OVER half of all new business start ups fail within five years, according to a report in the autumn issue of the Irish Banking Review.
The report found that of 239 start ups grant assisted under the Enterprise Development Programme (EDP) between 1978 and 1992, only 46 per cent were still trading in 1994. Firms in internationally traded services did a little better, with a 53 per cent survival rate.
Job creation in the EDP firms was also "modest" when compared with Government expectations, according to report authors Ms Teresa Hogan and Mr Anthony Foley.
The EDP was set up to help firms with the "potential to achieve significant employment and output in the long run". It assisted companies such as Green Isle Foods, Monaghan Mushrooms and Rye Valley Foods.
Some 22 or 9 per cent of the 239 firms assisted under the programme became "fast growth firms" defined as firms which started with 25 or less employees and grew to employ at least 50 people by 1994.
These fast growth firms made the greatest contribution to employment growth, according to the report. They accounted for 62 per cent of employment in surviving firms.
Fast growth firms employed an average of 11 employees at the start up stage and an average of 131 by 1994. But there was significant variation in the level of employment growth recorded - one firm which employed 24 at the start up date grew to employ 600 in 1994. Employment at another firm rose from 25 to 70.
Employment at the 22 "fast growth" firms rose to 2,888 jobs in 1994 from 242 at the start.
Only 24 of the EDP firms employed over 50 people, while the 110 surviving firms employed a total of 4,670 people. The 86 firms which employed under 50 people accounted for a total of 1,542 jobs.
A sectoral breakdown of the fast growth firms shows that just under half were in the metal and engineering sector. Ten fast growth firms were in this sector while five were in the food sector and three were in clothing and footwear.
There was one fast growth firm in each of the four other sectors - internationally traded services, miscellaneous industries, paper and printing and non metal products. There were no EDP assisted fast growth firms in chemicals and pharmaceuticals, timber or textiles.
The report is based on data from the Companies Office and Dun and Bradstreet. Between 1981 and 1990, EDP assisted firms accounted for only 5.4 per cent of indigenous grant assisted start ups.
