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SME’s The Backbone Of The Irish Economy

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Let’s hear it for the Little Guy

As you all know, we here at EcovisDCA are big supporters of small businesses, new start-ups and SMEs (Small and Medium Enterprises) and we have spoken many times in the past about new and interesting funding opportunities becoming available for these kinds of businesses. We have also spoken in the past about the way in which SMEs can be said to form the backbone of the Irish business world as in reality they form over half of all Irish Businesses. The shows the absolute vital importance of keeping these types of enterprises up and running in Ireland.

This week there has been good news for Irish SMEs as figures compiled by business and credit risk analyst Vision-net show that 2017 was the best ever year for the formation of new start-ups in Ireland. This is not only good news for our business world, but it shows a new and growing level of confidence in doing business in Ireland which can only mean good things going forward for our small island with big dreams.

These figures showed that a total of 22,354 companies were set up in 2017, which is a marked increase on previous years which barely surpassed 20,000 in 2016, the first time these figures have been seen since the late 90’s. Managing Director of Vision-net, Christine Cullen has been quoted as saying that the results are a

“Clear sign of a buoyant economy. Despite the continued uncertainty surrounding Brexit and the Border, the national business community has remained productive and innovative. Ireland is an attractive place to set up and do business, for indigenous and foreign companies alike”.

Unsurprisingly, Dublin was the strongest county for new start-ups, with professional services and finance businesses compiling the greatest share of these new businesses. It was also found that the construction industry continues its ongoing recovery and that there is a burgeoning sense of confidence in these industries that was previously unseen. This means that there is money being leant into these businesses which was not available to them before.

As always, it is important not to let good news let us become complacent, as Cullen states:

“There are important factors to consider. As Ireland approaches full employment, it’s likely that the impressive year-on-year growth that we have seen since the end of the recession will slow. Brexit, too, remains a largely unknown quantity. Its effects on the economy will likely not be felt for several years”.

Whilst this shows positive movement, we do of course have further to go and as always we here at EcovisDCA are always available to help with any new business or finance queries you may have. Please don’t hesitate to get in touch.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

VENTURE CAPITAL FUNDING

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Venture capital groups have become one of the most popular methods of gaining equity. This method has become so popular of late that Irish Venture Capital Companies have become one of the primary sources of funding for SME’s.

The purpose of venture capital groups is to provide equity to growing start-ups.  These groups may also act as a mentor of investment as they often provide essential advice to the companies in whom they invest as well as assisting in the expansion of the company.

 

It was reported in February of this year that Venture Capital Funding for SME’s had hit the 400m mark. This is the highest level of venture capital funding seen in over 10 years.  Over 80% of this money was dedicated to the expansion of existing companies. This growth in the popularity of venture capital funding has lead to growing confidence among Irish entrepreneurs.

 

Obtaining venture capital is very different from raising debt or a loan from a lender such as a bank and is an option that should be considered carefully. One of the ways in which this method of funding is unique is that instead of seeking security on their investment, lenders of venture capital will usually charge interest on the loan. Another way in which this option is different is that venture capital is invested in exchange for a stake in your company; creating a symbiotic relationship between the investor and the company they are investing in. The investor’s return is dependent on the profitability and growth of our business.

 

Recent research has shown that Venture Capital backed companies grow faster than other companies. Research has also shown that these companies are more profitable than their peers at a similar level. As well as injecting cash into the business, the investment is also likely to inject the start-up with credibility

 

So, is Venture Capital a viable option for your company?

Venture Capital is the best option for you if you are hoping to rapidly grow your company, and have the ability to protect your intellectual property throughout the investment period. In order to appeal to venture capital investors it also helps to have a USP (Unique Selling Point).

 

If you decide that Venture Capital Funding might be for you, you must ensure that your investor has a strong track record, excellent credentials, industry contacts that can help you grow your business and the time to invest in growing your company.

 

There are a wealth of venture capital funds available in Ireland at your disposal. For your convenience we have compiled a short list of those available:

 

  • AIB Seed Capital Fund
  • AIB Start-Up Accelerator Fund
  • Bank of Ireland Early Stage Equity Fund
  • Bank of Ireland Start-up and Emerging Sectors Equity Fund
  • SOS Ventures Ireland Fund
  • Frontline Ventures Fund
  • Delta Partners
  • Enterprise Equity

It is vital to choose the correct investor for your business, as your investors will be some of your most important contacts. Your venture capital provider should be able to provide advice and guidance as well as capital and it should be a relationship that will grow alongside your company.

NEW COMPANIES ACT OF 2014

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From June 1st 2015, the Companies Act of 2014 will come into effect. This new Act will replace the existing Companies act, which was in place from 1963-2013. This is the largest reform of Irish Business Law that we have seen in decades. Its purpose is to make running a business in Ireland easier. This new Act will carry on some of the features of its predecessor and will have a number of new features including:

  • All company directors must be over 18.
  • Existing private companies must choose their new company type: a private company limited by shares or as a Designated Activity Company (DCA).
  • A new company type will be created; a private company limited by shares can be registered with the CRO (Companies Registration Office). This company can be a single director company.
  • Private limited companies will be entitled to have a single director but all companies must retain the office of the company secretary.
  • All company directors who are subject to a foreign disqualification must file an appropriate form with the CRO.
  • There will be changes to the registration procedures, and required methods of notifying the CRO.
  • External companies will no longer be able to register a place of business.
  • As of June 1st 2015, all existing external companies registered as a place of business will be deleted.
  • A company will no longer be required to have an annual general physical meeting, instead an annual general written meeting will now suffice.
  • The existing duties of directors are translated into eight principle duties, which will apply to all directors.
  • Reintroduction of the requirement that directors provide compliance statements.
  • Some holding companies will be exempt from the obligation to prepare audited group financial statements where they and their subsidiaries do not exceed certain thresholds.

 

With all these changes in mind, what does this new legislation mean for you and your company?

 

The most important thing this means for you and your company is that integral changes to your business, whilst often stressful, must be made and this will be the ideal moment to begin deciding what changes can truly benefit your company.

 

Despite this legislation not coming into effect until June 1st, companies and their directors must now begin to prepare for these changes to come into effect.  At this juncture, it would be wise to begin looking at your company structure and making decisions about what structure and accompanying rules best suit your company.

For example you may want to remove the second “silent” director from the company that never had any involvement in the running of the business.

 

There will be a transition period of 18 months from June 1st to allow companies to act upon the relevant changes. If a private company has not chosen their new company type during this time, it will automatically become a new private limited company with a single-document constitution. This company type does not allow for the future changing of articles contained within its constitution.

 

This new default will naturally not be appropriate for all companies and this is a good moment to begin doing some housekeeping within your company. Taking a closer look at your company now may make all the difference in the future and, as always, DCA Accountants are available to provide any guidance necessary during this period of transition for your company.

EXCELLENCE IN EXHIBITIONS

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Participating in trade fairs and expos takes investment – a structured approach is the best way to maximise your return.

If you’re looking to make a big impression in the market quickly, a trade fair or expo is an attractive idea – rather than setting up many disparate meetings, these events offer you the chance to meet many potential customers. However, participating as an exhibitor takes quite a bit of investment, and even attending uses up valuable resources if the event is overseas. So how do you make the most of participation?

 

The Right Event

It might seem obvious, but picking the right event is half the battle. Event organisers can dazzle you with statistics about the number of companies attending or showcasing their products, but remember the maxim of quality over quantity. You’re far better off meeting a few strong potential customers then twenty random firms with no interest in your product or service. Before committing, seek a detailed breakdown of the companies that either attended past events, or are expected. Failing that, tap your contacts for information on how the event is perceived in the industry – particularly if it’s an overseas event that you’re not familiar with.

 

Plan Your Presence

The event hall will be a competitive space with many companies vying for attention – whether you’re an exhibitor or visitor, you need to communicate your unique selling points in a direct, impactful way. If you’re exhibiting, your unique selling points in a market should inform everything from stand design to the products that you showcase. As a visitor, you need to prepare your 30-second pitch, and also think up responses to the questions that you’re most likely to face.

 

Come Armed

Don’t arrive at an event with nothing to show people. Even attendees travelling internationally should bring a good supply of marketing materials, and business cards are still essential. Exhibitors, meanwhile, should have plenty to show. If you have a small budget and a small space at the event, just make sure that you fill it with things that communicate your company’s values – and value.

 

Listen

When you’re in a sales mindset, it’s easy to just talk about what you can offer. However listening carefully and showing interest is often the most positive message you can send about your company. It shows that you’re interested in the issues faced by potential clients or partners, while you’ll glean a lot of information that could prove useful in time. Also, remember that the people you speak with are also here to sell and make contacts beside yourself: it’s inconsiderate to monopolise them. If a conversation throws up a potential opportunity or longer sales pitch, agree to discuss it in detail at a less pressurised time, either at meal times around the event, or at a meeting later on.

 

Follow Up

When you get back, you’ll be tired and you’ll find a full workload on your desk. But don’t put off the essential follow-ups. Even if you see no basis for a sale or collaboration with people, a LinkedIn message or email thanking them for their time, wishing them well and showing that you remember them will create a positive impression. If, like many people, you struggle to recall faces and names after an event, you can take notes on the back of business cards that you collect – which will let you follow-up in a relevant way.

 

Eamonn Garvey

Partner,

DCA Accountants and Business Advisors

 

For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie or follow us on Twitter.

LIFT-OFF

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When is it right to go public with your new business, and what groundwork do you need to lay?

 

Sticking your head above the parapet – whether it’s going for a promotion, or expressing an unpopular opinion – is an unnerving process. This is no less true for going public with a new or recently-formed business.

 

When you have something to sell, of course, you need to start selling it. However, many entrepreneurs make the mistake of going off half-cocked, when there are unresolved questions about their product or service, or when they’re not equipped to take on a surge in demand. This can create a bad first impression that it’s all too difficult to recover from. So what are the key steps that you need to have completed before you start clamouring for attention from your market?

 

A Defined Offering

Most obviously, you need to know what you’re selling, and know it in-depth. This isn’t just about your 30-second pitch, although that’s essential: you will need to be able to field any reasonable question from a potential customer. These questions range from how your product or service works (think carefully about how much you want to give away here) and whether it adds value to every business or household (or what individuals and entities can most benefit from it), to how long it will take to deliver a return on investment – and what the comeback is if it doesn’t. Your answers will need to be convincing, and it’s worth putting effort into them – remember, sceptics aren’t automatically time-wasters. Any sales staff that you engage for this product or service need also need to have this in-depth knowledge.

 

If it is possible to introduce your product or service to a select group of trustworthy potential clients, then do so as when you feel you’re ready. They will likely have questions that you haven’t even considered, and may flag up issues with your offering that had gone unnoticed up to this point. Tapping their feedback – making it clear that they’re getting their views canvassed as part of the development process – is a valuable exercise.

 

A Test Case

This can, of course, be taken to the next level by letting a business or consumer actually try the product or service for free – or at a steep discount. If you do this, liaise closely with this ‘test case’ customer during the implementation process, and continue to gather feedback after it is introduced.

 

Actually seeing your product or service in action will give you valuable information, both positive and negative. The negatives can inform the work that you do to improve your offering. The positives can be incorporated into marketing materials – few things attract a potential customer more than a concrete example of how a product or service has worked elsewhere.

 

The Capacity Question

When you have exhaustively defined your offering, and ideally have a positive ‘test case’ in progress, it’s time to make sure that you can actually deliver your product or service quickly. This can entail taking the plunge and either making hires or buying stock – and doing so is often the most nerve-wracking part of starting up. If it’s possible to have this capacity on stand-by, then that’s a great advantage. However, if it isn’t, don’t look to cut corners: you need to be able to resource any contracts that you win from day one, so make any financial commitments that you need to meet your projected sales – and ideally have some capacity in reserve.

 

After going through this process, of course, you face the tricky task of getting the market’s attention. But without a solid foundation of a defined offering and capacity to deliver, your best marketing efforts will be derailed.

 

Do you have a question for DCA’s experts? Contact us or connect with us on Twitter.