Nearly 99 per cent of businesses across the island employ fewer than 50 people, a higher proportion than many of our European neighbours. The continued resilience of our small businesses to seemingly more prevalent and tempestuous winds of change will be critical to sustained economic success.
In total, there are close to 362,000 small businesses on the island of Ireland, employing 1.2 million people dispersed across all cities and counties. Together, small businesses contribute a mighty 81 per cent of GVA (gross value add) to the Northern Ireland economy and 46.2 per cent in the Republic but their significance is even more important, though perhaps less visible, as providers of often high-quality jobs that sustain small, local, often rural, communities.
InterTradeIreland’s Fusion programme, a cross-border product-development and innovation programme for small businesses, has, for example, supported 200 businesses in its most recent phase, creating 764 high-quality new jobs through innovation-fuelled growth.
Cross-border trade on the island has been growing at an annual average rate in excess of 4 per cent over the past 20 years. In that time, the volume of trade has almost doubled to more than €6.5 billion. It is primarily small businesses that are propelling and benefitting from this growth in trade. In total, more than 5,000 small businesses from Northern Ireland trade across the border, with similar numbers operating in the opposite direction.
These businesses benefit not only directly in terms of market growth but also gain invaluable experience and confidence by exporting to another jurisdiction that often encourages them to look further afield.
For example, Virginia Medical Supplies, a small business from Co Cavan, which recently participated in InterTradeIreland’s Acumen programme that supports small businesses to enter and develop the cross-border market, saw its turnover triple and now exports to Dubai, Spain, Great Britain, Denmark and Italy as a direct result of the experience gained.
Another programme participant, Maurice Walsh & Co Ltd, from Ballynahinch in Co Down, which designs, manufactures and installs structural and architectural metalwork, saw its turnover increase by 50 per cent and has taken a similar journey into overseas markets.
In fact, an InterTradeIreland report, Analysis of the key features of an exporting SME on the island of Ireland, found cross-border sales represent the first export market for almost three-quarters of businesses across the island (73 per cent), with 90 per cent of Northern Ireland firms taking their first export steps in the Irish market and two thirds (63 per cent) of Irish exporters taking the same steps in the opposite direction.
Stripping out deadweight and displacement, an independent evaluation of phase three of our Acumen programme indicates that participating businesses have generated a total of £52.3 million (€59.6 million) of net additional sales, comprising £16.6 million (€18.9 million) for Northern Ireland businesses and £35.7 million (€40.7 million) for businesses in Ireland. This equates to a net economic profit for the two economies in terms of additional gross value added of almost £20 million (€22.8 million).
Market confidence
So, cross-border trading opportunities and cooperative innovation partnerships are sustaining and fuelling the small-firm economy across the island. The InterTradeIreland quarterly All-Island Business Monitor (AIBM)reveals that cross-border traders are taking advantage of current buoyant levels of market confidence, but this is balanced with challenges caused by rising energy, overhead and supply costs, new competitors and difficulties recruiting appropriate skills.
Small businesses will need to show their characteristic resilience and entrepreneurial spirit over the next few years as they face up to potential and uncertain changes to the cross-border trading relationship. Worryingly, the AIBM also found that 98 per cent of firms are not making any plans for the UK's exit from the European Union.
Resources constrain the capacity for smaller businesses to make detailed longer-term plans but InterTradeIreland’s message is simple: while we recognise the pressures facing small business owners dealing with the here and now, there is, nevertheless, a window of opportunity that must be grasped to prepare for the challenges, and indeed the opportunities, that will be presented by a new cross-border trading relationship set to emerge over the next few years. Our new Brexit Advisory Service is available to support and encourage businesses to ‘Plan, Act & Engage’ in preparation for Brexit.
Aidan Gough is director of Strategy & Policy with InterTradeIreland