Irish SMEs increasingly more innovative post-recession

A survey published by KPMG has found that eight-in-ten respondents believe Ireland’s small businesses are more commercially innovative since the global recession.

Around 15 per cent of Ireland’s SME community was forced to close during the economic crisis, but there is increasing positivity at present. As recently as 2013, Ireland ranked as one of the most entrepreneurial countries in the continent.

Ian Harkin, co-founder of Irish toy firm Arklu, which now sells its new line of dolls in more than 30 countries, believes this is a legacy of Irish emigration having been exposed to exciting business opportunities and fresh ideas.

“A new generation of Irish people is embracing globalism like never before – I’ve met more Irish people than any other nationality in far-flung corners of the world – and that’s shaping the businesses that are being started in Ireland,” said Harkin.

The recession necessitated finding a more innovative approach for Irish SMEs to take products to market, as well as an upsurge in small firms seeking alternative forms of finance.

According to Marc Rafferty, CMO at Irish peer-to-peer lending firm, Linked Finance, the firm has helped fund 250 SMEs to the tune of €7m.

It also recently raised €2.5m in equity finance towards its goal of supporting five thousand SMEs with €250m of crowd-lending by 2017.

“Before the recession, SMEs in countries such as Holland and the United States relied on banks for about 50 per cent of their funding, whereas in Ireland that figure was more like 90 per cent,” said Rafferty.

“That over-reliance on banks completely changed during the financial crisis, which led to greater interest in alternative models of funding.”

Ireland’s new social enterprises are another legacy of the recession, many of which grew from an effort to address its ongoing impact.

“Recession always births entrepreneurship,” adds Rafferty.

“It’s a horrid time to be over-extended in business because there’s no way to recover, but it’s also a time of great opportunity, with smart people available for hire and cheap resources.

“Plus, in tough economic times, anything positive tends to be well-received.”

Date published 1 Apr 2015 | Last updated 1 Apr 2015