SMEs: Best outlook in years gives lift to home-produced businesses
They make up 75% of all enterprises in Ireland and account for 50% of employment in the private sector and 68% of total employment, contributing hugely to jobs, the local economy, export business and charity funding/sponsorship.
In other words, the family business is essential to the economic well-being and stability of the country.
For all that, people are still wary about putting their heads above the parapet and taking on the challenges of entrepreneurship. There are fears about long working days with not enough return, about personal liability and failure.
For someone thinking of starting a family business, to these headaches must be added the fear of splitting the family if things don’t work out as hoped.
They inevitably find themselves caught between the glorious ambition and a dragging sense of: what gives me the right to think this could work?
The good news is that it can work and there are plenty of reasons to believe in your idea and take the plunge.
There are incentives and blindingly bright role models to light the way to success, and there are also good reasons stemming from the family itself and how it can do business.
Family Business: A Survival Guide (ICAI, 2014) provides a comprehensive guide to these reasons, with the aim of helping you to plan a start-up and plan for a long-term, viable future as a family business owner.
It shows you what has caused others to fail, and also what steps you should take in order to achieve your dreams and secure your future.
THE IRELAND FACTOR
So, if you’re thinking about setting up a family business, what are the pros?
First off, there’s Ireland itself, as a brand and as a business market.
We often hear that for a small country we ‘punch above our weight’, and happily that is true.
We rank highly on international surveys for creating and retaining talent, for international experience of senior managers and for our attractiveness to FDI.
We also have a skilled labour market and a robust export market, so it’s a very good place from which to do business.
Furthermore, the government wants to support job creation, so various agencies provide programmes of funding and mentoring to help start-ups get onto their own two feet quickly.
It’s a positive, dynamic and ambitious business environment and the fact that it is post- recession is a good thing for new businesses because it means there’s a sense of pulling together to get all the cogs working smoothly.
Yes, Ireland was dealt a body-blow by the downturn, but the upside is a legacy of self-reliance and an awareness of supporting Irish products and jobs. Budget 2015 announced an increase in capital spending to over 500m.
All things taken together, it’s a good time to get your head above that parapet.
The strong business environment is supported by the current tax regime, with corporation tax at 12.5%.
Additionally, under the Irish R&D regime, a 25% tax credit exists for companies engaged in qualifying R&D undertaken within the EEA.
Finance Bill 2015 removed the base year restriction on this credit, with effect from 1 January 2015.
The credit is in addition to the normal 12.5% corporation tax deduction for the expenditure.
There are also a variety of helpful tax reliefs and incentives for start-ups and we enjoy tax treaties with 70 countries. As a result, Ireland has the third-lowest start-up costs in the world. In the world – that’s a convincing statistic.
ON THE SHOULDERS OF GIANTS
It is clear, then, that the business environment supports entrepreneurs in their endeavours, but the same can be said of the general culture.
There is a long history of family companies in Ireland, and loyalty to their brands.
A family business can expect a good reception in this country as there is already a tradition of supporting local business.
For this we can thank those who have gone before and beaten a path through the economic wilderness for start-ups to follow.
The modern entrepreneur can benefit from standing on the shoulders of giants such as Musgrave, Dunnes Stores, Kilkenny Group, Dawn Meats, Sisk Holdings, Henderson, Maxol and Keelings.
These progressive companies illustrate the look of the ‘new’ family business, which is a far cry from the one-shop, modest earning, ‘safe’ business of old.
These enterprises are constantly seeking to consolidate their position nationally and internationally and they send out a very positive affirmation: we did it as a family business; you can do it too.
THE LIFE OF THE ENTREPRENEUR
There is another reason so many people opt to set up their own business, and that can be loosely termed ‘the life of the entrepreneur’.
This does involve a lot of hard work and worry and financial commitment, not all of which are enjoyable, but it also gives a sense of control, a sense of pride and a very real ambition to make things work because it’s personal – it’s for the family.
This is the driving force behind most family entrepreneurs, who are focused on creating a sustainable asset for their children and grandchildren and beyond.
For an entrepreneur, working for someone else’s vision and gain holds very little attraction; the creative business mind wants to forge new paths and then enjoy the rewards of its innovativeness and dogged determination.
It’s the thrill of the hunt, the sweat of the brow, the seat of the pants exhilaration that makes their working life so stimulating and enjoyable. You can’t really put a price on that.
Finally, it is important to include the bonus that start-ups are gender blind.
There is no glass ceiling when you’re the one who builds the house. For modern businesswomen, this is a huge plus.
UNIQUE STRENGTHS
The family business model possesses many unique strengths. The family enterprise is a tightly run unit, with strong bonds of trust amongst all stakeholders. Its owners and staff know the products inside-out and are passionate about selling them.
The make-up of the family business means it can be ‘fleet of foot’ under pressure, turning quickly to adopt, adapt and survive in aggressive or recessionary environments.
There is a solid sense of shared vision, values and future, which imbues the business’ structures and ambitions.
There is a focus on doing the job as well as possible, and not falling for the shimmering promises of risky diversification.
Family business is synonymous with loyalty, with top customer service, reliability as well as with social responsibility. When a family business is run well and operates effectively, it can achieve its dreams and ambitions like no other business model.
And that’s a very attractive proposition indeed.
n Kieran McCarthy is a partner at Hughes Blake Chartered Accountants and author of Family Business: A Survival Guide, which focuses on why Ireland is a great place to start up a family business.
Yes, Ireland was dealt a body blow by the downturn, but the upside is a legacy of self-reliance and an awareness of supporting Irish products and jobs
