90% of Irish SMEs are confident about business prospects in 2023 - joint highest of nine countries surveyed in new Bibby Financial Services research

Updated: 1 September 2023
  • 72% of Irish SMEs expect sales to increase in the next six months – higher than the global average of 64%
  • Irish construction sector has most confident outlook for sales expectations over next six months (80%) – much higher than the global average for this sector of 64%
  • Rising inflation and energy costs are top two concerns of Irish SMEs 
  • 57% of Irish businesses intend to increase prices to combat inflation concerns while just over a third (38%) are reviewing supply chain efficiency

90% of Irish SMEs say they are the confident about their business prospects in 2023, according to new research conducted by Bibby Financial Services, Ireland’s leading independent financial provider to SMEs. 

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%.

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%.

For the year ahead, Irish SMEs see their key opportunities as:

  • 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%)
  • Taking on new staff (24%)
  • Renegotiating with existing suppliers (23%) 
  • Exploring new distribution channels (21%) 

Irish SMEs are also facing a wide range of challenges, with inflation / rising costs (64%) and energy costs (62%) 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%).

As a result, Irish businesses are taking a number of measures to navigate these issues:

  • 57% say they are increasing prices to customers
  • 38% are reviewing their supply chains for efficiencies
  • 14% are freezing recruitment plans
  • Just 8% feel they don’t need to make any changes

Furthermore, 62% of Irish SMEs have been impacted by either suppliers or customers going into administration in the past 12 months, with the wholesale (79%) and manufacturing sector (74%) most affected. Again, this is in line with the global average of 62%.

88% of Irish businesses say they expect to invest this year, just behind Germany which is the most optimistic at 93%, and ahead of France at Slovakia who have the lowest sentiment (both 86%). In Ireland, the construction sector is the most likely to invest (91%) followed by manufacturing and wholesale (90%).  

The average amount Irish SMEs expect to invest is €108,850 this year, with SMEs in the transport sector likely to invest the most. The survey shows that the main areas of investment for Irish SMEs in 2023 are:

  • Marketing and sales (37%)
  • Staff training and development (34%)
  • New Staff (23%)
  • Digital technology and IT (20%)
  • Machinery and equipment - including commercial vehicles (17%)

Those in the transport, haulage and distribution sector are intending to invest the majority (49%) in staff training and development, while the manufacturing (30%) and construction (22%) sectors are more likely to invest in machinery equipment compared to other sectors. Investing in new staff is the main priority for the construction sector (31%) and the services sector (24%), above the country’s average.

To support these investment intentions SMEs are increasingly turning to third-party financing. Nearly half (48%) are more likely to use external finance than before the Covid-19 pandemic with bank and government loans, and unsecured lending the most popular options. this figure leaps to 63% for SMEs who exclusively export, while the transport, haulage and distribution sector are most likely to use external finance at 63%. Among the reasons for needing external funding, 72% primarily require it for growth and expansion.

However, amid the backdrop of rising interest rates, many are considering alternative methods of financing to traditional sources.

Mark O’Rourke, Managing Director at Bibby Financial Services Ireland, said: “Today, 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.

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.”