ENTREPRENEURSHIP IS ALIVE AND KICKING

There has never been a better time to start a business in Ireland than there is now.

Ireland is one of the fastest growing economies in the developed world. Much of this astonishing growth has been due to a new generation of entrepreneurs. Since the 1990s, growing numbers of entrepreneurs across the country have decided to start up modest ventures in all walks of life and business. The Irish Report of Global Entrepreneurship Monitor (GEM) for 2005 found that Ireland remains one of the leading countries in Europe in terms of entrepreneurship and is fast approaching the levels of early stage entrepreneurial activity prevalent in the United States. Overall, the research found that almost one in ten of the adult population living in Ireland is actively planning or has recently set up a new business.

A New Mindset

This new generation of entrepreneurs has sprung from the buoyant economy we have in Ireland today, teamed with historically low unemployment rates, and a new mindset where it’s more acceptable to try and fail and try again. GEM research shows that there has been a significant improvement in societal attitudes to entrepreneurship and taking risks. At the Entrepreneur of the Year Awards 2006, Minister for Enterprise Trade and Employment Michael Martin reiterated the strong position of entrepreneurs when he said in his speech that, “Irish industry and entrepreneurship are of paramount importance to the Irish economy and to Irish society. The 2005 GEM report found that total entrepreneurial activity in Ireland reached 9.8%, the highest in the EU. Positive culture is consistently highlighted as the most significant factor in creating an environment conducive to entrepreneurial activity in Ireland.”

According to Charles Lynch, Galway County and City Enterprise Board, “there is buoyancy in the economy, a greater drive, and a spirit of adventure among business people who are willing to take the chance to go out and do something. I think to some degree the spirit of begrudgery that used to exist with people believing that you couldn’t do something is disappearing and there is a much greater willingness to take a chance and gamble.” Irish living standards have also increased significantly over the last decade and this has undoubtedly added to making Ireland more appealing to entrepreneurs. The OECD estimates that in terms of GDP per capita, based on current Purchasing Power Parities, Ireland is ranked 4th in the world. At the same time, the public finances have never been in better shape, according to Lynch. “The cost of finance is relatively reasonable in comparison to 15 years ago when you could have been paying enormous overdrafts rates and huge APR. The cost of finance is still relatively reasonable to allow people to go off and try and make it happen,” says Lynch.

Strong State Support

Aid from the government has contributed to making today a ripe time for entrepreneurs to blossom.The state, through the development agen cies and through sponsorship of privately operated initiatives, provides a wide range of supports and ini tiatives to stimulate entrepreneurship. At present, the Department of Enterprise, Trade & Employment is ultimately responsible for suppo rting entrepreneurs and startup enterprises throug h a range of bodies including Enterprise Ireland, Ci ty and County Enterprise Boards, FAS, and Business Innovation Centres to name a few of the bodies that encourage and assist startup enterprises.

The recently announced budget will also stimulate entrepreneurs who are starting up as it introduced measures proposed by the Revenue, whereby new start-up companies will not have to pay preliminary tax in respect of their first accounting period. The frequency of VAT payments for smaller firms is being reduced from six VAT returns to three each year in some cases, and to two each year in some cases. The budget also raised the ceiling per company on total BES investment from €1 million to €2 million.

The annual limit on BES investment per investor, which has not been increased since 1984, was raised from €31,750 to €150,000. In the case of the Seed Capital Scheme, the annual investor limit is being increased to €100,000. An increase in these limits will bring vital risk capital to the small business sector.

The Minister for Enterprise, Trade and Employment has also announced a provision of €5 million in 2007 for Innovation Vouchers, Knowledge Acquisition Grants, and ICT audits, all of which were recommended by the Small Business Forum. Michael Hayden, business advisor, Dun Laoghaire Rathdown County Enterprise Board says these measures will contribute to greater entrepreneurial activity in Ireland.

“We know that the entrepreneurial activity is as good this year as any previous year, if not better in terms of the numbers of the people coming to us for funding and other supports. There are a number of reasons why it is good. The expansion of the Seed capital and BES scheme would be something that could be referred to. I think the range of supports by the boards is on the increase,” says Hayden.

Using Your SSIA

The likelihood is that the release of SSIA equity will see and has seen a surge of interest in startups, both among the SSIA holders and tradesmen looking to provide products and services to meet the demand. In many cases, it can provide the finance people need to set up their own company, money they did not have before. So is it a good idea to throw in the lot and invest all your SSIA when establishing business? Michael Kelly of Carlow County Enterprise Board believes, “when starting off in business you are going to need capital. There will be peaks and valleys so as regards to throwing all your SSIA into it I would encourage the use of it as an asset. If you can lodge your SSIA as security for the business, to me that would be a better way of doing it. This presents you with a tool for security so yes use it to start a business but not necessarily as working capital but more as security, to promote your idea and to encourage people to buy into it.”

However, John Cranfield, Chief Executive of First Step Microfinance says, “one always needs capital to start a business. It depends what the initial capital outlay is going to be for your business and an SSIA is as good a source as any for funding and it would make it easier to borrow. If they have that money it would be fool hardy not to use it.”

Immigrant Entrepreneurship

The number of immigrants looking to start up a business in Ireland has increased significantly in the past two years. The fact that so many immigrants are coming here to start business is a sign that Ireland has become a very viable market in which to become a successful business entrepreneur. According to Cranfield, “the situation in Ireland with the ethnic population in Ireland are going to be a very strong sector to be dealing in; a very positive addition to Irish life and they will be very success. Many immigrants coming into Ireland are going to be very successful entrepreneurs and it is up to us to support them.”

A strong culture of support for entrepreneurship is a key factor in fostering an environment conducive to entrepreneurial activity in Ireland, and with that established, the vibrancy of the small business sector can only continue to flourish and contribute towards Ireland’s future economic success.