Consolidation and clusters needed to boost SMEs

More consolidation and the establishment of sector-specific cluster groups are needed in order to strengthen Ireland’s SME industries, according to a new report.

In its ‘How to be a Stand-Out SME’ report, the first comprehensive study, benchmarking Irish SMEs against their European counterparts, accountancy giant Mazars has suggested that in order to create a base of strong SMEs, with good balance sheets and reasonable scale, more joint venture agreements and merger/acquisition activity may be needed.

Joe Carr (global leader of SME advisory services at Mazars) said Irish SMEs compare favourably in terms of size with their counterparts in Britain, Germany, France, Spain and beyond, but lag performance-wise.

He said things like a culture shift away from short-term financing, a change in attitude to risk, and improved management skills are needed.

“Very few SMEs understand how to professionally manage and grow their business. The quality of management is the key determinant here, but just because you’re small doesn’t mean you need to be any less sophisticated in how you manage your business. One way of tackling this is for small companies to learn from large ones. We need to facilitate and encourage greater linkages between smaller and larger companies to foster greater knowledge-sharing.”

Jobs and Enterprise Minister Richard Bruton welcomed the Mazars report, noting it contained information about the state of SMEs “which will be very useful to us as we seek to develop new policies to provide better supports.”

Separately yesterday, a study by Bank of Ireland showed that 82% of Irish SMEs believe their business has either stabilised or is in growth mode. The survey also noted that 67% of SMEs are optimistic about the next 12 months, with 61% expecting to grow their businesses this year.

Meanwhile, independent lender Bibby Financial Services warned that late payments remain “a significant barrier” to greater job creation and Ireland-based SMEs need to be better insulated from late payment risks and unpaid debts.