- 20% decrease in new limited companies formed to date this year (4,109) based on the same period in 2007
- Start-up activity has returned to normal levels following strong growth in 2007
- Continued diversification away from traditional sectors of the economy towards service based businesses
- Business sentiment among small businesses remains high despite turbulent environment
Bank of Ireland Business Banking today issued its latest Business Start-up Barometer that tracks the number of business start-ups in Ireland. The Barometer shows that, consistent with the recent slowdown in the economy, the number of new businesses established has fallen by 20% to 4,109. However, with approximately 4,500 businesses established in the same period in 2006, this year's figures reflect a return to normal levels of activity following a particularly active first half of 2007.
Much of the decrease has been the result of the significant and expected downturn in the Real Estate and Construction sectors, which fell by 36% and 48% respectively. However, the Barometer also identifies the continued diversification of entrepreneurial activity away from traditional sectors towards service-based businesses. For example, the number of accounting, bookkeeping and auditing businesses has increased by 10% (56), while 47 new businesses relating to human health activities have been established.
Bank of Ireland says that a recent Irish Export Association report also identified that Service sector exports grew by 18% in 2007 and now account for 42% of total exports demonstrating the sector's importance to Ireland's longer-term economic development.
However, most Irish service exports are made by foreign-owned firms based in Ireland. In 2006, 90.2% of total exports (merchandise and service), were made by foreign firms. Most Irish service businesses are small and do not export.
Despite a slight decline of 6%, Dublin remains the prime location for Irish businesses with 1,690 new businesses established in the capital to date this year (1,805 in 2007). Consistent with 2007 figures, the Barometer indicates that the growth in Dublin's satellite towns will continue in 2008. The number of business established in Louth has increased by 17% (70) compared with the first quarter of 2007, while Wicklow businesses have increased by 5% (67). County Clare is also attracting an increasing number of entrepreneurs with the number of new businesses in the county growing by 11% in 2008 (62). Cork (358), Galway (169) and Limerick (150) continue to make up the top four locations for start-ups.
The findings of the Barometer indicate that the recent economic climate has posed significant challenges to Irish start-up businesses in the first quarter of 2008. However, Bank of Ireland says that the continued diversification of start-ups into other sectors demonstrates the ability of Irish entrepreneurs to adapt to a changing economy and overcome current challenges in the small business environment.
The new limited companies, include those established by existing companies, which cannot be stripped out from the data. These new companies are not strictly a reflection of entrepreneurial activity e.g. a bank could establish a new company to operate a particular fund.
Commenting on the figures released today, Dr Dan McLaughlin, Group Chief Economist, Bank of Ireland said: "The Barometer suggests that resources are beginning to shift from construction to other areas of economic activity."
Damian Young, Head of Small Business, Bank of Ireland Business Banking said: "Today's figures confirm the expectation of a slowdown in the number of new companies registered. However, business sentiment among existing businesses remains mostly positive even in the current turbulent environment. For example, a recent Small Firms Association survey identified that 72% of businesses expect to grow in 2008. Success for businesses will hinge on their ability to remain customer focused. Tougher economic conditions will focus new businesses on being innovative, competitive and more cost conscious."
