Small firms need to catch up on innovation, warns Moran
NOT enough small businesses in Ireland are trading online and innovation and creativity are undervalued, the top civil servant in the Department of Finance has said.
John Moran said Ireland lagged behind world and European leaders in innovation and that it was too concentrated within multinationals here.
And he claimed just 23pc of home-grown firms were engaging in e-commerce, a problem that, he said, urgently needed to be addressed.
"For businesses employing less than 10 people this percentage could be even lower. It is now believed that of online purchases made in Ireland 70pc of these are done in overseas markets," Mr Moran told the Irish Small & Medium Enterprises Association (ISME) annual lunch.
"There is now an urgency to ensure that businesses recognise that this is happening and that they are encouraged and supported to correctly respond to this digital reality."
It was one of Mr Moran's final speeches to the small businesses community after he announced his resignation earlier this month. He is due to formally step down from his position once his successor is appointed.
Mr Moran said businesses could be "lulled into a sense of comfort" about the scale of innovation in Ireland because of the level that was taking place in multinationals, rather than domestic firms.
"We identified this as the number one structural issue that we have to deal with for this new economy that we want to create," he said.
"Because we lag behind the world leaders, we lag behind the European leaders."
He claimed innovation wasn't about big changes but small incremental steps, and that employers needed to think about how they could do business differently.
Mr Moran said the Irish economy was overly funded by the banks and that small businesses needed to look at other forms of finance.
And he also claimed he was "shocked" at the number of companies that were not doing cash-flow analysis.
He said he couldn't overstate the importance of the Credit Review Office, which was relied upon by the Government to provide proof and data to see "what was happening on the ground".
Mr Moran also said there was an issue in Ireland where the country didn't have enough companies that were born, or enough that died.
"I think we hold on to companies a little bit too long that don't have a business plan that stacks up for the long term. We don't have those companies recognise that and look for external partners to come and share in the venture to go along and put enough capital into the business," he said.
Mark Fielding, ISME chairman, said small businesses were facing significant challenges, including unsustainable costs and excessive red tape and bureaucracy.