Cybersecurity and Recruitment Top Investment Priorities as SME Optimism Rises – Azets Ireland

Azets Ireland has launched a new barometer which reveals that small and medium-sized firms are more optimistic about the future of the Irish economy than companies employing over 250 employees.

The Azets Barometer Survey, which featured 111 responses from businesses across Ireland between April and May 2024, found that Irish businesses are the second most optimistic in Northern Europe with Irish respondents rating their economic prospects at 6.1 out of ten.

The barometer highlights the growing levels of optimism among smaller firms in Ireland relative to their larger peers. Micro businesses employing 9 employees or less have increased their score from 3.7 out of 10 at the beginning of 2024 to 5.2 out of 10. Small firms employing 10 to 49 employees score 6.5 out of 10. The positive sentiment among SMEs may reflect a lower level of concern regarding warehoused tax debt, lower levels of inflation, and a positive outlook for economic growth.

The biannual survey reinforces the correlation between business size and financial confidence with smaller firms in Ireland in a weaker financial position relative to their peers. Large businesses, which employ 250 employees or more, expressed the highest levels of optimism within Ireland’s business community, scoring 7.1 out of 10. This compares to a score of 5.7 for micro businesses.

According to the survey, Irish businesses ranked talent recruitment and retention as well as economic uncertainty (both 6.0) as the challenges at the forefront of businesses’ minds. This was followed by geopolitical uncertainty and competition (both 5.8).

In terms of investment intentions, the Azets Barometer revealed that 91% of Irish businesses are planning to invest in cybersecurity measures, with other priorities including recruitment and talent acquisition (89%) digitalisation (88%), employee retention (87%). Micro businesses place the highest emphasis on cyber security measures. Recruitment will receive the largest investment, with 44% planning to invest at least €60,000.

More than half (57%) of micro businesses said they will make no investment in artificial intelligence (AI) over the next 12 months. In comparison, 96% of medium-sized businesses that employ 50-249 people said they will invest in AI in the coming year.

The results of the survey reveal that the main challenges companies face related to talent are compensation and benefits (41%), competition from other employers (36%), and skills shortage in the labour market (33%). In comparison to their northern European counterparts, Irish businesses exhibit considerable confidence in their ability to attract and retain top talent despite the competitive labour market.

Despite these investment plans and with businesses having battled against sustained economic turbulence spanning several years, the Azets Barometer found that on average Irish firms prepare their cashflow forecast 11.4 months in advance.

Ireland has achieved the highest succession planning score among the surveyed countries, with an impressive 6.3 out of 10. This contrasts with 5.1 in other Northern European markets. This indicates that a significant majority of Irish businesses are actively engaged in fairly thorough succession planning and are integrating it into their overall business strategies.

Neil Hughes, CEO of Azets Ireland, said: “The latest Azets Barometer indicates that businesses are generally confident about the future and Ireland’s economic prospects.

“Despite facing higher labour costs, increased costs, higher levels of regulation, and the payment of warehoused tax debt in recent times, it is positive to see the growing levels of optimism among ambitious owner-managed businesses. As we look ahead to Budget 2025, is important that growth in the mid-market is nurtured and encouraged over the coming months.

“It’s clear from the Azets Barometer that Irish businesses are prioritising investments in cyber security and people as they look to protect their data and grow their workforce.

“However, the barometer reveals that smaller Irish firms risk being left behind in the AI race. Now is the time for micro businesses, in particular, to start accessing the potential of this transformative technology and how best to start adopting it across their organisation.

“The future of family-owned and owner-managed firms in every corner of Ireland hinges on effective succession planning. Boasting the highest success planning score in Northern Europe, Ireland sets the standard for succession planning. Irish business leaders are being proactive and putting in place plans that facilitate a successful transition from one generation to the next.

“Entrepreneurial, owner-managed, and family-owned businesses are the backbone of the Irish economy, employing more than two-thirds of all those working in the private sector. At Azets Ireland, we’re expanding of our team of experts who have a deep understanding of the dynamics of these ambitious businesses and how to fuel their future growth.”

To learn more about the latest Azets Barometer Survey, visit https://www.azets.ie/azets-barometer/.