The Irish SMEs Could be Perfect Exportersby Helena Deane on 07/05/11
I have read that, according to a study published by ISME in October 2010, a good 50% of Irish Businesses expect a deterioration in business conditions over the following 12 months, while 60% confirmed that their sales are down and that the expectations of future revenue is low.
Key survival strategy
I have been stressing that as small businesses face a decrease in domestic market sales and prospects of having to downsize, developing export activities is becoming a key survival strategy. Irish SMEs are perfectly placed to export. The analysis undertaken by the European Commission for Enterprise and Industry has shown that Irish SMEs excel strongly in the area of Entrepreneurship, Skills and Innovation and Responsive Administration. Irish SMEs are also far more active in Internet based trading and have a higher share of new products or income from new products.
Despite this, the EC Eurobarometer has shown that in 2007 (at the height of the economic boom!) only 11% of medium enterprises in Ireland have had income from exports. This is a disappointing figure, considering that some other small open economies have performed significantly higher, for example Slovenia with 21% and Finland with 19%. To add insult to injury, majority of exports have been attributed to foreign companies established in Ireland.
It is widely acknowledged that SMEs face numerous institutionalised barriers to trade internationally, such as different legal systems, contract law, consumer law, differences in licensing laws and standards, different taxation systems and product liability rules. This, coupled with other barriers to trade including language, culture, poor access and a lack of market information has resulted in most Irish owner managers holding little enthusiasm for the exporting opportunities, exporting being something that is being perceived as ‘too difficult to do’.
Such businesses miss out on the significant benefits exporting can deliver, such as increase in sales and increased lifespan for products and services (due to access to new markets), decreased production costs and increased productivity (from economies of scale and better use of resources), decreased vulnerability to fluctuations on the Irish market, as well as increased expertise/experience and differentiation from competitors.
'Made in ireland' is such a valuable brand with strong international reputation, more small businesses should use this to their advantage and give exporting a go.