Half of all firms in ‘survival mode’

ONE in every two businesses is in survival mode, with the growth plans of one in three enterprises constrained by a lack of access to finance, according to a survey to be published today.

The latest InterTradeIreland Business Monitor survey for Q3 indicates that a lack of finance for investment is constraining growth for a third of businesses in Ireland.

Director of strategy and policy with InterTradeIreland, Aidan Gough, said: “We are faced with a complex trilemma; a decline in customers, a fall in confidence and contraction in cash, with each reinforcing the other, creating a vicious circle that is difficult to break out of.

“The fact is that nine out of 10 businesses are reluctant to approach banks for funding; the disconnect between the funding businesses require and what banks are willing to provide is an issue that has to be addressed.”

The Business Monitor survey, which surveys 1,000 companies across the island on a quarterly basis, highlighted that businesses have seen a decline in sales and cashflow, with a perceived lack of access to finance from the banking system. Yet, only one in 10 businesses approached their banks for funding.

“The Business Monitor also indicates that those who export or who have cross-border sales are significantly more likely than those who rely solely on the domestic market to report increased sales and are less likely to have experienced a decrease. Around 33% of companies which are exporting or involved in cross-border trade are reporting increased sales, compared with only 19% of those which are operating solely in local markets. The roadmap is very clear — we need more companies exporting,” added Mr Gough.

A surprising seven out of 10 respondents felt that their bank had little or no understanding of their financial needs, with the manufacturing sector having the least satisfaction with their business bank relationships than those in other sectors.

Among the key findings of the report were:

* Nearly half (46%) of businesses reported that they are winding up, contracting or simply trying to survive.

* 60% of businesses were unaware of credit insurance and only one in 10 businesses have it.

* 61% of respondents said loans and overdrafts were either not very attractive or not at all attractive

The monitor found: “In general, the economic outlook is much the same as seen in the previous couple of years, at a consistently low level with no sign of any significant uplift. This is reflected in only 6% of companies planning to increase employment in the near future.”