90% of Irish SMEs say they are the confident about their business prospects in 2023, according to new research conducted by Bibby Financial Services.
The 2023 Global Business Monitor, which surveys nine countries on topics such as business sentiment, opportunities and challenges, shows that Ireland and Germany, both at 90%, are the most confident nations about business prospects for the year ahead.
Globally, an average of 85% of SME's say they are positive about business prospects in 2023, with France taking second place (89%) behind Ireland and Germany, and the UK holding the third spot (87%). Poland is the least confident country (79%).
In Ireland, the transport, services and wholesale sectors say they are most optimistic about their prospects this year.
However, this confidence doesn't extend to the global economic environment, with almost three in four of Irish SMEs (71%) believing the global economic conditions are worse now than during the Covid-19 pandemic or the global financial crisis.
67% of Irish SMEs say they have experienced an increase in business over the last six months, while 18% state their performance has remained the same. This positions Ireland in third place, just behind Germany (73%) and the Netherlands (68%). Slovakia registered the lowest increase in sales (43%). This is in comparison to the global average of 59%.
The research found companies in Ireland are confident this positive trend is set to continue, with 72% of Irish SMEs saying they expect their revenue to increase over the next six months, the second highest globally. 20% expect it to stay the same while 8% expect sales to decline.
This figure is ahead of the global average expectancy for sales to increase (64%), with Germany the highest (75%) and Slovakia as the most cautious (51%). There is also strong caution in the UK and the Netherlands, with 54% predicting only a slight increase in sales.
When it comes to sales expectations, the Irish construction sector has the most confident outlook for the next six months (80%) – much higher than the global average for this sector of 64%. This is followed by the manufacturing sector, with over three quarters (77%) positive about an increase in sales, 5% ahead of the global figure for that sector. Wholesale takes third place at 74%.
Top of the agenda for Irish SMEs for the year ahead is attracting new customers (67%) – the highest of all nine countries surveyed and well ahead of the global average of 52%; building new supplier relationships (36%) and taking on new staff (24%).
Irish SMEs are also facing a wide range of challenges, with inflation and energy costs highlighted as the top two issues, in line with the other countries surveyed.
This is followed by supply chain pressure (30%), interest rates and the cost of borrowing (27%), and the conflict in Europe (24%).
Access to finance is a challenge for 19% of SMEs, particularly for the construction industry (24%).
Mark O’Rourke, Managing Director at Bibby Financial Services Ireland, said, business owners are battling with a cost-of-doing-business crisis on two fronts: significantly higher costs and the economic instruments leveraged to tackle this primary issue.
"It’s perhaps little-wonder, therefore, that almost three quarters of global SMEs say economic conditions are worse now than during the pandemic and the global financial crisis.But SMEs are resilient. This is because they care about their employees. They care about their customers and supply chains. They want to be forces for good that support the local communities that surround them. They naturally find solutions to complexities they face," Mr O'Rourke said.
"It is critical that SMEs can continue to access the finance they need to operate and grow. This means considering a range of financing options that provide sustainable working capital and cashflow to help them overcome challenges and take advantage of opportunities that arise over the coming months."