over the rest of 2016.”

The full Magnet Regional Business Barometer survey can be downloaded here.