Impact Of SSIA Funds In association with AIB

MINI-BOOM FOR IRISH BUSINESSES

Adrian Moynihan, Business Startegist, AIB

Adrian Moynihan discusses the likely effects of the release of SSIA funds on Irish SMEs.

As most people are probably well aware by now, there is a milestone event for the Irish economy that is on the near horizon. Starting in May of this year, 1.2 million savers will receive the fruits of five years saving with around €16 billion coming into the economy over a twelve-month period from SSIA accounts.

Although the majority of these funds are likely to come on stream in 2007, a significant portion will be released in 206 and most people are already planning what to do with their savings.

THE BIG SPEND

What will actually happen to this €16 million when the SSIA scheme concludes has been the subject of much media speculation over the past few months. Different surveys have produced different outcomes but broadly speaking results have shown that while some people will hold onto their money and reinvest as they have now got into the saving habit, others will spend some or all of their SSIA lump sums.

This is likely to have a positive impact on business conditions and increase the demand for goods and services in certain sectors. In particular, areas such as construction, motor trade, travel and luxury goods, to name just a few, should see strong consumer demand. Overall though, the likelihood is that there will be a mini-boom for most Irish businesses over the next 18 months.

ARE YOU READY?

So what plans have you, as a business owner/manager, made to prepare your business, to capitalise on this extra demand? The key question that every business owner/manager needs to ask themselves is "is my business ready for this?"

The bottom line is that you need to start planning now. You should ensure that both you and your business are prepared for the SSIA surge, there is no doubt your competitors will be.

MARKET YOUR WARES

In fact, the level of competition amongst businesses is expected to increase even further over the coming months. Industry experts are expecting a bumper year in advertising revenues due primarily to te relase of SSIA funds (and The Ryder Cup 2006) as businesses compete more intensively to fully capitalise on the business opportunities that arise. With consumers becoming more demanding and discerning with whom they do business, the need to develop and implement a targeted and cost-efficient marketing plan should be finding its way into every owner/manager's business agenda in 2006.

EMERGING BUSINESS

Another factor that may impact the level of competition amongst businesses is the likelihood that some people will use lump sums they have accumulated under the SSIA scheme to partly fund the setting up of their own business. This is one outcome of the SSIA funds that has not received much attention to date.

The level of new business start-ups has been very strong with around 80,000 new businesses being formed over the past six years. Due to overall economic conditions, the probability is that this trend is going to continue apace. With the release of the SSIA funds this may increase even further. While some of these new businesses will have unique and innovative propositions, the majority will be seeking to compete with existing businesses.

Existing business owners should consider developing plans to:

• Make it easy for your customers to do business with you
• Reward loyalty and repeat business
• Maintain regular and meaningful contact with your key customers
• Try to 'lock in' your customers to safeguard against competitor advances

This promises to be a very busy period for many business owners/managers. The key message is to be ready for it and make the most of the opportunity at your doorstep.