Private and family-owned businesses underpin a large part of the Irish economy. SMEs account for 70 per cent of private sector employment, and it is estimated that two in three new jobs are created by SMEs.
However, the business climate is far from easy for Ireland's entrepreneurs, according to Olivia Lynch, a partner with KPMG Private Enterprise advising entrepreneurs, fast-growth companies and family businesses.
Among the complex business challenges she points to are competition for talent, relentless pressure on margins and the unpredictability of Brexit.
“These issues are common to every size of business, and through each stage of the business cycle. But they say the true sign of an entrepreneur is that they don’t fall into the trap of falling in love with the problem, and instead they relentlessly seek out the solution.”
Raising finance is among the main issues for business.
“At KPMG we see constant evolution in ways to raise short and long term funding using asset-backed lending like stock and debtors, crowd funding, peer-to-peer lending, and venture debt, as well as new innovations with international and non-bank lenders entering the Irish market,” says Lynch.
“Global and domestic private equity remain very active with a significant wave of capital to deploy on competitive terms using innovative structures and in both minority and majority plays.”
Other issues include recruiting and retaining talent, how to structure a business legally and tax efficiently as it expands and grows abroad, dealing with the Companies Act with its comprehensive directors' responsibilities, employment law issues and the myriad of taxes to comply with and pay in Ireland and abroad.
Availing of all of the available tax reliefs such as start-up companies’ relief, R&D tax credits, funding reliefs such as EII and SURE and so on are essential, according to Lynch, who believes that Ireland’s tax regime plays an important role in supporting Irish entrepreneurs in achieving their business objectives.
Enhancements
“Tax permeates all aspects of a business from setting up the business, financing it, employing people and expanding abroad. The Government states that core to its programme is improving the position of the self-employed generally. The time is right to introduce further enhancements to the tax and social welfare system to support and encourage Irish business.”
She says such improvements make common sense.
“Appropriate tax measures are needed to support entrepreneurs to realise their business ambitions as they face greater market uncertainty. Issues such as a level playing field for self-employed and employees, reducing the income tax burden, access to user-friendly tax reliefs facilitating a tax efficient release of built-up equity without the need for an outright sale, and rewarding the economic risk taken by entrepreneurs are all matters which should get greater priority in our tax regime.”
She also highlights the role of Irish women entrepreneurs as an essential part of Ireland’s business environment. With over 12,000 women each year setting up in business, she believes there is still great untapped potential to be realised.
She points to the importance of initiatives such as Going for Growth which help harness the experience of seasoned female entrepreneurs to mentor women in business so that they can drive on and achieve sustainable growth.
"As advisers to a wide range of family and privately-owned businesses we applaud the proven record of Going for Growth in helping women in business realise their full potential," says Lynch. "At KPMG we work with many businesses in overcoming challenges and creating opportunities, and we are delighted to continue our sponsorship with Enterprise Ireland of this exceptional initiative.
Female entrepreneurs
“The programme helps busy female entrepreneurs take a helicopter view of their business to make key strategic and often difficult decisions that will define the direction of their business for years ahead. They are encouraged to work on the business as opposed to in the business.”
Some 66 female entrepreneurs have been selected for the 11th cycle of Going for Growth which kicked off this month. Between them these entrepreneurs already have annual sales of €40 million and over half are exporters. They currently employ over 500 people, and have very ambitious plans for their future growth.
“As part of KPMG’s involvement with Going for Growth we are eager to support participants in addressing the business challenges they face”, says Lynch. “We will again run business-focused practical workshops on tax, finance, legal and other business matters.”
Looking to the year ahead, Lynch cites the latest KPMG survey on M&A activity which revealed cautious optimism tempered by Brexit-related concerns. The survey notes the positive impact of the robust funding environment, with increased competition for targets amongst well-funded trade and financial buyers. Debt continues to be the funding of choice, with attractive terms and new entrants to the Irish market.
Meanwhile, in comparison with many of their British and continental peers, Irish privately and family-owned businesses have a reasonably positive outlook as highlighted by KPMG’s most recent European Family Business Barometer.
“Entrepreneurs are critical to the future success of the Irish economy,” she says . “One of our greatest motivators is watching our clients’ meet and often exceed their ambitions through innovation, drive and sheer determination.”