The contribution of Small Businesses
to Northern Ireland
Foreword from the Federation
of Small Businesses
The Federation of Small Businesses (FSB) would like to thank the Ulster University Business School and the Ulster
University SME Centre for producing this report in response to our request for an independent assessment of the
economic and social contribution of SMEs in Northern Ireland.
In particular we would like to thank Kirsty McManus, Director of the Centre for SME Development, for coordinating
the report, Dr Robert Kerr and Ian Smyth of the Department of Management and Leadership for the survey report,
and Dr Mark Bailey of the Department of Accounting, Finance and Economics, for the economic analysis.
The research consists of two strands, an analysis of the economic value of the small business sector, and an analysis
of the results of a survey which sought to identify the key challenges for SMEs.
The results and findings of the research clearly demonstrate that collectively SMEs make the majority contribution
to Northern Ireland. Small and medium-sized companies and self-employed people, together, provide; 75% of
employment, 75% of turnover and 81% of GVA in NI’s private sector. Furthermore, SMEs actually employ more
people than NI’s large companies and the public sector combined1.
Socially too, SMEs play a major role. As demonstrated in this survey of 200 SMEs, small businesses make a
substantial contribution to the socio-cultural fabric of their local area, by employing staff who were previously
long-term unemployed, by engaging with schools, colleges and community groups, and by donating time, services
and money to local charities.
The survey found that 80% of small businesses here intend to grow, which clearly indicates the potential of the
sector to expand and flourish under the right conditions.
Addressing issues that prevent or discourage growth would therefore contribute significantly to the local economy,
not least in employment terms, as the Executive attempts to rebalance the economy towards private sector
growth. A number of key themes emerged from the survey results. Most significantly, respondents called for:
a reduction of business rates and corporation tax, better broadband provision, more help with online/marketing
activity, better availability of skilled staff, a reduction in bureaucracy and regulation, a VAT reduction, and action to
address late payments.
It is also apparent that we need to capture the enthusiasm, potential and creativity in our population by enabling
and encouraging new start-ups. Business registrations in Northern Ireland plummeted in 2009 and again in 2012,
from a position in 2005 when NI had the highest start-up rate in the UK. In addition, the five year survival rate of
new firms, which used to be the highest, is now the lowest of any UK region or nation.
But notably, the most pressing concerns of the small business sector for the future are those of political uncertainty
and economic stagnation. These issues must be addressed.
The FSB is exploring many of the issues raised by members in more detail in a series of position papers through
which we will further identify policy solutions and recommendations.
1
DETI, Quarterly Employment Survey, Table 5.10 (March 2014 figures); ONS Business Population 2014
We will be capturing the main findings of all of the research carried out in our forthcoming NI Assembly Election
Manifesto, which we hope will raise awareness of small businesses’ needs and concerns, and assist election candidates
and elected members of all parties and political positions when they are developing their own Manifestos, and most
importantly, when preparing for and implementing the next Programme for Government and Economic Strategy.
This report shows that micro and small businesses are the most important type of business in Northern Ireland.
However, when it comes to improving conditions for conducting business, they feel largely overlooked and
underestimated.
The FSB will be expecting action, not just commitments, and we will be monitoring progress and holding the next
government to account.
Wilfred Mitchell OBE
FSB Policy Chairman NI
Foreword from Ulster University
Business School
It is often said that small and medium sized businesses are an important part of the economy in Northern Ireland
but to what extent is this the case?
It was to answer this question that the Federation of Small Businesses asked the Ulster University Business School’s
SME Centre to provide an impartial opinion on both the importance of small and medium sized businesses to the
Northern Ireland Economy, and what issues concern such businesses.
Through research led by Kirsty McManus, Director of the SME Centre, supported by Dr Robert Kerr, Ian Smyth and
Dr Mark Bailey, it was found that there are over 118,000 businesses in the small and medium sized businesses
sector (SMEs)1 in Northern Ireland. These SMEs account for approximately 75% of turnover and employment in
the private sector; significantly more than for the UK as a whole where the turnover share is less than 50% and the
employment share is approximately 60%. We know that SMEs buy more of their labour and materials from their
local economy than compared to larger firms, the SME sector is 81% of private sector non-financial GVA or nearly
half of total GVA of Northern Ireland.
Also, because of the sectoral mix of expected job creation in the next few years, over 19,500 (89%) of the 22,000
new private sector jobs projected to be created in Northern Ireland’s economy between 2014 and 2018 are expected
to be in SMEs. Unfortunately the picture is not all good news as Northern Ireland is the one UK region where business
births and deaths (registration and deregistration) are roughly equal, as opposed to births being substantially more
than deaths, with sharp drops in 5 year survival rates for new firms over the last 5 years in all local government
areas, but especially in Belfast and Castlereagh with 70% of firms born in 2008 not surviving to 2013.
Thus, the research has revealed that small businesses are an important part of the Northern Ireland Economy,
but what are the key challenges and opportunities for SMEs? In our research which included a survey of 200 small
businesses across all sectors in Northern Ireland, it was found that the major barriers identified as impacting on
business success were related to cash-flow (48%), taxation (46%), marketing costs (41%), regulatory issues (38%),
availability of skilled staff (35%) and energy costs (35%) with the marketing costs being a greater obstacle with
smaller SMEs than larger SME employers and the availability of skilled staff ranking higher as an issue than previous
research would suggest.
The overwhelming majority (80%) of SMEs plan to grow their own business over the next two years and perceive
the key supportive mechanisms to be access to, and the cost of, finance, help with marketing and online activity,
and the reduction of business rates. Their big concerns for the future are political uncertainty, the overall economy,
cash flow and the availability of skilled labour.
The key messages coming from the research show the importance of SMEs to the Northern Ireland Economy,
and that support in a number of key areas (business taxation, better broadband provision, more help with online/
marketing activity, increased access to skilled staff, less bureaucracy and regulation) will help their growth and
benefit the future economy of Northern Ireland.
Professor Marie McHugh
Dean of the Ulster University Business School
1
defined as from sole operators to up to 249 employees
Part One
The Importance of Small Businesses to
the Northern Ireland Economy
Prepared by:
Dr Mark Bailey
Course and Subject Director - Economics
Ulster University Business School
T: 028 903 68254
E: mf.bailey@ulster.ac.uk
W: www.ulster.ac.uk
Contents
Executive Summary3
Policy issues3
Population4
Turnover5
Employment7
GVA10
Firm Births, Deaths and Survival Rates12
Geographical location14
Small Business Rates Relief
20
Sectoral composition23
Taxation26
The Future27
Data Sources and References29
Executive Summary
•
There are over 118,000 businesses in the SME sector (defined as from sole operators up to 249 employees)
in Northern Ireland - most of whom are defined as sole operator businesses. However, over 30,000 of them
have employees.
•
All of the broad sectors of the private sector in Northern Ireland are at least 99% made up of SME firms.
•
The SME sector accounts for approximately 75% of turnover in the private sector in Northern Ireland, which
is significantly more than the UK as a whole, where the share of SME turnover in private sector turnover is
less than 50%, or for Wales or Scotland where the share of SME turnover in private sector turnover is just
under 60% and just under 50% respectively.
•
The SME sector in Northern Ireland is 81% of private sector non-financial GVA and 47% of total GVA.
•
Official government figures state that the smaller the size of the firm the greater the GVA contribution as a
percentage of turnover, with micro businesses (fewer than 10 employees) contributing almost double the
GVA per £ of turnover than large businesses (greater than 250 employees) - 45p per £ of turnover compared
to 23p per £.
•
The SME sector accounts for over 75% of all private sector employment in Northern Ireland, which is
significantly more than the UK as a whole where the share of SME employment in the private sector is
around 60%; in Scotland the share of SME employment in the private sector is around 60%; Wales is roughly
comparable to Northern Ireland in terms of the SME share of private sector employment.
•
The SMEs in the Wholesale and Retail Trade (including Repair of Motor Vehicles and Motorcycles) account
for over 20% of all private sector employment in Northern Ireland. •
Over 19,500 (89%) of the 22,000 new private sector jobs projected to be created between 2014 and 2018
are expected to be in SMEs.
•
Northern Ireland is the one UK region where businesses births and deaths (registration and deregistration)
were almost equal, at roughly 9% of registered businesses in 2014; the UK business birth rate in 2013 was
14.1% and the death rate was 9.7%.
•
Since 2009, Northern Ireland has been persistently below the rest of the UK in terms of the net change in
the number of business registrations, with an annual decline in the total number of businesses registered.
•
There have been sharp drops in 5-year survival rates for new firms over the last 5 years in all areas, but there
have been especially sharp drop in survival rates in both Belfast and Castlereagh for firms born in 2008, with
over 70% of firms born in 2008 not surviving to 2013.
Policy issues
•
How do we make the business environment in general, but especially for SME businesses, as conducive to
job creation in Northern Ireland as is the case for the UK?
•
How do we make the 5 year survival rate for new businesses the same as in the rest of the UK addressing
the decline of the last 5 years?
•
How do we encourage business creation to increase to the UK level?
3
Population
The first key question is how many Small Businesses (SMEs) are there in Northern Ireland? There are over
118,000 in total, most of which are zero employee businesses but over 30,000 have employees.
Table 1 - Private Sector population in Northern Ireland
2012
Number of firms
2013
Number of firms
2014
Number of firms
Zero employees
81000
81790
86000
72.4%
Micro (1 - 9)
27175
25305
26765
22.5%
5045
5040
5025
4.2%
845
845
865
0.7%
SME (0 - 249)
114065
112980
118655
Other (250 +)
135
140
140
0.1%
Small (10 - 49)
Medium (50 - 249)
Figure 1 - Private Sector population in Northern Ireland in 2014 by firm size
Medium (50 - 249), 865, 1%
Small (10 - 49), 5025, 4%
Other (250 +), 140, 0%
Micro (1 - 9), 26765, 23%
Zero employees, 86000,
72%
4
Table 2 - Change in the Private Sector population in Northern Ireland
Number of firms
Change from
2012 to 2013
Change from
2013 to 2014
Zero employees
0.98%
5.15%
Micro (1 - 9)
-6.88%
5.77%
Small (10 - 49)
-0.10%
-0.30%
Medium (50 - 249)
0.00%
2.37%
SME (0 - 249)
-0.95%
5.02%
Other (250 +)
3.70%
0.00%
The number of firms in the zero and micro-sized firm sectors increased in 2013/14 by over 5% in each case
(albeit after a similar sized decline in 2012/13 for the micro firm sector). Historical precedence, especially for
the zero employees sector, would suggest that this may be a result of people leaving larger firms in a recession
and deciding to create their own business rather than re-entering employment.
Turnover
Small businesses are a key part of the private sector in Northern Ireland. Figures from the Department for
Business, Innovation and Skills2 for the last three years show all SMEs (defined as from sole operators up to 250
employees) contributing approximately 75% of turnover in the private sector in Northern Ireland.
Table 3 - Turnover in the private sector in Northern Ireland
2012
Turnover
£ millions
Zero employees
2013
%
Turnover
£ millions
2014
%
Turnover %
£ millions
5927
11.43%
5800
11.06%
5804
10.57%
Micro (1 - 9)
10740
20.71%
9788
18.67%
9935
18.10%
Small (10 - 49)
11621
22.41%
12222
23.31%
12732
23.19%
Medium (50 - 249)
10729
20.69%
11315
21.58%
11802
21.50%
SME (0 - 249)
39,017
75.24%
39125
74.61%
40273
73.35%
Other (250 +)
12841
24.76%
13313
25.39%
14630
26.65%
2
These figures are taken from Business Population Estimates for the UK and Regions 2012, 2013 and 2014. Figures before 2012 in the earlier
Small and medium-sized enterprises for the UK and regions data series are not comparable because of methodological changes.
5
Figure 2 - Turnover in the private sector in Northern Ireland in 2014 by firm size (£ millions)
This is significantly more than for the UK as a whole, where the share of SME turnover in the private sector is
less than 50%.
Zero employees,
£5804, 11%
Other (250 +),
£14,630, 27%
Micro (1-9), £9935, 18%
Medium (50 - 249)
£11,802, 21%
Small (10 - 49),
£12,732, 23%,
Table 4 - Turnover in the private sector in the UK
2012
Turnover
£ millions
2013
%
Turnover
£ millions
2014
%
Turnover
£ millions
%
SME (0 - 249)
1528678
48.82%
1577562
48.10%
1647202
46.78%
Other (250 +)
1602870
51.18%
1702399
51.90%
1874052
53.22%
It is also significantly more than for Wales or Scotland where the share of SME turnover in the private sector is
less than 60% in Wales and less than 50% in Scotland.
6
Table 5 - Turnover in the private sector in Wales
2012
Turnover
£ millions
Zero
employees
2013
%
Turnover
£ millions
2014
%
Turnover %
£ millions
6,168
8.38%
6,187
8.04%
7,064
8.94%
Micro (1 - 9)
12,892
17.51%
12,753
16.57%
13,021 16.49%
Small (10 - 49)
11,655
15.83%
12,895
16.76%
12,884 16.31%
Medium (50 249)
12,640
17.17%
13,379
17.38%
13,726 17.38%
Other (250 +)
30,252
41.10%
31,746
41.25%
32,284 40.88%
Table 6 - Turnover in the private sector in Scotland
2012
Turnover
£ millions
2013
%
2014
Turnover %
£ millions
Turnover %
£ millions
Zero
employees
12,300
6.19%
12,403
6.12%
12,979
6.31%
Micro (1 - 9)
24,903
12.52%
24,520
12.10%
26,095
12.70%
Small (10 - 49)
24,965
12.55%
25,063
12.36%
28,959
14.09%
Medium (50 249)
28,508
14.34%
36,270
17.89%
32,092
15.61%
Other (250 +)
108,172
54.40%
104,449
51.53%
105,415
51.29%
One interesting phenomena is the marginal decline in the share of the turnover cake that NI SMEs are taking in
Northern Ireland over this 3 year period, from 75.2% to 73.4% (a drop of 1.8 percentage points), which suggests
that although the numbers have been broadly consistent, their average turnover has not been rising in line
with that of the rest of the private sector. This does seem to have been a UK wide phenomena.
Employment
A similar story exists for employment, with the SME sector accounting for over 75% of all private sector
employment in Northern Ireland.
7
Table 7 - Private Sector employment in Northern Ireland 2012-2014 by firm size
2012
Number of
employees
thousands
2013
%
Number of
employees
thousands
2014
%
Number of
employees
thousands
%
Zero
employees
91
18.13%
93
18.27%
96
18.90%
Micro (1 - 9)
109
21.71%
109
21.41%
105
20.67%
Small (10 - 49)
101
20.12%
101
19.84%
100
19.69%
Medium (50 249)
80
15.94%
81
15.91%
84
16.54%
SME (0 - 249)
381
75.90%
384
75.44%
385
75.79%
Other (250 +)
121
24.10%
125
24.56%
123
24.21%
Figure 3 - Private Sector employment in Northern Ireland in 2014 by firm size
Other (250 +), 123000,
24%
Medium (50 - 249),
84000, 16%
Zero employees, 96000,
19%
Micro (1 - 9), 105000,
21%
Small (10 - 49), 100000,
20%
This shows a similar picture as for the total number of small and medium enterprises, with the number of
individuals employed in the SME sector rising over the past 3 years by 1.05% (compared to 1.20% for the
private sector as a whole).
8
This employment share of the SME sector is again significantly more than for the UK as a whole, where the
share of SME employment in private sector turnover is around 60%.
Table 8 - Employment in the private sector in the UK
2012
Number of
employees
thousands
2013
%
Number of
employees
thousands
2014
%
Number of
employees
thousands
%
SME (0 - 249)
14,130
59.14%
14424
59.28%
15159
60.08%
Other (250 +)
9,763
40.86%
9907
40.72%
10071
39.92%
It is also significantly more than Scotland, where the share of SME employment in the private sector is around
60%; Wales is roughly comparable at around 75%.
Table 9 - Employment in the private sector in Scotland
2012
Number of
employees
thousands
2013
%
Number of
employees
thousands
2014
%
Number of
employees
thousands
%
Zero
employees
255
15.03%
266
15.36%
259
15.22%
Micro (1 - 9)
289
17.03%
289
16.69%
298
17.51%
Small (10 - 49)
256
15.09%
271
15.65%
281
16.51%
Medium (50 249)
221
13.02%
225
12.99%
231
13.57%
SME (0 - 249)
1021
60.17%
1051
60.69%
1069
62.81%
Other (250 +)
676
39.84%
681
39.32%
633
37.19%
Table 10 - Employment in the private sector in Wales
2012
Number of
employees
thousands
2013
%
Number of
employees
thousands
2014
%
Number of
employees
thousands
%
Zero
employees
161
21.02%
158
20.39%
181
21.99%
Micro (1 - 9)
170
22.19%
170
21.94%
172
20.90%
Small (10 - 49)
138
18.02%
145
18.71%
153
18.59%
Medium (50 249)
108
14.10%
112
14.45%
112
13.61%
SME (0 - 249)
577
75.33%
585
75.49%
618
75.09%
Other (250 +)
189
24.67%
190
24.52%
205
24.91%
9
The 1.05% growth in SME employment over these 3 years is good news for the Northern Ireland economy,
but is put in shade somewhat by the 7.28% increase in SME employment over the same period in the UK (and
the 5.60% increase in total private sector employment in the UK between 2012 and 2014).
The suggestion that arises from this difference is that the business environment for businesses of all sizes,
but especially SME businesses, is not as conducive to job creation in Northern Ireland as is the case for the UK
as a whole. This is not purely a Northern Ireland versus England difference, as the employment growth rates
for SMEs over the 3 year period under analysis are 7.11% in Wales and 4.70% in Scotland.
GVA
Turning to GVA (which is the value added by firms to the economy as opposed to their turnover which involves
purchases from other firms and individuals), small firms are an important component of the total income of
the Northern Ireland Economy3
Table 11 - Northern Ireland Private Sector Non-financial and Total GVA by firm size4 2014
Firm Size
% of Private
Sector Nonfinancial GVA
% of
Total
GVA
Zero employees
14%
8%
Micro (1 - 9)
25%
14%
Small (10 - 49)
22%
13%
Medium (50 - 249)
20%
11%
Other (250 +)
19%
11%
3
This was calculated using turnover data from the Business Population Estimates for the UK and Regions 2014 and median value added for
registered businesses, 2013 ( http://www.ons.gov.uk/ons/rel/abs/annual-business-survey/median-value-added-per-registered-business--2013/
sty-abs-median-2013.html )
4
The use of private sector non-financial GVA is because whilst in many industries, it is straightforward to sensibly measure output (i.e. count
the number of items sold and the monies received for them) that is not the case for financial services along with public sector output and
the output of many non-financial business services, such as consultancy and advertising. The main indirect measure of output used in the
UK National Accounts is known as Financial Intermediation Services Indirectly Measured (FISIM) which is calculated on deposits and loans
assuming that the output of all the implicit services associated with loans and deposits is captured in the margin that the bank makes
on them. A detailed discussion of this issue is to be found in Burgess, S. (2011), “Measuring financial sector output and its contribution to
UK GDP”, Bank of England Quarterly Bulletin, 2011 Quarter 3, pp. 234 – 246 (http://www.bankofengland.co.uk/publications/Documents/
quarterlybulletin/qb110304.pdf )
10
Figure 4 - Northern Ireland Private Sector Non-financial GVA in 2014 by firm size
Share of Private Sector Non-financial GVA
Other (250 +), 19%
Zero employees, 14%
Micro (1 - 9), 25%
Medium (50 - 249), 20%
Small (10 - 49), 22%
Therefore, firms with less than 250 employees are 81% of private sector non-financial GVA and 47% of total
GVA.
Partly this importance of the SME sector for overall GVA is due to the differences in value added as a percentage
of turnover by employment size, which shows that the smaller the size of the firm the greater the value added
as a percentage of turnover, with total value added being 45% of total turnover for micro businesses, compared
with 23% for large businesses as shown below.
Figure 5 - Value added as a percentage of turnover by employment size, 20135
This chart is taken from the median value added for registered businesses, 2013 element of the Business Population Estimates for the
UK and Regions 2014 ( http://www.ons.gov.uk/ons/rel/abs/annual-business-survey/median-value-added-per-registered-business--2013/
sty-abs-median-2013.html )
5
11
The biggest sectors contributing to this GVA are Manufacturing, Construction and the broad Wholesale and
Retail Trade and Repair of Motor Vehicles and Motorcycles sector, in each of which the SME sector adds over £1
billion to GVA in Northern Ireland. SME Firms in the Professional, Scientific and Technical Activities sector are
almost of that magnitude of importance to the overall economy.
Firm Births, Deaths and
Survival Rates
At a regional level, Northern Ireland is the one UK region (based on the 2014 Business Demography Report from
the Office of National Statistics) where businesses births and deaths (registration and deregistration) were
almost equal at roughly 9% of registered businesses. Most other UK regions or nations have 3% or more births
than deaths, with the UK business birth rate in 2013 averaging 14.1% and the death rate averaging 9.7%.
This concern becomes somewhat more heightened when one looks at the trend for recent years which has
2013 as a good year for Northern Ireland. Since 2009 Northern Ireland has been persistently below the rest
of the UK in terms of the net change in the number of business registrations (i.e. births less deaths) with an
annual decline in the total number of businesses registered.
Figure 6 - Net change in the number of business registrations6
6
Office of National Statistics (2014), Business Demography 2013. 27th November 2014 (http://www.ons.gov.uk/ons/rel/bus-register/businessdemography/2013/index.html )
12
How do survival rates in Northern Ireland compare to the rest of the UK?
Table 12 - 5 year business survival rates by UK region
Firms
born in
2005
Firms
born in
2006
Firms
born in
2007
Firms
born in
2008
North East
43.2
43.6
43.7
41.0
North West
43.2
43.0
43.6
40.3
Yorkshire and The
Humber
43.0
42.9
41.9
40.6
East Midlands
45.2
45.0
45.4
43.0
West Midlands
44.2
44.7
43.3
41.2
East
46.1
45.9
45.7
42.4
London
39.7
41.8
41.7
37.1
South East
46.8
47.8
47.3
44.3
South West
48.1
48.9
48.1
45.5
Wales
44.4
44.3
43.6
42.5
Scotland
45.6
46.3
47.4
43.6
Northern Ireland
54.0
50.5
44.0
35.5
UK
44.4
45.0
44.6
41.3
The 5 year survival rate for firms born in Northern Ireland varies by year from being the highest for a UK region
or nation for firms born in 2005, to the lowest of any UK region or nation for firms born in 2008. The broad
pattern, albeit over a short period, is one of sharp decline which is an issue of concern – the differences at a
local level, as we will see later, are even more of a concern.
13
Geographical Location
Where are the SMEs in Northern Ireland located? For this we need to turn to the Inter Departmental Business
Register (IDBR), which tells us that most of the old local councils had at least 1,000 SMEs in their boundaries.
Table 13 - SME population in Northern Ireland by LGD7 2006-2013
Firms with
less than 250
employees in a given
year →
Council ↓
2008
2009
2010
2011
2012
2013
1,985
2,010
2,055
2,040
1,980
2,005
1,940
1,845
Ards
2,595
2,665
2,725
2,675
2,565
2,520
2,495
2,390
Armagh
3,155
3,215
3,230
3,225
3,155
3,145
3,160
3,070
Ballymena
2,750
2,785
2,835
2,805
2,705
2,715
2,715
2,610
Ballymoney
1,430
1,495
1,495
1,450
1,430
1,440
1,415
1,335
Banbridge
2,160
2,270
2,260
2,270
2,225
2,190
2,175
2,180
Belfast
8,640
9,030
8,995
8,770
8,525
8,445
8,430
8,635
760
775
810
795
770
760
765
745
Castlereagh
1,390
1,460
1,520
1,530
1,475
1,415
1,385
1,375
Coleraine
2,355
2,370
2,345
2,260
2,185
2,170
2,135
2,065
Cookstown
2,115
2,240
2,325
2,345
2,280
2,275
2,325
2,260
Craigavon
2,765
2,850
2,885
2,865
2,780
2,735
2,690
2,625
Derry
2,760
2,840
2,825
2,795
2,695
2,675
2,645
2,590
Down
2,805
2,945
3,005
2,915
2,835
2,785
2,720
2,720
Dungannon
3,275
3,350
3,380
3,370
3,325
3,315
3,330
3,310
Fermanagh
4,035
4,230
4,275
4,215
4,130
4,195
4,165
4,110
Larne
1,130
1,140
1,205
1,170
1,140
1,130
1,170
1,125
Limavady
1,315
1,395
1,425
1,400
1,360
1,320
1,320
1,265
Lisburn
3,695
3,865
3,910
3,840
3,765
3,735
3,730
3,695
Magherafelt
2,555
2,610
2,665
2,605
2,505
2,535
2,505
2,455
860
870
900
870
845
850
855
835
Newry
and Mourne
4,450
4,720
4,865
4,855
4,740
4,655
4,605
4,600
Newtownabbey
1,855
1,940
2,055
2,015
1,940
1,875
1,875
1,855
North Down
2,080
2,155
2,200
2,155
2,075
2,060
2,020
1,885
Omagh
3,170
3,300
3,390
3,355
3,220
3,175
3,190
3,190
Strabane
1,950
1,990
2,030
2,000
1,935
1,900
1,925
1,945
Moyle
Local Government District
14
2007
Antrim
Carrickfergus
7
2006
There seems to be no obvious pattern of one area having sustained growth or sustained decline.
Focusing just on the last 2 years, four areas have witnessed sharp drops in the number of firms – North Down
with a decline of 175 firms (8.66% of its total in 2011); Antrim with a decline of 160 firms (8.25% of its total);
Ballymoney with a decline of 105 firms (7.42% of its total); and Ards with a decline of 130 firms (5.21% of its
total). No other LGD had a 5% rise or fall in the number of SMEs between 2011 and 2013, with most witnessing
a fall except Omagh (0.47% growth), Belfast (2.25% growth), and Strabane (2.34% growth)8.
8
It is worth remembering that this data source is using a definition of SMEs which excludes many of the zero employee firms in particular
but it is the only source available which takes us down to a more local level.
15
Table 14 - SME population in Northern Ireland in 2013 by LGD and size
Council ↓
Firms → Firms
with less
than 10
employees
(micro
firms)
Firms with
between
10 and 49
employees
(small firms)
1,645
175
25
89.16%
9.49%
1.36%
2,160
210
20
90.38%
8.79%
0.84%
2,820
210
40
91.86%
6.84%
1.30%
2,375
205
30
91.00%
7.85%
1.15%
1,230
95
10
92.13%
7.12%
0.75%
2,010
155
15
92.20%
7.11%
0.69%
6,970
1,360
305
80.72%
15.75%
3.53%
650
75
20
87.25%
10.07%
2.68%
1,160
180
35
84.36%
13.09%
2.55%
1,825
210
30
88.38%
10.17%
1.45%
2,080
160
20
92.04%
7.08%
0.88%
2,280
295
50
86.86%
11.24%
1.90%
2,215
330
45
85.52%
12.74%
1.74%
2,480
215
25
91.18%
7.90%
0.92%
3,035
230
45
91.69%
6.95%
1.36%
Antrim
Ards
Armagh
Ballymena
Ballymoney
Banbridge
Belfast
Carrickfergus
Castlereagh
Coleraine
Cookstown
Craigavon
Derry
Down
Dungannon
16
Firms with
between
50 and 250
employees
(medium
firms)
Fermanagh
Larne
Limavady
Lisburn
Magherafelt
Moyle
Newry and Mourne
Newtownabbey
North Down
Omagh
Strabane
3,855
215
40
93.80%
5.23%
0.97%
1,020
100
5
90.67%
8.89%
0.44%
1,170
80
15
92.49%
6.32%
1.19%
3,250
385
60
87.96%
10.42%
1.62%
2,270
150
35
92.46%
6.11%
1.43%
790
40
5
94.61%
4.79%
0.60%
4,175
365
60
90.76%
7.93%
1.30%
1,555
240
60
83.83%
12.94%
3.23%
1,645
210
30
87.27%
11.14%
1.59%
2,975
185
30
93.26%
5.80%
0.94%
1,825
110
10
93.83%
5.66%
0.51%
Most SME firms are in the micro firm size band, but some LGDs have over 10% in the small and medium size
bands, with Belfast having nearly 20% in the small and medium bands combined.
17
Table 15 - Births of new businesses for Northern Ireland by
Local Government District, 2013
Council ↓
Firm Births →
NORTHERN IRELAND
4,855
Antrim
120
Ards
170
Armagh
170
Ballymena
130
Ballymoney
60
Banbridge
Belfast
140
1,040
Carrickfergus
65
Castlereagh
130
Coleraine
145
Cookstown
115
Craigavon
210
Derry
240
Down
175
Dungannon
160
Fermanagh
195
Larne
70
Limavady
85
Lisburn
295
Magherafelt
130
Moyle
45
Newry and Mourne
345
Newtownabbey
160
North Down
200
Omagh
145
Strabane
115
Belfast has the most firm births in 2013 with 1,000 new firms born.
18
2013
Table 16 - 5 year business survival rates by Northern Ireland LGD
Survival rates of firms Firms
born in a given year → born in
Council ↓
2005
Firms
born in
2006
Firms
born in
2007
Firms
born in
2008
Antrim
57.9
53.8
44.4
33.3
Ards
53.5
50.0
43.1
42.9
Armagh
56.1
49.0
42.6
40.0
Ballymena
55.9
50.0
52.5
35.5
Ballymoney
50.0
52.2
45.0
35.3
Banbridge
56.0
56.3
56.3
40.0
Belfast
51.9
49.4
42.1
28.8
Carrickfergus
41.3
47.4
50.0
38.9
Castlereagh
47.7
53.8
39.4
27.3
Coleraine
50.6
53.3
45.5
44.8
Cookstown
61.4
50.0
39.4
44.4
Craigavon
54.3
46.7
47.9
32.1
Derry
50.2
48.1
44.6
37.3
Down
58.6
46.5
39.6
39.5
Dungannon
58.6
57.1
42.2
40.0
Fermanagh
53.3
47.3
47.2
36.6
Larne
55.4
55.6
53.3
47.1
Limavady
50.0
50.0
33.3
31.8
Lisburn
55.0
56.7
46.2
35.9
Magherafelt
54.1
56.4
44.7
35.3
Moyle
51.5
54.5
50.0
40.0
Newry and Mourne
54.4
49.0
41.9
35.2
Newtownabbey
50.0
51.4
50.0
38.6
North Down
56.1
47.5
43.1
38.3
Omagh
56.0
48.9
38.3
38.9
Strabane
58.1
45.8
43.5
33.3
This table reinforces the sharp drop in 5 year survival rates noted earlier but highlights that some LGDs had very
substantial drops – Antrim, Ballymena, Banbridge, Belfast, Castlereagh, Craigavon, Fermanagh, Lisburn, Moyle,
Newtownabbey and Strabane all had drops of over 10% in the 5 year business survival rate, while Cookstown
had a 5% increase.
The extremely sharp drop in survival rates in both Belfast and Castlereagh for firms born in 2008 is of particular
note, with over 70% of firms born in 2008 not surviving to 2013.
19
Small Business Rates Relief
If we look at the number of firms qualifying for Small Business Rate Relief (SBRR) from Land and Property
Services9 there are some interesting geographical differences in the percentage of firms eligible in each local
government district.
Table 17 - Firms eligible for Small Business Rate Relief by Northern Ireland LGD
District Council
Antrim
Number of
Properties
benefitting
from Small
Business
Rate Relief in
2014/15
% of total firms in
Northern Ireland
eligible for Small
Business Rate
Relief in LGD
% of firms
in each LGD
eligible for Small
Business Rate
Relief based
on 2013 IDBR
geographical
distribution
figures
690
2.60%
37.40%
1090
4.10%
45.61%
895
3.37%
29.15%
Ballymena
1005
3.78%
38.51%
Ballymoney
443
1.67%
33.18%
Banbridge
674
2.54%
30.92%
4761
17.91%
55.14%
Carrickfergus
410
1.54%
55.03%
Castlereagh
552
2.08%
40.15%
1014
3.81%
49.10%
Cookstown
580
2.18%
25.66%
Craigavon
1258
4.73%
47.92%
Derry
1417
5.33%
54.71%
Down
1180
4.44%
43.38%
974
3.66%
29.43%
1241
4.67%
30.19%
Larne
474
1.78%
42.13%
Limavady
443
1.67%
35.02%
1441
5.42%
39.00%
Magherafelt
735
2.77%
29.94%
Moyle
383
1.44%
45.87%
Ards
Armagh
Belfast
Coleraine
Dungannon and
S.Tyrone
Fermanagh
Lisburn
9
The data on the number of Properties benefitting from Small Business Rate Relief in 2014/15 in each local government district was provided
in response to a request by the Statistics Branch of Land and Property Services.
20
Newry and Mourne
1525
5.74%
33.15%
Newtownabbey
937
3.52%
50.51%
North Down
984
3.70%
52.20%
Omagh
890
3.35%
27.90%
Strabane
586
2.20%
30.13%
The percentage of firms in each LGD eligible for Small Business Rate Relief varies from 26% in Cookstown to
55% in both Belfast and Carrickfergus, with the average being 40%.
Table 18 - Properties receiving Small Business Rate Relief since 2010 and
average amount received since 2010 by Northern Ireland LGD10
District Council
Antrim
Number of
properties
receiving
SBRR since
2010
Total amount
of Small
Business Rate
Relief since
2010
Average
amount of
Small Business
Rate Relief
since 2010
879
£1,696,978
£1,931
Ards
1365
£2,412,934
£1,768
Armagh
1119
£2,333,410
£2,085
Ballymena
1243
£2,383,532
£1,918
Ballymoney
569
£1,025,887
£1,803
Banbridge
832
£1,595,564
£1,918
5722
£11,556,334
£2,020
Carrickfergus
525
£1,056,047
£2,012
Castlereagh
714
£1,184,372
£1,659
1247
£2,456,586
£1,970
Cookstown
756
£1,330,074
£1,759
Craigavon
1574
£2,955,224
£1,878
Derry
1763
£3,118,819
£1,769
Down
1808
£3,582,957
£1,982
Dungannon and
S.Tyrone
1425
£2,716,685
£1,906
Fermanagh
1281
£2,151,296
£1,679
Larne
1522
£2,542,805
£1,671
Limavady
601
£1,071,536
£1,783
Lisburn
594
£1,099,275
£1,851
Belfast
Coleraine
10
The data is from Department of Finance and Personnel (2014) - Reval 2015 NI Local Briefings [online at http://www.dfpni.gov.uk/lps/
index/reval2015ni/local_briefings.htm ]
21
Magherafelt
982
£1,597,396
£1,627
Moyle
464
£870,657
£1,876
Newry and
Mourne
1893
£3,435,721
£1,815
Newtownabbey
1183
£2,229,653
£1,885
North Down
1188
£2,124,616
£1,788
Omagh
1068
£2,094,777
£1,961
703
£1,366,477
£1,944
Strabane
The average amount of Small Business Rate Relief received since 2010 is £1877, with some geographic variation
between Larne (the lowest at £1671) and Armagh (the highest at £2085). This difference is mainly due to
adjusting for valuation changes over time, with properties in Larne receiving the largest negative valuation
change (-13%) in the recent revaluation of non-domestic properties in Northern Ireland (which took effect
with the 2014/15 rates bills), and properties in Armagh receiving the largest positive valuation change (+23%).
22
Sectoral composition
How do the small firms break down by sector? The 2014 Business Population Estimates breaks the population
of small firms down by sector as follows:
Table 19 - Share of enterprises in Northern Ireland
for Industrial Sectors by employment size
Sector
Zero
employees
Micro
(1 - 9)
Small
(10 49)
Medium
(50 249)
Other
(250
+)
Less
than 250
A Agriculture, Forestry and
Fishing
14,545
81.39%
3,190
17.85%
130
0.73%
5
0.03%
0
0.00%
17,870
100%
B, D and E Mining and
Quarrying; Electricity,
Gas, Steam and Air
Conditioning Supply;
Water Supply; Sewerage,
Waste Management and
Remediation Activities
675
71.05%
185
19.47%
60
6.32%
30
3.16%
0
0.00%
950
100%
C Manufacturing
7,180
72.67%
1,860
18.83%
630
6.38%
175
1.77%
35
0.35%
9,845
99.65%
F Construction
19,625
79.16%
4,625
18.66%
470
1.90%
65
0.26%
5
0.02%
24,785
99.98%
G Wholesale and Retail
Trade; Repair of Motor
Vehicles and Motorcycles
5,705
42.98%
5,995
45.16%
1,355
10.21%
195
1.47%
25
0.19%
H Transportation and
Storage
4,130
77.85%
940
17.72%
190
3.58%
40
0.75%
5
0.09%
5,300
99.91%
300
8.94%
2,225
66.32%
705
21.01%
110
3.28%
15
0.45%
3,340
99.55%
J Information and
Communication
2,780
82.25%
465
13.76%
110
3.25%
15
0.44%
10
0.30%
3,370
99.70%
K Financial and Insurance
Activities
995
68.62%
390
26.90%
50
3.45%
10
0.69%
5
0.34%
1,445
99.66%
L Real Estate Activities
1,275
69.67%
500
27.32%
50
2.73%
5
0.27%
0
0.00%
1,830
100%
M Professional, Scientific
and Technical Activities
5,345
67.15%
2,195
27.58%
390
4.90%
30
0.38%
0
0.00%
7,960
100%
N Administrative and
Support Service Activities
2,675
69.21%
945
24.45%
165
4.27%
55
1.42%
25
0.65%
3,840
99.35%
P Education
1,840
89.10%
170
8.23%
50
2.42%
5
0.24%
0
0.00%
2,065
I Accommodation and Food
Service Activities
13,250
99.81%
23
24
P Education
1,840
89.10%
170
8.23%
50
2.42%
5
0.24%
0
0.00%
2,065
Q Human Health and Social
Work Activities
10,885
86.77%
1,040
8.29%
500
3.99%
105
0.84%
15
0.12%
12,530
99.88%
R Arts, Entertainment and
Recreation
4,180
91.07%
300
6.54%
95
2.07%
15
0.33%
0
0.00%
4,590
100%
S Other Service Activities
3,865
67.99%
1,740
30.61%
75
1.32%
5
0.09%
0
0.00%
5,685
100%
Total
86,000
72.39%
26,765
22.53%
5,025
4.23%
865
0.73%
140
0.12%
118,655
99.88%
So all sub-sectors of the private sector in Northern Ireland are at least 99% made up of SME firms.
Table 20 - Share of private sector employment in Northern Ireland for
Industrial Sectors by employment size
Sector
Zero
employees
Micro
(1 - 9)
Small
(10 49)
Medium
(50 249)
Other
(250 +)
A Agriculture, Forestry and Fishing
58.06%
38.71%
3.23%
0.00%
0.00%
B, D and E Mining and Quarrying;
Electricity, Gas, Steam and Air
Conditioning Supply; Water Supply;
Sewerage, Waste Management
and Remediation Activities
0.00%
0.00%
0.00%
100.00%
0.00%
C Manufacturing
8.86%
10.13%
16.46%
42.86%
32.65%
18.37%
6.12%
0.00%
G Wholesale and Retail Trade;
Repair of Motor Vehicles and
Motorcycles
2.86%
35.71%
38.57%
14.29%
8.57%
H Transportation and Storage
26.67%
26.67%
33.33%
13.33%
0.00%
0.00%
29.41%
44.12%
26.47%
0.00%
J Information and Communication
37.50%
25.00%
25.00%
12.50%
0.00%
K Financial and Insurance Activities
33.33%
33.33%
33.33%
0.00%
0.00%
L Real Estate Activities
99.84%
0.16%
0.00%
0.00%
0.00%
M Professional, Scientific and
Technical Activities
21.74%
34.78%
34.78%
8.70%
0.00%
N Administrative and Support
Service Activities
12.00%
16.00%
12.00%
P Education
99.95%
0.00%
0.05%
0.00%
0.00%
Q Human Health and Social Work
Activities
30.56%
16.67%
27.78%
25.00%
0.00%
R Arts, Entertainment and
Recreation
50.00%
12.50%
25.00%
12.50%
0.00%
S Other Service Activities
36.36%
63.64%
0.00%
0.00%
0.00%
F Construction
I Accommodation and Food
Service Activities
18.99% 45.57%
20.00% 40.00%
Most sectors in the Northern Ireland economy are entirely comprised of SMEs with regard to employment,
the exceptions being Manufacturing (54.43% of employment is in SMEs), Administrative and Support Service
Activities (60% of employment is in SMEs) and the Wholesale and Retail Trade (91.43% of employment is in
SMEs).
In all other sectors within the private sector, 100% of employment is in SMEs.
25
Table 21 - SME employment in Northern Ireland by Industrial Sector
Sector
A Agriculture, Forestry and Fishing
B, D and E Mining and Quarrying; Electricity, Gas, Steam and Air
Conditioning Supply; Water Supply; Sewerage, Waste Management
and Remediation Activities
SME
Employment
(thousands)
32
6
C Manufacturing
45
F Construction
54
G Wholesale and Retail Trade; Repair of Motor Vehicles and
Motorcycles
107
H Transportation and Storage
20
I Accommodation and Food Service Activities
42
J Information and Communication
14
K Financial and Insurance Activities
10
L Real Estate Activities
9
M Professional, Scientific and Technical Activities
25
N Administrative and Support Service Activities
19
P Education
4
Q Human Health and Social Work Activities
42
R Arts, Entertainment and Recreation
10
S Other Service Activities
12
451
Employment in SMEs is a major component of the Northern Ireland economy with 451,000 of the 509,000
in the private sector being employed in SMEs; indeed SMEs in the Wholesale and Retail Trade (including
Repair of Motor Vehicles and Motorcycles) account for over 20% of all private sector employment in Northern
Ireland.
Taxation
A response to a parliamentary question estimated that in 2010/11, firms with fewer than 50 employees
contributed 21% of PAYE revenues in the UK. The response noted that it was not possible to identify tax
revenue raised from small businesses on a consistent basis as the necessary information on turnover, assets
and employment is not routinely collected on tax returns for every head of duty11.
Written Answers to Questions – Treasury - Monday 24 October 2011 online at http://www.publications.parliament.uk/pa/cm201011/
cmhansrd/cm111024/text/111024w0001.htm#11102437000273
11
26
The Future
The Economic Policy Centre (EPC) at Ulster University projects that 22,000 net jobs will be created in Northern
Ireland between 2014 and 2018, which they break down by sectors as shown below.
Table 22 - Projected changes in SME employment in Northern Ireland
by Industrial Sector between 2014 and 2018
SME
employment
share
(my figures)
EPC forecast
job growth
2014-2018
(thousands)
Projected
share of
job growth
attributable
to SMEs
(my figures)
A Agriculture, Forestry and Fishing
100.00%
1.20
1.20
B, D and E Mining and Quarrying;
Electricity, Gas, Steam and Air
Conditioning Supply; Water Supply;
Sewerage, Waste Management and
Remediation Activities
100.00%
0.10
0.10
54.43%
3.20
1.74
100.00%
1.70
1.70
91.43%
2.10
1.92
H Transportation and Storage
100.00%
0.70
0.70
I Accommodation and Food Service
Activities
100.00%
2.10
2.10
J Information and Communication
100.00%
2.30
2.30
K Financial and Insurance Activities
100.00%
-0.40
-0.40
L Real Estate Activities
100.00%
0.50
0.50
M Professional, Scientific and Technical
Activities
100.00%
3.60
3.60
N Administrative and Support Service
Activities
60.00%
2.10
1.26
C Manufacturing
F Construction
G Wholesale and Retail Trade; Repair of
Motor Vehicles and Motorcycles
P Education
100.00%
Q Human Health and Social Work
Activities
100.00%
0.90
0.90
R Arts, Entertainment and Recreation
100.00%
1.10
1.10
S Other Service Activities
100.00%
0.80
0.80
22
19.52
If we assume that the new jobs are split between the SME and non-SME sectors according to the current share
of employment by sector, then over 19,500 of these 22,000 jobs projected will be in SMEs.
27
This is backed up by both the findings in our survey, that 80% of the firms surveyed plan to grow their
business over the next 2 years, and also the latest InterTradeIreland’s Quarterly Business Monitor survey
for January to March 2015, which says that 41% of Micro firms and 57% of Small firms view their current
business environment as being one of growth.
12
This is online at http://www.intertradeireland.com/researchandpublications/business_monitor/
28
Data Sources and
References
• Burgess, S. (2011), “Measuring financial sector output and its contribution to UK GDP”,
Bank of England Quarterly Bulletin, 2011 Quarter 3, pp. 234 – 246 [available online at
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb110304.
pdf]
• Department of Finance and Personnel (2014) - Reval 2015 NI Local Briefings [online at
http://www.dfpni.gov.uk/lps/index/reval2015ni/local_briefings.htm ]
• InterTradeIreland (2015), InterTradeIreland’s Quarterly Business Monitor survey: Quarter
1 2015 [available online at http://www.intertradeireland.com/researchandpublications/
business_monitor/ ]
• Northern Ireland Statistics and Research Agency (2015), Inter Departmental Business
Register, 4th February 2015 [ available online at http://www.detini.gov.uk/stats-interdept-bus-register ]
• Office of National Statistics (2012), Business Population Estimates for the UK and
Regions 2012, 19th December 2012 [available online at https://www.gov.uk/government/
statistics/bis-business-population-estimates ]
• Office of National Statistics (2013), Business Population Estimates for the UK and
Regions 2013, 5th November 2013 [available online at https://www.gov.uk/government/
statistics/business-population-estimates-2013 ]
• Office of National Statistics (2014), Business Demography 2013. 27th
November 2014 [available online at http://www.ons.gov.uk/ons/rel/bus-register/
business-demography/2013/index.html ]
• Office of National Statistics (2014), Business Population Estimates for the UK
and Regions 2014, 26th November 2014 [available online at https://www.gov.uk/
government/statistics/business-population-estimates-2014 ]
• Office of National Statistics (2015), Business Population Survey median value added
for registered businesses, 2013, 15th January 2015 [available online at http://www.
ons.gov.uk/ons/rel/abs/annual-business-survey/median-value-added-per-registeredbusiness--2013/sty-abs-median-2013.html ]
• Statistics Branch of Land and Property Services (2015), Number of Properties
benefitting from Small Business Rate Relief in 2014/15 in each local government district
[ provided in response to an e-mail request ]
29
30
Part Two
FSB (NI) Business Survey 2015 Report
Prepared by:
Dr Robert Kerr
Ulster University Business School
Department of Management
and Leadership
Room 01K17A
Shore Road
Newtownabbey
Co. Antrim
BT37 0QB
Tel: +44 (0)28 903 68029
Email: rl.kerr@ulster.ac.uk
Ian Smyth
Ulster University Business School
Department of Management and
Leadership
Room 01K14
Shore Road
Newtownabbey
Co. Antrim
BT37 0QB
Tel: +44 (0)28 903 68449
Email: i.smyth@ulster.ac.uk
Miss Kirsty McManus
Ulster University Business School
Ulster University
Shore Road
Newtownabbey
Co. Antrim
BT37 0QB
Tel: +44 28 90366139
Email: k.mcmanus@ulster.ac.uk
Contents
Executive summary3
Introduction5
Survey results7
Business sector7
Employment8
Main customer 9
Main customer location 10
Barriers or obstacles to business success
11
How Government can address these issues
17
Main source of business support18
Business growth19
Encouraging business growth20
Future concerns21
Priority areas for FSB’s manifesto22
Capturing SME contribution to society
23
Summarising main themes26
Executive Summary
The FSB (NI) Business Survey 2015 is a Northern Ireland wide survey of SMEs conducted by the Ulster University
SME Centre and Ulster University Business School on behalf of the FSB. The main aims of the survey were:
1. To assess the direct contribution of small businesses to the overall NI economy.
2. To identify the key challenges for SMEs in areas such as access to finance, procurement, skills, innovation,
local Government reform, exporting.
The survey format and questions were established after extensive consultation and focus group activity. This
led to the predominant use of open-ended questions within the survey, inviting SME owners to respond to
questions in their own words.
The survey was launched on the 2nd June 2015 and closed on the 17th June 2015. A total of 200 complete and
usable responses were received.
The business sector profile of respondents was broadly in line with previous FSB survey findings and indicates
a similar representative sampling of Northern Ireland SMEs. Ninety per cent of the survey respondents employ
staff (a rise from previous surveys) with the majority hiring between 1 to 5 employees (52 per cent).
The main customer base for the surveyed SMEs is the general public (47 per cent), followed by small private
sector small firms (29 per cent), private sector large firms (14 per cent) and the Government sector (10 per
cent).
Only 15 per cent of the respondents had a main customer outside of Northern Ireland. These were predominantly
GB based (7 per cent), the rest of Europe (3 per cent), outside of Europe (3 per cent) and the Republic of Ireland
(2 per cent). Given that previous research has noted the high level of export trade activity within Northern
Ireland due to the proximity to the Republic of Ireland, it is perhaps surprising that this is the main customer
location for relatively few SMEs.
The main barriers or obstacles identified by SMEs as impacting on business success were ‘cash flow/ getting
paid’ 48 per cent, ‘profit taxes: corporation / VAT’ 46 per cent, ‘competition’ 44 per cent, ‘business rates’ 43 per
cent, ‘cost of marketing / promotion’ 41 per cent, ‘compliance and regulations’ 38 per cent, ‘employment taxes’
36 per cent, ‘energy costs’ 35 per cent and ‘availability of skilled support’ 35 per cent. The ‘cost of marketing /
promotion’ was rated higher than expected and is a greater obstacle with smaller SMEs (ranked 3rd) than larger
SME employers (ranked 12th). Availability of skilled staff was also ranked higher than previous research findings
would suggest. Business rates is the highest ranked obstacle for organisations primarily selling to the general
public. Cash flow / getting paid was highest ranked obstacle for SMEs trading with the Government Sector, and
for large or small firms within the private sector but was not as critical for SMEs dealing with the general public
(ranked 8th).
When asked how Government could address these issues the top coded response centred on the reduction of
bureaucracy and regulation followed by reducing business rates, better broadband provision, a reduction or
help with PAYE / NI / Income Tax, a VAT reduction or threshold increase, and payment deadline enforcement and
supply chain protection. Other proposed solutions include reducing corporation tax, better access to affordable
finance, investment in education and training for schools and universities, more support and investment for
small business not Foreign Direct Investments, a rebalance of procurement processes to better suit SMEs and a
reduction in energy and fuel prices.
3
The main source of business support identified by SMEs was FSB (15 per cent), followed by Invest NI (11 per
cent), the internet (11 percent), accountants (9 per cent) then mentors / business network / partners (8 per
cent). Nine per cent of SMEs did not know where to go for support.
Eighty per cent of SMEs plan to grow their own business over the next two years. The top three reasons given for
why an SME is not planning to grow are: the small firm owners believe they are already at capacity and cannot
grow any further; the cost of employing additional members of staff; the ongoing political and economic
uncertainty leads to hesitation around expansion.
When asked what three things would help their business grow, the top three coded responses include access
to and cost of finance (44 coded responses); help with marketing and online activity (41) and the reduction of
business rates (41).
When asked about their two big concerns for the future the respondents identified political uncertainty (33
coding references); the economy (24); cash flow (21) and the availability of skilled labour (19) as the most
pressing concerns.
When asked to identify what the priority areas for a manifesto should be, the joint top response was cut
corporation tax and reduce business rates, followed by better funding and investment for small businesses,
less bureaucracy and regulation, and political and economic stability.
A number of key themes are present within the survey results. Whilst the importance placed on a theme can
vary dependant on the question, a number of obvious themes are recurrent. Most significantly, the reduction
of business rates and corporation tax, better broadband provision, more help with online/marketing
activity, access to skilled staff, less bureaucracy and regulation and VAT reduction being notable
recurrences.
Employment in SMEs is a major component of the Northern Ireland economy. Other notable ways SMEs
contribute to the Northern Ireland economy, and society in general include:
•
•
•
•
•
•
•
•
•
4
Sixty eight per cent hire a workforce mainly composed of people from the local area
Over a quarter hire staff that were previously long-term unemployed
Twenty three per cent engage in staff apprenticeship schemes
Thirteen per cent hire people with a disability
One in four choose a ‘charity of the year’
Over half donate money / products or time to a good cause.
Forty two per cent engage with local schools / colleges
Thirty seven per cent engage with local community groups
Nearly all SMEs (95 per cent) indicate a long term intention to remain within the local area, with roughly
a quarter of them identifying employing and hiring a local workforce as one of the most important ways
their business contributes to their local community.
Introduction
This report presents the findings of a research study conducted by the Ulster University SME Centre and Ulster
University Business School on behalf of the FSB.
Survey Aims
The main aims of this study were:
1. To assess the direct contribution of small businesses to the overall NI economy.
2. To identify the key challenges for SMEs in areas such as access to finance, procurement, skills, innovation,
local government reform, exporting.
This line of investigation enables the indirect exploration of themes and policy issues raised in the previous
section, such as:
• How do we make the SME business environment more conducive for job creation?
• How do we improve the 5 year survival rate for new businesses?
• How do we increase the rate of business creation?
Survey Development
A focus group consisting of SMEs/regional development stakeholders was held on 24th April 2015 to outline
potential areas of investigation and identify suitable survey questions. A clear outcome for this focus group
was the need for the survey to adopt a more exploratory approach than previous surveys to ensure it captured
what was specifically important for the Northern Ireland SME sector. This led to the majority of the survey
consisting of open-ended questions soliciting free text responses.
Whereas ‘multiple-option’ questions are ideally suited for situations where all of the response variables (options)
are known, open free-text questions are more suited for exploring all of the potential responses (options) that
may be of importance. This enabled the research team to explore potential issues and areas of interest that
may have been missed in previous surveys.
Open-ended questions were used since “open-ended questioning leads to higher accuracy in retrospective
reports” (Graebner & Eisenhardt, 2004, p. 372) and allow replication logic (Eisenhart, 1989) to more readily
guide the responses of the small business owners themselves. Because this survey was designed to harness
the viewpoint of small business owners, it encourages those individuals to relate, in their own words,
experiences, attitudes and opinions relevant to the questions (Burgess, 1984).
Survey Deployment
The survey was open from 2nd June 2015 to 17th June 2015. All FSB members for whom a valid email address
was held were invited to participate in an online survey. Around 4000 members in total were sent an
5
email invitation containing a link to the survey. The Ulster University SME centre also distributed an email
invitation to its mail distribution list. The SME Centre also promoted the survey via twitter and other social
media feeds.
The online survey fieldwork dates for this study were:
•
•
•
•
•
02/06/2015 09/06/2015
09/06/2015
11/06/2015
17/06/2015
Invitation email sent to all FSB members
Reminder sent to all FSB members
Invitation email sent out by SME Centre
Final reminder sent to all FSB members
Survey closes and end of fieldwork period -
A total of 200 completed and acceptable survey responses were returned within the time period.
Survey Analysis
The authors used NVIVO software (QSR International) to assemble and link the different answer sources for
each question before coding and analysing the data (Richards & Richards, 1994). NVIVO aids in this analysis by
providing tools to more rigorously explore the various qualitative datasets at the researchers’ disposal (Bazeley,
2007).
Our analysis of these questions developed both in and across the answers themselves and occurred as follows:
first, the authors engaged in open coding of text to capture the key priority areas for the small business owners
given their responses. The coding was then compared, discussed, and challenged by additional authors. As
recommended by Gioia et al. (2013), the number of primary codes were reduced to avoid repetition and overlap.
At the end of this step, we had a number of primary codes that summarized the voice of the small businesses
surveyed.
In the next step, the authors subsequently compared our primary codes across answers and revisited the data
multiple times using charts and tables to facilitate this comparison. To avoid any erroneous conclusions, this
process of replication was important (e.g., Eisenhardt, 1989; Yin, 1984).
Making Meaningful Comparisons
Where possible, comparisons are made with previous surveys / reports conducted within Northern Ireland’s
SME sector. These previous reports include:
• Small Business Survey 2014 (SME Employers in Northern Ireland). Dept. for Business Innovation and
Skills. This report is based on 436 interviews with SME employers only; enterprises with no employees were
excluded from analysis.
• The FSB ‘Voice of Small Business Member Survey’, 2014. The survey deployed in November 2013.
• The FSB ‘Voice of Small Business Member Survey’, 2012. The survey deployed in November 2011.
• Business Population Estimates for the UK and Regions, 2012, 2013, 2014
A note of caution. Care should be taken when attempting to make meaningful comparisons between various
reports. As the authors could not access the survey data from previous reports, tests of statistical significance
6
between results could not be conducted. Differences between question structure and research methodology
also make meaningful comparisons difficult.
Survey Results
BUSINESS SECTOR
The sector profile for survey respondents is broadly similar to previous survey findings. For example, the most
populous two SME sectors in Northern Ireland in 2014 were retail/wholesale (23 per cent) and construction (16
per cent)1. One noticeable exception in the findings was a lower representation than expected from the ‘hotels,
restaurants, bars, catering / leisure’ sector.
2013 (%)*
16
14
14
7
15
5
5
5
n/a
5
4
2
n/a
5
3
4
1
3
0
5
Q2. Please indicate your business sector
* The FSB ‘Voice of Small Business Member Survey’ (Nov. 2013)
1
Small Business Survey 2014 (SME Employers in Northern Ireland)
7
Employment
Of the 118,000 businesses in the SME sector (defined as from sole operators up to 249 employees) in Northern
Ireland, only 28 per cent (approx. 32,000 business) have employees. The rest are defined as sole operator
businesses (72 per cent)2. In contrast 90 per cent of the survey respondents indicated they employed staff, a
rise from 71 per cent in 20133, and 87 per cent in 2011. The respondents’ average workforce is 9.1 employees,
up from 8.6 in 20114. The majority of respondents (52 per cent) hire between 1 to 5 employees.
Q1. How many people do you employ?
Business Population Estimates for the UK and Regions, 2014
The FSB ‘Voice of Small Business Member Survey’, 2014
4
The FSB ‘Voice of Small Business Member Survey’, 2012
2
3
8
Main Customer
The general public is the main customer for the majority of respondents (47 per cent), followed by private
sector small firms (29 per cent), private sector large firms (14 per cent) and finally the Government sector (10
per cent). SMEs with higher numbers of employees are more likely to have the Government sector as their
main customer.
Q4. Who is your main customer?
It is important to note this question focuses on the main customer for SMEs and may downplay the actual level
of trade activity across sectors. However, figures indicating a relatively low reliance on the Government sector
as a main customer are interesting considering previous research findings. The 2014 Small Business Survey
found that 23 per cent of SME employers had done business with the public sector over the previous twelve
months5 and 52 per cent of the respondents to the 2011 FSB survey indicated they had supplied goods and /
or services to the public sector6.
5
6
Small Business Survey, 2014 (SME Employers in Northern Ireland)
The FSB ‘Voice of Small Business Member Survey’, 2012
9
Main Customer Location
The main customer location for Northern Ireland SMEs was resolutely ‘Northern Ireland’ (85 per cent). Only
15 per cent of Northern Ireland SMEs indicated that their main customer was outside the province, with ‘GB
based’ leading (7 per cent), then ‘outside of GB but within Europe’ (3 per cent), ‘outside of Europe’ (3 per cent)
and the ‘Republic of Ireland’ (2 percent).
Q4. Who is your main customer? Location
Again it is important to note this question focuses on the main customer for SMEs and may downplay the
actual level of export activity occurring within this sector. For example, 29 per cent of the respondents to
the 2013 FSB survey stated they export goods and/or services, significantly higher than the 16 per cent UK
average7. The 2014 Small Business Survey found that thirty per cent of SME employers in Northern Ireland sold
goods or services or licensed products outside of the UK8, again a higher proportion than the UK average (19
per cent). Although these figures reflect the extent to which SME employers in Northern Ireland sell goods or
services to individuals and firms in the Republic of Ireland, the current research findings indicate that relatively
few SMEs view the Republic of Ireland as their main consumer base.
5
6
The FSB ‘Voice of Small Business Member Survey’, 2014
Small Business Survey 2014 (SME Employers in Northern Ireland)
10
Barriers or Obstacles to
Business Success
The main barriers or obstacles impacting on business success were identified as
• ‘cash flow/ getting paid’ 48 per cent,
• ‘profit taxes: corporation / VAT’ 46 per cent,
• ‘competition’ 44 per cent,
• ‘business rates’ 43 per cent,
• ‘cost of marketing / promotion’ 41 per cent,
• ‘compliance and regulations’ 38 per cent,
• ‘employment taxes’ 36 per cent,
• ‘energy costs’ 35 per cent and
• ‘availability of skilled support’ 35 per cent.
Table 1 compares these findings with previous survey results.
Obstacles impacting on business success (%)
47.5 46
44 42.5
40.5
38
35.5 34.5 34
27
26
26
26 25.5 25 24.5
17 16.5
11.5
Q5. Which of the following barriers or obstacles have impacted on the success of your
business over the last twelve months?
11
Table 1 - Comparison of barriers or obstacles with previous findings
Current study (2015)
2014 – Small Business
Survey
2013 - The FSB ‘Voice of
Small Business Member
Survey’
Cash flow/ getting paid 48%
The economy 71%
The economy 51%
Profit taxes / VAT 46%
Red tape 61%
Cash flow 49%
Competition 44%
Competition in the market
60%
Energy costs 41%
Business Rates 43%
Unable to increase prices / 58%
Business rates 38%
Marketing / promotion costs
41%
Regulations 54%
Profit taxes: Corp Tax/ Vat 34%
Compliance and regulations
38%
Cash flow 53%
Regulations and enforcement 33%
Employment taxes 36%
Taxation 51%
Employment taxes: 33%
Note: ‘The economy’ was not provided as an option in the 2015 survey. The researchers decided to remove this
option to place a greater focus on factors that could more likely be influenced at a province-wide level.
This was a ‘drag and drop’ ranking question. ‘Drag and drop’ ranking questions allow respondents to rank a list
of items by dragging and dropping each item in order of preference. A total score for each variable is generated
by a weighted calculation. Items ranked first are given a higher value or “weight.” The score computed for each
answer option/row header is the sum of all the weighted values. Table 2 presents the results from the ranking
analysis.
12
Table 2 - Ranked barriers or obstacles
Score*
Overall
Rank
1. Cash flow / getting paid
1578
1
2. Profit taxes: Corporation / VAT
1501
2
3. Business rates
1384
3
4. Competition
1359
4
5. Compliance and regulations
1195
5
6. Cost of marketing / promotion
1193
6
7. Employment taxes: PAYE, National
Insurance
1088
7
8. Availability of skilled staff
1031
8
9. Energy costs
1012
9
10. Broadband access
816
10
11. Lack of suitable business support
788
11
12. Employment law
751
12
13. Access /cost of appropriate finance
731
13
14. Workplace pension reform
704
14
15. Increased costs of raw materials
704
15
16. Transport issues (infrastructure/parking/
fuel)
691
16
17. Vulnerability in the supply chain
484
17
18. Availability / cost of suitable premises
481
18
19. Import/export barriers
255
19
The ‘cost of marketing / promotion’ was rated higher than expected, with 41 per cent of respondents indicating
this was an obstacle. Cost of marketing / promotion is a greater obstacle for smaller SMEs (1 to 9 employees:
ranked 3rd) than larger SME employers (10+ employees: ranked 12th).
The importance of the availability of skilled staff was, at 34 per cent, much higher than previous responses to
similar categories, such as 2013 categories of ‘skilled staff’ 15 per cent and ‘recruiting/ retaining staff’ 14 per
cent.
Business rates is the highest ranked obstacle for organisations primarily selling to the general public. Cash flow
/ getting paid was the highest ranked obstacle for SMEs trading with the Government Sector, and with large
or small firms within the private sector, but was not as critical for SMEs dealing with the general public (ranked
8th).
13
14
Government sector
Cash flow / getting paid
Compliance and regulations
Competition
Profit taxes: Corporation / VAT
Transport issues
Availability of skilled staff
Employment law
Employment taxes: PAYE, NI
Cost of marketing / promotion
Lack of suitable business support
Energy costs
Access /cost of appropriate finance
Business rates
Workplace pension reform
Broadband access
Vulnerability in the supply chain
Import/export barriers
General public
Business rates
Profit taxes: Corporation / VAT
Cost of marketing / promotion
Competition
Employment taxes: PAYE, NI
Energy costs
Compliance and regulations
Cash flow / getting paid
Workplace pension reform
Lack of suitable business support
Availability of skilled staff
Increased costs of raw materials
Access /cost of appropriate finance
Employment law
Availability / cost of suitable premises
Broadband access
Transport issues
Vulnerability in the supply chain
Import/export barriers
Import/export barriers
Workplace pension reform
Import/export barriers
Availability / cost of suitable
premises
Workplace pension reform
Increased costs of raw materials
Availability / cost of suitable
premises
Energy costs
Employment law
Transport issues
Vulnerability in the supply chain
Access /cost of appropriate finance
Employment taxes: PAYE, NI
Lack of suitable business support
Energy costs
Business rates
Compliance and regulations
Availability of skilled staff
Cost of marketing / promotion
Profit taxes: Corporation / VAT
Competition
Broadband access
Cash flow / getting paid
Small firms (private sector)
Lack of suitable business support
Access /cost of appropriate finance
Broadband access
Vulnerability in the supply chain
Employment law
Cost of marketing / promotion
Transport issues
Increased costs of raw materials
Compliance and regulations
Business rates
Employment taxes: PAYE, NI
Availability of skilled staff
Competition
Profit taxes: Corporation / VAT
Cash flow / getting paid
Large firms (private sector)
Table 3 - Breakdown of ranked barriers or obstacles by main customer
15
Availability / cost of suitable premises
Energy costs
Transport issues
Access /cost of appropriate finance
Availability / cost of suitable
premises
Compliance and regulations
Employment taxes: PAYE, NI
Availability of skilled staff
Profit taxes: Corporation / VAT
Cash flow / getting paid
Employment law
Energy costs
Transport issues
Increased costs of raw materials
Cost of marketing / promotion
Workplace pension reform
Access /cost of appropriate finance
Vulnerability in the supply chain
Availability / cost of suitable
premises
Lack of suitable business support
Broadband access
Import/export barriers
Competition
Business rates
Compliance and regulations
Broadband access
Lack of suitable business support
Energy costs
Employment taxes: PAYE, NI
Availability of skilled staff
Access /cost of appropriate finance
Workplace pension reform
Increased costs of raw materials
Transport issues
Employment law
Availability / cost of suitable premises
Vulnerability in the supply chain
Import/export barriers
Import/export barriers
Vulnerability in the supply chain
Increased costs of raw materials
Broadband access
Employment law
Workplace pension reform
Lack of suitable business support
Availability of skilled staff
Energy costs
Cost of marketing / promotion
Employment taxes: PAYE, NI
Compliance and regulations
Business rates
Profit taxes: Corporation / VAT
Workplace pension reform
Lack of suitable business support
Employment law
Import/export barriers
Employment taxes: PAYE, NI
Increased costs of raw materials
Vulnerability in the supply chain
Transport issues
Competition
Access /cost of appropriate finance
Business rates
Compliance and regulations
Cash flow / getting paid
Availability of skilled staff
Broadband access
Cost of marketing / promotion
Cost of marketing / promotion
Competition
Competition
Profit taxes: Corporation / VAT
Main customer outside NI
Profit taxes: Corporation / VAT
Cash flow / getting paid
Main customer NI based
Business rates
10+ employees
Cash flow / getting paid
1 to 9 employees
Table 4 - Breakdown of ranked barriers or obstacles by number of employees/location of main customers
16
Compliance and
regulations
Profit taxes:
Corporation / VAT
Competition
Business rates
Costs of raw
materials
Employment law
Availability of skilled
staff
Transport issues
Cost of marketing /
promotion
Broadband access
Employment taxes:
PAYE, NI
Lack of suitable
business support
Access /cost of
finance
…..
Availability of skilled
staff
Cash flow / getting
paid
Lack of suitable
business support
Employment taxes:
PAYE, NI
Broadband access
Profit taxes:
Corporation / VAT
Cost of marketing /
promotion
Business rates
Compliance and
regulations
Import/export
barriers
Access /cost of
finance
Availability/cost
suitable premises
Transport issues
…..
…..
Employment law
Vulnerability in the
supply chain
Access /cost of
finance
Business rates
Profit taxes:
Corporation / VAT
Energy costs
costs of raw materials
Availability of skilled
staff
Competition
Cash flow / getting
paid
Lack of suitable
business support
Availability/cost
suitable premises
Cost of marketing /
promotion
Broadband access
Creative
services
…..
Transport issues
Access /cost of
finance
Broadband access
Cash flow / getting
paid
costs of raw materials
Availability of skilled
staff
Employment law
Cost of marketing /
promotion
Energy costs
Competition
Compliance and
regulations
Employment taxes:
PAYE, NI
Business rates
Profit taxes:
Corporation / VAT
Hotels,
restaurants,
bars, catering/
leisure
…..
Transport issues
Broadband access
Access /cost of
finance
Employment law
Availability of skilled
staff
Competition
Energy costs
costs of raw materials
Employment taxes:
PAYE, NI
Compliance and
regulations
Profit taxes:
Corporation / VAT
Business rates
Cost of marketing /
promotion
Cash flow / getting
paid
Manufacturing
…..
Import/export
barriers
Lack of suitable
business support
Availability/cost
suitable premises
Cost of marketing /
promotion
Compliance and
regulations
Employment taxes:
PAYE, NI
costs of raw materials
Transport issues
Energy costs
Workplace pension
reform
Business rates
Profit taxes:
Corporation / VAT
Cash flow / getting
paid
Competition
Personal
services (e.g.
hairdressing,
dry cleaning)
Note: Only sectors with 10 or more responses included within the table. Only top 15 responses displayed.
Cash flow / getting
paid
Construction
and building
Competition
Computer
related
activities
Table 5 - Breakdown of ranked barriers or obstacles by sector
…..
costs of raw materials
Availability of skilled
staff
Lack of suitable
business support
Vulnerability in the
supply chain
Employment law
Cash flow / getting
paid
Compliance and
regulations
Workplace pension
reform
Employment taxes:
PAYE, NI
Energy costs
Cost of marketing /
promotion
Competition
Profit taxes:
Corporation / VAT
Business rates
Retailing
…..
Compliance and
regulations
Transport issues
Broadband access
costs of raw materials
Availability/cost
suitable premises
Availability of skilled
staff
Energy costs
Cost of marketing /
promotion
Competition
Access /cost of
finance
Business rates
Employment taxes:
PAYE, NI
Cash flow / getting
paid
Profit taxes:
Corporation / VAT
Sales, main.
and repair of
motor vehicles/
fuel
How Government can address
these Issues
When asked to refine their response to the question of barriers by identifying what Government can do to
address these issues, a number of interesting insights are given.
Q6. Consider your top three responses to the previous question, do you have
any ideas how Government can address these issues?
No. Coding
references
Less bureaucracy and regulation
37
Reduce business rates
32
Better broadband provision
24
Reduce or help with PAYE,NI,Income Tax
23
VAT reduction or threshold increase
20
Payment deadline enforcement and supply chain protection
18
Cut corporation tax
17
Access to and cost of finance
16
Invest in Education and Training for schools and universities
15
Better support and investment for Small Biz not FDI’s
11
Rebalance procurement towards SMEs
11
Reduction in Energy and Fuel prices
11
17
This was an open-text response question. The top coded response centred on the reduction of bureaucracy
and regulation followed by reducing business rates and, perhaps surprisingly, better broadband provision, a
reduction or help with PAYE / NI / Income Tax, a VAT reduction or threshold increase, and payment deadline
enforcement and supply chain protection. Other proposed solutions include reducing corporation tax, better
access to affordable finance, investment in education and training for schools and universities, more support
and investment for small business not Foreign Direct Investments, a rebalance of procurement processes to
better suit SMEs and a reduction in energy and fuel prices.
As broadband provision was ranked 10th overall in the list of barriers or obstacles (see table 2) it is perhaps
surprising it is third most prominent suggestion for how Government can improve the situation for the SME
sector. Responses ranged from cost of broadband, through to the provision of superfast broadband to rural
areas.
Main source of business support
This was an open-text question inviting the respondents to write down their main source of business support.
The majority of respondents identified FSB as the main source of business support (15 per cent), followed by
Invest NI (11 per cent), the internet (11 percent), accountants (9 per cent) then mentors / business network /
partners (8 per cent). Surprisingly 9 per cent of the respondents did not know where to go for support.
Q7. Where do you go to for your main source of business support?
18
Although the response to this question falls roughly in line with previous findings there are a few interesting
distinctions. Whereas previous surveys have found accountants and Invest NI9, or accountants, FSB, family
and friends, informal networks and customers to be key sources of support10, the internet has not been clearly
defined as a source of support before. The internet’s ability to act as main source of business support may also
partially explain the call for better broadband provision.
Another point of interest is that 9 per cent of respondents didn’t know where to go for support. This figure is
higher than previous indications (e.g. 4 per cent in 201311) and indicates further work should be conducted to
improve SME awareness of useful sources of support.
Business Growth
Q8. Are you planning to grow your business over the next two years?
Why are you not planning
to grow?
Q9. Why are you not planning to grow your
business?
No. of
refs.
At capacity
9
Cost of employing people
8
Political/Economic uncertainty
7
Access to and cost of finance
4
Close to retirement
4
Don’t need to
4
Business decline
2
Small Business Survey, 2014 (SME Employers in Northern Ireland)
The FSB ‘Voice of Small Business Member Survey’, 2014
11
The FSB ‘Voice of Small Business Member Survey’, 2014
9
10
19
Although the majority of small businesses surveyed do plan to grow their own business over the next two years
(80 per cent), there are various reasons why the remaining 20 per cent do not intend to do so. The main three
coded reasons given for this are that small firm owners believe they are already at capacity and cannot grow
any further; the cost of employing additional members of staff is prohibitive; and the ongoing political and
economic uncertainty is leading to hesitation around expansion.
Encouraging Business Growth
When asked what three things would help their business grow, the top three coded responses include: access
to and cost of finance (44 coded responses); help with marketing and online activity (41) and the reduction of
business rates (41).
Q10. Name three things that would help your business grow
No. Coding refs.
20
Access to and cost of finance
44
Help with marketing and online activity
41
Reduce business rates.
41
Cut corporation tax
33
Availability of skilled labour
27
VAT reduction or threshold increase
27
Reduce or help with PAYE,NI,Income Tax
23
Better broadband provision
19
Less bureaucracy and regulation
17
Rebalance procurement towards SMEs
16
Reduction in Energy and Fuel prices
13
Political and economic stability
13
Of particular interest, ‘Help with marketing and online activity’ was the second most coded response to this
question. This ranged from help both to trade and to have a presence online, to better support for marketing
activity which reflects the shifting nature of the consumer and marketing landscape. The reduction of
business rates was the equal second most coded node, with many small firms continuing to suggest this is
a significant issue, despite the attempt at rebalancing business rates earlier in 2015 and the small business
rate relief scheme. Cutting corporation tax came fourth with pressure on the Northern Ireland Executive to
agree a way forward for corporation tax powers to be devolved, although the ongoing uncertainty surrounding
welfare reform and the UK Government’s intention to reduce corporation tax at a national level are currently
hampering progress on this issue.
Future Concerns
When asked ‘What are your two big concerns for the future?’, the respondents identified political uncertainty
(33 coding references); the economy (24); cash flow (21) and the availability of skilled labour (19) as the most
pressing concerns.
Q 11. What are your two big concerns for the future?
No. Coding refs.
Ongoing political uncertainty
33
Economic stagnation
24
Cash flow
21
Availability of skilled labour
19
Public sector cuts and redundancies
16
Access to and cost of finance
15
Business viability
14
Exchange rate fluctuations
13
Rising taxes
12
Competition
11
21
This is somewhat in line with responses from the 2013 survey, with the economy and cash flow being the top
two previous responses, however political uncertainty was the largest coded node in this survey suggesting the
challenging nature of the current political landscape is impacting upon small firms. The availability of skilled
labour is another issue of note with all respondents who expressed concern that the right skill set won’t be
available in the labour market going forward.
Priority areas for FSB’s
manifesto
Q 12. This survey will feed into the FSB’s manifesto for Government
going forward – what do you think are priority areas for inclusion?
No. Coding refs.
22
Cut corporation tax
15
Reduce business rates.
15
Better funding and investment for Small Biz
13
Less bureaucracy and regulation
11
Political and economic stability
10
VAT reduction or threshold increase
9
Better broadband provision
7
Access to and cost of finance
6
Reduction in Energy and Fuel prices
5
Invest in Education and Training for schools and universities
4
When asked to identify what the priority areas for a manifesto should be, the joint top responses were: cut
corporation tax and reduce business rates, followed by better funding and investment for small businesses,
less bureaucracy and regulation, and political and economic stability. Other responses include a VAT reduction
or threshold increase, better broadband provision, access to and cost of finance, a reduction in energy and fuel
prices, and investing in education and training for schools and universities. It is worth noting that all of the
above suggestions bar ‘political and economic stability’ were also proposed as methods for the Government to
deal with barriers and obstacles to business success (question 6).
Capturing SMEs’ contribution to
society
Employment in SMEs is a major component of the Northern Ireland economy with the SME sector accounting
for over 75 per cent of all private sector employment in Northern Ireland (significantly more than the rest of
the UK at 60 per cent). A series of questions was included within the survey to explore other ways the SME
sector contributes to society.
Other significant employment benefits the SME sector generate within Northern Ireland and their local
communities include: hiring a workforce mainly composed of people from the local area (68 per cent), hiring
staff that were previously long-term unemployed (29 per cent), engaging in staff apprenticeship schemes (23
per cent) and hiring people with a disability (13 per cent).
Q13. How does your small business contribute to your local community?
Exploring the altruistic nature of SMEs: 4 per cent of respondents have a ‘payroll giving’ scheme, 24 per cent
choose a ‘charity of the year’, 40 per cent donate time to a local good cause, 47 per cent donate products and
58 per cent donate money to a local good cause.
23
Q13. Does your business do any of the following?
Q13. Community - Does your business engage with any of the following types of
groups?
The SME sector indicated a high level of engagement with the local community, with 42 per cent of respondents
indicating they engage with local schools / colleges, 37 per cent with local community groups, and over a
quarter engage with local sports clubs/societies.
24
Q13. Does your business have a long term intention to remain in the same town/area?
Nearly all SMEs (95 per cent) indicated a long term intention to remain within the local area, with roughly a
quarter of them identifying employing and hiring a local workforce as one of the most important ways their
business contributes to their local community.
4%
3%
Employ and hire local workforce
Engage with local schools
Support local charity
6%
24%
7%
8%
Engage with local community groups
Engage with local sports club provides
sense of community
9%
16%
11%
12%
Buy local and shop local
Based locally
Provide opportunities for unemployed
Q 14. Of the indicators chosen above, please choose two that you feel are most important
in contributing to your local community and give more detail on what this means
specifically for you:
25
Question 14 was an open text question, allowing respondents themselves to express what they felt were the
most important in contributing to their local community. The top five coded responses were: employing and
hiring a local workforce, followed by engaging with local schools; supporting a local charity; engaging with local
community groups and engaging/supporting local sports clubs. The ways in which small businesses contribute
to their local communities were varied; however these coded responses show a strong emphasis on societal
involvement and support.
Summarising main themes
A number of key themes have emerged through analysis of the survey results. Whilst the importance placed
on some of themes can vary dependant on the question, as can be seen from Table 6 below, a number of
obvious themes are recurrent. Most significantly, the reduction of business rates and corporation tax, better
broadband provision, more help with online/marketing activity, access to skilled staff, less bureaucracy and
regulation and VAT reduction being notable recurrences.
26
Priority areas for FSB Manifesto
3
8
7
10
Better support and investment for Small Business
10
3
Cut corporation tax
7
4
1
2
10
Help with marketing and online activity
2
6
Improve access to and cost of finance
8
1
8
6
Improve Political and economic stability
12
5
1
Increase availability of skilled labour
5
8
4
Invest in Education and Training for schools and universities
9
10
Less bureaucracy and regulation
1
9
4
Payment deadline enforcement and supply chain protection
6
Rebalance procurement towards SMEs
11
10
Reduce business rates
2
3
2
3
Reduce or help with PAYE,NI,Income Tax
4
7
7
Reduction in Energy and Fuel prices
12
11
9
9
VAT reduction or threshold increase
5
6
6
2
Future concerns
Encouraging business growth
Better broadband provision
Barriers and obstacles to business success
Key themes
Government reduce barriers and obstacles
Table 6 - Occurrence and ranking of key themes
27
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