New business start-ups to rise by 20%

THE number of new business start-ups is set to rise by nearly 20% this year, according to research by Bank of Ireland Business Banking.

Irish entrepreneurs are setting up nearly 400 new businesses every week and the total of new ventures will exceed 20,000 this year, compared with 17,000 last year.

A recent survey by the Global Economic Monitor, an international research group that covers more than 40 countries, put Ireland at the top of the table for entrepreneurial activity and estimated that one in 12 of the workforce was involved in start-up business. Most new Irish businesses focus on the services sector.

Bank of Ireland's full-year results, which were published last week, showed lending to small and medium businesses had surged 23% year-on-year on the back of improved economic conditions and greater confidence about borrowing to invest in business growth. Other recent figures from AIB and Bank of Scotland have confirmed a strong trend in new business lending.

The healthy figures come after state business development agency Enterprise Ireland said earlier this month that homegrown businesses would be the key driver of economic growth in the future and that Ireland would need to become less reliant on foreign investment to generate new jobs.

The agency has undertaken a root-and-branch restructuring programme to tailor its services to businesses that aim to grow quickly. It will spend €400 million over the next five years on promoting research and development (R&D) within Irish industry and encouraging small and medium businesses to pool their R&D resources to become international leaders in specialist sectors.

It has also thrown its weight behind a new €20 million fund set up by the government to improve productivity. The fund is aimed at streamlining homegrown companies to allow them compete at the highest level on a global scale, by embracing technology and automation to fine-tune their costs and boost margins.

But the agency also warned that there was no room for complacency and that businesses based on a strategy of being a low-cost provider would not survive. Irish firms would need to grow more quickly than ever before and the number of companies that had achieved significant scale, by breaking through the €20 million barrier for annual revenues, was too small, it said.

Ireland needed to double the 500 companies currently spending money on R&D over the next five years and needs to be better at developing skills in technology if the country's recent economic success was to be maintained.