There is no doubt that the air of economic doom looming over us is not helping confidence especially among small businesses. Despite this, entrepreneurs are resilient and open to new challenges however we need to rally together to ensure that the structures are in place to provide a safety net for entrepreneurs who take risks. Maree Morrissey leads a discussion with six of our island’s business leaders, entrepreneurs and economists and unveils a huge fire burning that in fact ignites new debate challenging our politicians and education systems to step up to the mark, offering real support as a means of sustaining growth.

A newer Ireland is emerging, where the value of entrepreneurship is coming to the fore. Through a changing economy and the undercurrent of all-island business collaboration, these exciting times are seeing SMEs thriving; some expanding to become hugely successful global businesses. Of these companies, the ones that made it to our listing, of the Top 1000 Fastest Growing All-Island SMEs, are showing huge leaps in net worth growth over the past four years, despite the looming tone of an economic downturn. The challenge is for these companies to sustain this growth.

Our round table discussion puts into context our current economic state and best ways forward for sustaining this growth, for SMEs, small business and start-ups, into 2008 and beyond. The most startling fact to emerge is that it couldn’t be a better time to grow or start a business. With the spotlight off property as our obsession depletes and with the economy sitting at a more realistic level of 3% growth, still ahead in European terms, despite other factors such as fluctuating oil prices and rising inflation, the general consensus is, time to get down to business and support our entrepreneurs by sending out this clear message, instilling confidence once again.

Maree Morrissey starts the discussion by highlighting the apparentness of the impact of property valuations when analysing the growth factors of top companies listed on our Fastest Growing SMEs, Top 1000.

On completion of our listing that identifies the fastest growing all island SMEs we noted within the top 25 a significant amount of businesses were involved in property and construction related activity, which had huge impact on their high net worth growth. In addition to this, other companies seemed to have propelled their net growth through property re-valuations. Given that the property market has taken a hit and property valuations are down at least 8%, the challenge is for these companies to overcome this net worth loss that will show in 2007 accounts, and find ways to increase net worth going forward.

Paul you were instrumental in sourcing the data, do you think Irish entrepreneurs need to identify new market opportunities and get away from our obsession with property in order to maintain this high level of growth?

PB: I think we need to be careful that we don’t start talking ourselves into a recession regarding the property market. Despite the loom of an economic downturn, there has not been a noticeable drop in exchequer returns, which were reasonably good in the first half of 2007.

CMcV: I don’t feel that the market is in a recession at all. We are bench marking ourselves against last year when it was at its highest ever. This year, there have been around 60,000 housing units created, whereas last year there were 90,000. That was a phenomenal year for property. So, yes maybe it will stay at the 60,000 level but that in itself is a very substantial figure.

TO’R: There are still opportunities in the Irish property market for example the commercial sector is very strong at the moment. Diversity is key and entrepreneurs are already looking abroad in places like Eastern Europe. If you look at the demographics and the economises in eastern Europe they have a lot of growth to come and what happened in Ireland 10 years ago is being replicated in the new EU countries so there are still opportunities there.

Despite the rise in economic uncertainty, we have fantastic demographics; great fiscal system and interest rates, although rising are not going to go through the roof which indicates things are going right for us. As the property boom levels off, it gives us time to catch our breath. The real challenge is how to channel some of this accumulated wealth back into business.

AH: The entrepreneurs who have built up their property investment are dealmakers and they’re not going to disappear. They are always looking for something tangible and worthwhile to invest in.

JC: There is a serious gap between seed corn stage and early start-up capital. Perhaps we could throw more spotlight on plugging this gap.

What about the role of banks and government support agencies in providing some of this capital?

LN: Banks won’t touch you unless they know you have potential and the government agencies are fed up being left as a last resort. As a result, you have this gap. It is easy to raise four million but to get €500k is almost impossible.

J: A banks primary goal is to satisfy their shareholders, by gaining a return on equity but there are entrepreneurs out there with some really solid business ideas at research and development stage worth investing in.

For the smaller start-up who requires initial funding of up to €50,000, in a recent survey carried out by Irish Entrepreneur, we interviewed 100 of these start ups and their biggest obstacle was raising finance. Interestingly, 89% said they used private equity from their homes to fund their business.

A: The truth is if you’re passionate about your venture and you want to succeed, who wouldn’t put their home on the line?

LN: People think it’s hard to get money but it’s not hard to get money if you have the right idea and have the right people behind the business.

J: I have to disagree. There are many micro entrepreneurs generating excellent business plans and ideas who still can’t get funding. We need to expose these smaller businesses to investment opportunities.

How do we nurture our entrepreneur’s mindset amidst the general doom and gloom that some economists are putting out in the marketplace?

T: Irish Entrepreneurs are resilient and optimistic and are not listening to economists like Geroge Lee; they are out taking risk, making investments and doing very well. As Irish Entrepreneurs hold their nerve, I think they will get the support they need to get through their doubts.

An emerging trend that is determining why more people are looking at starting a business is maintaining a work life balance and technology now more than ever plays a vital role.

C: The days of working nine to five are long gone. Entrepreneurs at home and when working want to give 100%. Mobile telephony and broadband services this well.

According to OECD Broadband Statistics of June 2007: Ireland makes progress but still only ranks at number 22 among the 30 member countries. Is this the issue that is affecting our small business’ productivity or is it the fact that many small businesses do not have the knowledge to harness the power of technology in moving their business forward.

C: We have to find ways of making it easy for small businesses to learn more about the uses of technology that we are already using. For example, everyone knows how to use a mobile phone, but do they know how to look at emails on their phone and how easy it is to set up and how to access this on a laptop and get straight forward access to all my files. Training and promoting this is the way forward.

Small businesses are playing a huge role in generating economic wealth. Do we need to focus more on harnessing their potential?

A: Yes, even when they are at the micro finance stage because their single biggest challenge is how to scale the business to the next level. One area that is forgotten about is skills transferral in our multi nationals. For small businesses the opportunity to supply the multi nationals can be a good learning curve. This is way to make them scale up.

For me, a key factor in helping my business grow, is the support that you get from associating with multi nationals because I am able to network with other people who have built great businesses and learn from them.

L: The key is to encourage more networking and entrepreneur master classes, whereby entrepreneurs can learn from each other.

We have expanded into foreign markets in the highly competitive service sector, are Irish Entrepreneurs equipped to embark on a journey aggressively seeking out and exploiting international market opportunities?

J: Yes, for example look at Jerry Kennelly of StockByte selling his business based in Kerry to the international company, Getty Images for a staggering 135 million dollars.

It’s no secret that the level of entrepreneurship in NI is not as vibrant as the south however it is on the up. Despite this, are many NI entrepreneurs exploiting global opportunities?

L: The entrepreneur is a free spirit, I think they are all of the same mindset and it doesn’t matter where you come from. Yes, the support systems are different but the entrepreneur does not differ.

Opportunities in global markets? And where will the next boom come from?

T: The service industry is going to be if you look around the world. Biotech, IT and entertainment conversions are also hugely important. We have a fantastic advantage in Ireland in Financial services. Its not really seen as normal hunting ground for entrepreneurs because it requires a lot of capital, which by its definition entrepreneurs don’t have, but we are seeing some entrepreneurial activity in this area. For example people involved in the aircraft leasing activities. I think in Ireland, we have a critical mass, we have a terrific legal framework and I think we should be encouraging Irish Entrepreneurs to develop niche areas in this sector where they can export too.

Are attitudes to risk changing?

J: There’s an interesting situation in Ireland at the moment with our vast wealth, where entrepreneurs are making super profits beyond what they ever imagined. Their attitudes to risk have matured hugely.

C: We must have the support from politicians of the highest level, right across the board encouraging entrepreneurship. They need to come out and make heroes of people who are taking risks and setting up companies that are sustainable and innovative.

P: There are a lot of people out there who are extremely gifted but they just don’t know how to go about starting a business, and in many cases were never top of their class.

This brings us back to a whole other point on how the education system has evolved to nurture our growing knowledge economy.

A: Our education system is really built for a different age than the age we are in at the moment. We’ve just come through a process driven age not driven by creativity. This needs to change.

T: I think the education process should be better tuned to support that shift to the knowledge economy. The knowledge economy is what we are going to be good at. We are going to be well-educated people who have critical mass. We have benefited from a lot of FDI (foreign direct investment). Biotech and IT will be particularly important to us and they don’t require big inputs in terms of resources, they require brainpower, which we have.

L: Our universities s are good but should be world class and invest in getting the smartest people in the world to come here and teach, think, research, write and spread their gospel.

The last few years we have a lot of people returning to Ireland with immigrants coming in and the same is happening in terms of our FDI. We have been a great home for FDI, should we be a source of FDI?

T: It would be better for the country in terms of diversifying our wealth generated here by people investing abroad. There is a lot of money to be made in the BRICK countries and encouraging Irish people to get out and do that would be very good. Of course there are challenges with this such as infrastructure, regulatory and bureaucratic; but still Irish entrepreneurs are breaking through these barriers and proving very successful for example Aidan Heavy who set up Tullow Oil.

The term, all-island business collaboration’ has been about for some time now. Are entrepreneurs north and south embracing this as a means of generating business?

L: In the past, the two economies turned their backs to each other at all levels, the administration, the public and the business community. That has changed now, although a slow process, the challenge is to build trust and to encourage the two communities not to fear each other. In my experience if you put two business people in a room they do business. Through building networks, we hope to achieve this. So yes, our island’s entrepreneurs are responding positively as they are recognising the value we can all bring to the table. The way forward therefore is to encourage networking of entrepreneurs from both regions and the rest will happen naturally. One of the aspects for the speed of the development in the Irish economy is due to the fact that now people are ready for this.

T: The north is going to unleash a wave of investment and Irish companies that don’t recognise that are going to lose out.

What about the recent Aerlingus issue where an Irish company saw an opportunity to make more money flying out of Belfast than in the south and that caused great consternation in the republic. Not a great testimonial?

T: But more people should do what they did and take risks. That is the only way forward.

A: There is a new sense of openness and willingness to do business. CPL are only now basing ourselves in the North and it’s proving hugely successful. Eircom just won a big contract with the NI government, which further fuels, a great attitude to do business. Aerlingus is an isolated case.

What is key to further strengthening this collaboration?

L: We need to encourage trade, but trade is just one of the issues. It’s about building the infrastructure and getting the planning right and getting capital moving across the island.

A: Another aspect is the need to get all-island labour skills working.

Remaining competitive is a major challenge for SMEs. How do we protect these businesses from international competition, especially from the Middle East?

T: If you look at the World Economic Forum that recently came out with a world competitiveness league, Ireland has remained at 22nd, the same position as last year. However we were up in the top 10 a few years prior. The number one country is the US, which is a very developed and expensive economy, and yet they remain competitive. It’s about being conducive to business. Remaining competitive means accepting what we are good at and not competing where we could fail, in manufacturing of cloths for example, China would beat us hands down due to labour costs.

Published in the Yearbook 2007 Issue of Irish Entrepreneur