Better prospects overseas for Irish SME’s thanks to ‘lacklustre’ government approach

In this week’s column, Kehlan Kirwan looks at the limbo in which SMEs find themselves and examines why other countries increasingly present better prospects of growing a company than Ireland does. 

Early last week the European Commission released a statement which told of the Irish government’s lacklustre approach to changing and improving regulations around  in the country.

It also noted that there was a significant difference between regulatory conditions set down for multinationals within Ireland as compared with domestic home-grown companies.

SMEs are highly dependent on public funds for R&D which meant any downturn in the economy could spell big trouble for companies looking to access research finance.

Many friends within the SME sector, and the start-up scene in particular, have been putting on a brave face for a while now. Good news stories have masked the reality for business over the past few years so much so that other countries now look more attractive than ever before.

The UK has been on an aggressive path of attracting companies and start-ups for three main reasons.

Firstly, its economy is stagnating and it needs fresh jobs and companies to expand.

The second factor is an uncertain investment landscape.

The third is, of course, the looming Brexit decision.

Since the announcement was made that the nation would decide its relationship with Europe on June 23 there have been rumblings that the UK would face an economic meltdown should it leave.

The government wants the UK to be an attractive prospect for business, in or out of Europe.

Scotland, meanwhile, has long based its finances on the steady flow of oil and gas that it brings in from the North Sea.

With oil prices a fraction of what they were 18 months ago, it too is now looking to develop a more coherent business strategy and Ireland’s model of foreign direct investment has not gone unnoticed either. Watch this space.

So before we even leave our small area of western Europe we can already see that the competition is hotting up.

Several startup investment firms have already warned of an impending exodus of domestic Irish business if things don’t change.

Several SME bodies have highlighted the risk of businesses opening offices just over the border where attractive UK incentives are on offer.

What we haven’t done effectively in Ireland is to create the pipelines necessary for a business to quickly and easily step up to the next stage of their business.

Domestic companies have to stop and wait for funding or meet out of date criteria in order to move to the next phase. That takes too much time.

The ability for serial entrepreneurs to invest, for employees to buy stakes in their own company, or simply to have a tax system that encourages entrepreneurs to succeed rather than the open discrimination which exists within the system is just the tip of an iceberg that goes much deeper.

We’ve talked a lot about Ireland’s success in recent years and rightly so. However, it has papered over the cracks in a system that is not fit for purpose when it comes to SMEs and startups.

Other countries on our doorstep are now competitors and that’s not even to mention the likes of Silicon Valley, New York or the numerous other innovation hubs around Europe.

For too long we have allowed ourselves to believe that we are one of the most competitive countries in the world for business. It’s a con and we are very quickly being found out.

The reality is that we are nowhere near where we need to be and our loss will be our neighbours’ gain.