Microbusinesses facing profitability pressures – survey
Microbusinesses with three or less employees are under severe pressure, particularly when it comes to profitability, a new survey has found.
Three out of every 10 are not optimistic about trade in the third quarter of the year, tipping them into loss-making territory for the first time since the pandemic, according to the research.
The study, carried out by IPSOS B&A on behalf of Linked Finance, found indigenous firms focused on the Irish market are also feeling challenged, with minimum wage legislation, rising costs and warehoused debt all weighting on performance.
But the survey found that overall most Irish small and medium sized (SMEs) firms are heading into the second half of this year with a positive outlook.
Large SMEs, with more than 10 staff, are doing particularly well, with more than two thirds reporting better results in the last year.
Those businesses involved in exporting also reported strong trade, with their sentiment up 11 percentage points during the last 12 months.
In overall terms the SME confidence index has grown year on year and stayed steady since the first quarter of this year.
“The steady confidence levels seen over the past 12 months among Irish SMEs reflect a sector that is becoming increasingly adept at navigating economic uncertainties,” said Niall O’Grady, CEO of Linked Finance.
“However, smaller, domestic-focused SMEs are more vulnerable to inflationary pressures and are still having to pass on pricing increases as a means of protecting their profitability.”
The survey of 351 business owners and managers found that the trend towards rising prices of recent years has stabilised, with businesses now more likely to maintain rather than increase prices.
While when it comes to job creation, the employment readings remain positive.
However, the level of positive outlook in the retail and wholesale sector has halved to 20% compared to a year ago.
The research also found that when it comes to politics, Fine Gael was seen as the party that would best serve the current SME issues in the next Government.
However, Fianna Fáil were seen as the most popular party among larger SMEs.
“The results from our survey highlight that SMEs are closely monitoring government actions, especially with a general election on the horizon. While the overall sentiment remains positive, it is crucial for government policies to continue supporting these enterprises,” said O’Grady.
Article Source – Microbusinesses facing profitability pressures – survey – RTE
