Budget 2014 – The impact on the SME sector .

Budget 2014 - Michael Noonan It was positive to see that the budget recognised the SME sector .While there is a lot to be done yet in terms of helping SMEs , Entrepreneurs and Start Ups there were some positive initiatives in the budget.

Ireland has come a long way since 2008. The 2014 Budget saw the Government announce a €2.5bn fiscal consolidation and achieve 95% of the original EU/IMF savings target of €32bn.

Budget 2014 looks to continue the progress Ireland has made and to create an environment which will stimulate growth in the economy as we exit the EU/IMF programme at the end of the year.

Within the constraints in which the Minister was operating this budget is a deliberate attempt to support entrepreneurs and stimulate innovation with the purpose of protecting and growing employment which is a positive for the SME community .

Particular measures of note include:

The Home Renovation Incentive which will provide an income tax credit to home owners who carry out renovation and improvement works on their homes in 2014 and 2015. CPA Ireland have called for such an incentive previously, which challenges the fiscal damage meted out by those operating in the black economy, acts as a stimulus for self-employed trades people and will release money into the domestic economy.

The Start Your Own Business Scheme (SYOB) which is a positive signal of intent to support entrepreneurs, particularly those that have been out of work for a period of 15 months.

– The removal of the Employment and Investment Incentive (EII) from the high earners’ restriction is a practical measure to stimulate investment

Capital Gains Tax Entrepreneurship Relief encourages reinvestment in business and will stimulate entrepreneurship.

Additional welcome measures include improvements to R&D Tax Credit and the increase in the VAT cash accounting threshold. These measures constitute significant support for small and medium enterprises by improving cash flow, fostering innovation and supporting entrepreneurship.

Corporation tax rate internationally

The Minister reaffirmed the Government’s continued commitment to maintaining Ireland’s 12.5pc corporation tax rate.


We welcome the positive endorsement of the R&D tax credit contained in the Department of Finance’s published review of the regime. The endorsement is significant as it is a clear statement to the FDI community that Ireland remains open for R&D business and will support innovation through its tax policy. This clarity was needed to counteract the uncertainty created by the review process itself and the recent negative media commentary regarding perceived abuse.

The Minister has increased confidence in Ireland’s ability to retain and attract R&D mobile investment.

The key findings of the review are positive. The scheme has been acknowledged as a significant driver in attracting FDI and stimulating increased domestic R&D activity. On foot of the review, the Minister has introduced a number of favourable amendments to enhance the scheme.

CGT exemption

The CGT relief for property owned for seven years and purchased between 7 December 2011 and 31 December 2013 introduced in Finance Act 2012 is being extended by one year to include properties bought before 31 December 2014. This extension will be welcomed by investors, both in Ireland and abroad, and will help bring further stability to the investment property market.

Retention of the 9pc reduced VAT rate
As part of the Jobs Initiative launched in 2011, a temporary reduced rate of VAT (which was due to revert to 13.5pc on 31 December 2013) was introduced to certain supplies, mainly within the tourism and hospitality sector. However the rate reduction has proved to be very successful having played a key role in both job creation and job retention in the sector and as part of the Government’s pro-business budget, the Minister has confirmed that the 9pc rate will be retained.

Micro and small enterprises are a central part of our economy, and their ability to succeed and grow underpins our future potential for jobs, growth and prosperity. 98.5% of all firms are small and employ over 650,000 people throughout the country.

What were the positive measures for business ?

  • Retention of the 9% VAT rate for the hospitality sector – to support and encourage growth in small businesses in the tourism sector;
  • Air Travel Tax reduced to 0% from 1st April – to encourage the development of new routes and therefore lead to more passengers and the creation of additional jobs in the tourism sector;
  • VAT anti-fraud measures – to protect compliant business from unfair competition by tackling the shadow economy.

As well as the reliefs already mentioned Minister Noonan also announced a package of measures aimed at supporting start-ups and growing businesses, including the following:

  •  Start Your Own Business Scheme (SYOB): This measure is being introduced to encourage individuals who are long-term unemployed to start their own unincorporated business. A two year exemption from income tax up to a maximum of €40,000 per annum is being provided for individuals who have been unemployed for at least 15 months prior to starting their own business;
  •  Increasing the threshold for the Credit Review Office from €500,000 to €3 Million;
  •  Supporting cash-flow in the small business sector by increasing the VAT cash threshold from €1.25 Million to €2 Million;
  •  Building Business Capacity – A training and mentoring programme consisting of 2 days dedicated off site training tougher with export mentoring support, to enhance SMEs business and financial capacity in relation to understanding and utilising a broader range of financial products, as well as equipping them with the necessary tools to make a strong business case when applying for credit. The programme will be launched on a pilot basis with 1,000 SMEs taking part next year;
  •  SME Communications Strategy – to increase awareness of State supports amongst SMEs. This strategy will also ensure that there is a greater awareness amongst businesses of the soon to be re-launched credit guarantee scheme;
  •  A package of improvements in the R&D tax credit aimed particularly at small Irish companies.

entrepreneur text

Hopefully more can be done to support the SME sector and encourage Business start ups to create employment , innovate their business , and grow their exports in International markets . SMEs need more support having come through a tough five years in business those how have survived are our new business heroes and should be supported and encouraged to grow , innovate and employ

Cormac Fitzgerald FCPA is Chairman of the SMP/SME Committee and Vice President of CPA Ireland . He is also the owner of Fitzgerald & Partners Accountancy Firm in Kinsale , Co. Cork .


SME Business Tips – Different Perspectives

sme tips

Something which I’m asked on a regular basis from my clients in the SME sector is what would your top five tips be . 

So I’ve asked this question of a number of business leaders recently from all different backgrounds with a focus on SME and innovation to give their top five tips for SME owners to help them succeed. 

CPA Ireland, one of Ireland’s leading accountancy bodies is focused on SMEs, entrepreneurship, innovation and has a number of business tools available to SME owners to help them in their business .

Please find attached a link to the department of Finance which shows what supports are available for SMEs which is an interesting spread sheet.

SME Matrix Dept of Finance

An Education perspective ….University College Cork 

JB McCarthy - UCCJB McCarthy – Development Director
Financial Services Innovation Centre, UCC, Cork.

You might want to let people know that the Enterprise Ireland call for €5K Innovation Vouchers is open at present. Companies can apply for a voucher to help explore a topic with a university, the only cost for the company is that they pay the VAT which they should be able to re-claim.

We have done several small projects for companies where they want to explore or innovate on their existing business model or explore new business models or see how social media might be able to build their profile.

A Legal perspective ..

Virgil Horgan, Solicitor – Hegarty & Horgan

At Hegarty & Horgan our clients come first. Our personal service ensures that we take time to listen to and understand our client’s legal requirements. When you need professional advice we are there for you. Along with the areas of practice listed on as in any General Practice there are a myriad of other problems and issues that clients require advice on and we use our experience and expertise to advise and assist our clients to find the best solutions.

1. Hire a business coach or accountant  .A third party or ‘outsider’ can help you work on your business from an objective point of view. Share your ideas and concerns of the business with a good mentor who has business experience .

2. Review your cash flow or budget plan. Very  few SME owners recognise the importance of a cash flow plan. Cashflow is critical to business survival and success .

3. Regularly review your business strategy. Identify what you want to achieve and where you want your business to be in one, two and five years’ time. Do an offsite SWOT analysis on your business with your advisor.

4. Develop a networking strategy. Most businesses benefit from networking and word-of-mouth, however, very few SME owners have a networking strategy. Be it online or attending events appropriate .

5. Make a commitment to learn more this year take the time to identify areas of your business that need work. Where do you need to improve your performance or learn new skills .Broaden your skillset .

A banking perspective …AIB Bank

Sinead O Connor-Aib KinsaleSinead O’Connor – Branch Manager of AIB Kinsale Co Cork.

Sinead is a Qualified Financial Advisor.  Given her wealth of experience, Sinead along with her team at AIB Kinsale can offer SMEs advice and guidance in relation to their financial needs from the beginning and right throughout the lifecycle of their business.

My top 5 tips for SMEs are:

1.  Know your Bank Relationship Manager and proactively engage with them throughout the year, inviting them to visit your business premises to ensure they fully understand how it works.

2.  Conduct quarterly reviews of your Business with regard to sales performance, competitors, industry analysis and the people working in your business.  If appropriate engage with external consultants to support you in this task.

3.  Review your financial statements with your Accountant/Financial Advisor to obtain a full understanding of the financial data.  In particular, establish how profitable your business is, and how much cash does it generate.  Work on areas of the business where greater efficienices can be achieved, or where margins can be improved.

4.  Consider your “unique strengths and weaknesses” and how you can use them/deal with them to your benefit.  Outline these to your Bank/Accountant to maximise the Partnership that you have with those specialists.

5.  Visit AIB’s website regularly at www.aib.ie to avail of the full product and service offerings available to you.  In addition throughout our Branch network there are specialists available to assist you either at your place of business or at the branch in the areas of Financial Planning, Leasing and Hire Purchase, Credit and Internet Banking.

A political perspective ..

Aine CollinsAine Collins TD

1.Seek Mentoring Support – look at all the options that are out there…. ie. Enterprise Ireland, leader, etc.  “I know that  the various supports available can seem complicated  to wade through but this is something I’m working on with the Department of Jobs, Enterprise and Innovation.

Hopefully we’ll have a more streamlined approach to state supported mentoring services by the end of this year.  However I can’t stress enough how helpful mentoring can be for a business.  It’s so useful to have someone who knows the ropes and has the expertise to act as a guide and confident.

2. Review Yourself – are you doing  what you are really good at for your own business?  Often entrepreneurs set up a business because there’s a certain aspect of it they love and are really good at – they then end up doing things that go with running a business that they really don’t like.  Do what you are really good at – and make sure you’ve really good people to do the other bits!

3. Review Your Business – make sure you’re really clear where you want your business to go.   Develop a business plan if you don’t have one & if you do, then take it down from the shelf, dust it off and review it objectively.  Then you’ll probably need to re-write it or at the very least modify it!  A plan must be reviewed and adjusted regularly – we need to plan, but as they say ‘the best laid plans….’, so review and monitoring is also key.  Keep the vision clear.

4. Messaging – what is your message, are people hearing it and do they understand it?  And review this both internally and externally.  Do you really know what your own message is?  Do your staff?  If you’re not all really clear on what your business is all about then you’ll all find it difficult to communicate this to your customer.  And the message also needs to be reviewed regularly to incorporate new changes within your business, be it new products or services, or changes in external market forces.

5. Be Brave.  Sometimes its really easy to stay in our comfort zones and be wary of taking a risk.  So every so often we all need to take a deep breath and jump!  This could be anything from taking on new staff, delegating more or deciding to expand your business.   Again, on this one, I’d really recommend a mentor – its great to have someone else to bounce ideas off.  And they can help give us the confidence and focus on the priorities to achieve the goal.

Áine Collins TD
Fine Gael, Cork North West

A Branding perspective …

Gerard TannamGerard is CEO of Islandbridge Brand Development

Branding is all about relationships. These are the five things you can do to make your mark with customers:

  1. Meet Regularly With Customers: Spend time with those who buy from you to find out more about them and what part they want you to play in their lives (but make sure there’s no selling agenda during those meetings / conversations).
  2. Network: Get out there and meet people. This can be face-to-face at industry seminars, general business events or dedicated referral opportunities or via the wide range of social media that is now available to the business owner.
  3. Be An Expert: Customers love to deal with people who really know their stuff. Be generous with your knowledge and experience. Become the go-to person in your area. If you can, publish.
  4. Gather Testimonials: Nothing succeeds like your prospective customer knowing that someone else happily bought from you. Invite your customers to offer testimonials and include these in exchanges with prospects and elsewhere in your market when you can.
  5. Engage The Right Team: It’s vital that everyone working for you plays their part and is consistently on-brand. Gather the expert resources you need and check that they have the right attitude as well as the know-how to work closely with you to deliver your brand.

A Regulators perspective…

Muireann O NeillMuireann O’Neill – CIT

Muireann O’Neill is employed by Cork Institute of technology, lectures in accountancy and is recognised as one of Ireland’s leading auditing and management accounting lecturers. Muireann also holds directorships in Inland Fisheries Ireland (‘IFI’) and the Irish Auditing and Accounting Supervisory Authority (‘IAASA’).

My approach to Business is a follows:

1. Ensure compliance with Law and Regulation. If you don’t know what is needed, engage an expert and don’t leave it to chance. You never know who may come knocking if you are not compliant.

2. Pay attention to RISK. Failure to do so can cause irreparable damage to the reputation of a business. Reputations take years to build and moments to lose. Risk awareness should be embedded within an organisation’s processes, culture and systems. Organisations should have a risk policy statement and maintain a risk register.

3. Successful business people view TIME as their most precious resource. Each day they list what’s most important (rather than just most urgent) and make sure they do it. Bill Gates has said that being acutely aware of the value of his time is one of the most significant factors in his success

4. Set goals in writing and then remind yourself of these goals every morning. Research has shown that this approach can make you over 30 times as likely to succeed.

5. Don’t be one of life’s best keep secrets. Be noticed and create a bit of noise.

What are your 5 Tips?

Cormac Fitzgerald - Fitzgerald & PartnersCormac Fitzgerald FCPA is the owner of Fitzgerald and Partners and is Vice President of CPA Ireland

Fitzgerald and Partners are SME Business Advisory, Accountants and Auditors located in Kinsale in Cork