Small business is thriving, but let’s not rest on our laurels

This year ends on a more cautious note for small Irish businesses than was the case 12 months ago.

This time last year Ireland had emerged strongly from the economic crash and members of the Small Firms Association (SFA) were optimistic about the future.

Now, they are still confident about the country’s growth prospects, its ability to be innovative and the prospects of a thriving business community continuing into the future, but they cannot ignore the complex anti-trade and anti-globalisation forces at work.

With Donald Trump to the left of us and Brexit to the right we are certainly stuck in the middle, and to add to this we have a minority government for the first time in our history.

Ireland is a small open economy and while we can’t directly affect many international changes it is vital that we are strategic in focusing on those factors that are within our control.

Take Brexit: the great unknown. What we do know is that our exporting sector is being decimated by an exchange rate devaluation of up to 18 per cent since the referendum vote, and 26 per cent since last December.

The SFA has been working intensively with Mary Mitchell-O’Connor, the jobs minister, and her Brexit response unit, and look forward to the government announcing a range of initiatives in the new year to assist exposed small businesses.

From our perspective it is clear that we need definite government action in the short term to help sustainable businesses survive and maintain the jobs they provide in every part of the country. This must involve direct stabilisation funding and new low interest and specialised export and trade finance.

We need government to become obsessive about our cost-competitiveness and tax-competitiveness in relation to the UK. Our minimum wage, insurance costs and capital gains tax rates are priority issues for us in this regard.

In our recent quarterly sentiment survey managing wage expectations was identified as the biggest threat to our members.

In an economy that is now deflationary, in which businesses are finding it impossible to get price increases, this is extraordinary, and is being fuelled by unrealistic demands in the public sector.

The government has already committed to what is effectively a 2.5 per cent pay increase for each public sector worker with €150 million in increments and €317 million under existing commitments under Lansdowne Road.

In contrast, just 60 per cent of our members have said that they are able to give pay increases next year, with the average being 2 per cent. We support the establishment of the Public Service Pay Commission as a structured process to determine public service wages. However, it is vital that it is transparent in its work and that it reflects the government’s ability to pay as an employer.

It must also be responsive to skills pressures and take account of all aspects of remuneration, including lucrative pensions and allowances and not just basic pay.

The SFA has achieved many wins on its lobbying campaigns this year. The programme for government included the long-fought commitment to full equalisation of tax treatment between self-employed and employees by 2018 through the earned income tax credit.

The social welfare safety net for the self-employed is firmly on the policy agenda and progress is being made on reducing capital gains tax for entrepreneurs with the rate now at 10 per cent and a commitment to reviewing the limit of €1 million in future budgets.

The increase in the national minimum wage was limited to a 10 per cent increase. We look forward to further progress across all these areas next year.

As important as it is to lobby on issues that arise in a given year and to be effective in reacting to calls from government for submissions on various issues that affect small business, we in the SFA believe that Ireland needs a much more proactive vision into the medium and longer term.

This year we launched our comprehensive policy statement: Vision for small firms in Ireland.

Put simply, our vision is for the country to be the most vibrant small business community in the world, supporting entrepreneurship, valuing small business and rewarding risk takers.

Small businesses, defined as those with less than 50 employees, make up more than 98 per cent of those in Ireland.

They exist in every single village, town and city, operate in all sectors of the economy and employ half of the private sector workforce.

Huge strides towards the SFA vision could be made in the space of five to ten years, creating more jobs, adding value to the economy, contributing to the exchequer, injecting vibrancy into towns and villages and creating a happier population.

Our vision document sets out a map for how the small business community can reach these new heights.

Economic analysis, a social narrative and over 60 concrete recommendations combine to trace the current small business landscape and project into the future. Recommendations are made under the themes of culture and recognition; education and skills; and the business environment.

These recommendations are not just for the government and state agencies but also for educators, individual businesses both large and small, representative organisations and communities.

This vision initiative is a hugely ambitious project but one that the SFA’s 8,500 members and I am ready to lead.

Through the very successful SFA National Small Business Awards programme over the past 13 years we already have over 300 alumni who are willing to mentor and support other businesses.

My priority this year will be to develop stronger relationships between big and small business through shared learning, innovation, and developing supply chains. Even with widespread buy-in progress will take time, which is all the more reason to start immediately.