Start-ups and SMEs must think globally in these unpredictable days
As we head into an uncertain 2017, there will no doubt be many commentators looking into their crystal balls trying to divine Ireland's economic trajectory over the next 12 months.
When it comes to driving further improvement in the Irish economy, the importance of entrepreneurship and new businesses in creating jobs and economic growth cannot be understated.
The World Bank estimates that small and medium enterprises (SMEs) are responsible for half of all jobs globally. This number alone is eye-catching but underlying it is something even more important. High-growth SMEs, often referred to as Innovation-Driven Enterprises (IDEs), are the engine of new job creation.
A couple of years ago, the Central Bank published research showing that start-ups in the first five years of operation account for two thirds of all new jobs created in Ireland, a finding consistent with a similar study done by the Kauffman Foundation in the US.
The Global Entrepreneurship Index 2016 ranked Ireland ninth among the 137 countries assessed; and sixth among the 41 countries in the Europe region, giving a clear indication of our capacity to maintain and even improve this level of performance.
With a business support ecosystem in Ireland that includes nearly 100 accelerators and incubators; and huge availability of financial, advisory and networking supports from the public and private sector, start-ups, SMEs and entrepreneurs in general are well served.
But one thing crucial to their long-term survival, and the more immediate need for economic growth and job creation, is exporting.
The importance of exports to economies was highlighted in a highly-regarded Commission on Growth and Development report in 2008, which strongly equated job growth with export diversification, noting that the best-performing developing economies had one particular policy feature in common: "All of the sustained, high-growth cases prospered by serving global markets." Our own experience from the 80s and 90s is a case in point.
Add to this the ESRI contention that foreign-owned firms are generally less labour-intensive than indigenous ones, and the connection between Irish-owned businesses exporting and job growth is clear.
This point was reinforced at a recent Enterprise Ireland market study visit for financial and advertising technology companies in New York city addressed by Bill Aulet, Managing Director of the MIT Martin Trust Centre for Entrepreneurship (and seasoned entrepreneur).
Aulet, who authored Disciplined Entrepreneurship: 24 Steps to a Successful Start-Up, has worked with thousands of entrepreneurs through his work at MIT and globally. A global mindset was something he noted in the successful companies he met, commenting, "they know they have to sell beyond their own backyard".
In his remarks at a networking event later that evening, Aulet went on to dispel several myths that surround entrepreneurs, including lazy assumptions that they love risk, are lucky, are charismatic and are born, not made. A disciplined approach to entrepreneurship is the true key to success, said Aulet.
Advising Irish companies during the November market visit (and detailed in his aforementioned book), Aulet identified key areas where a disciplined approach was not only valuable, but a requirement for aspiring IDEs.
These include: knowing your customer, knowing what you can do for your customer, knowing how your customer acquires your product, knowing how you can make money from your product, knowing how to efficiently build your product, and, finally, knowing how to scale your business.
Also, entrepreneurs often find that product modification from market to market is required. In fact, Aulet makes a strong case for having client meetings that focus on developing a product that serves the customers' needs rather than meetings where a finished product is presented and, essentially, the customer is being asked to adapt.
As the global economy becomes more and more interconnected, Irish entrepreneurs thinking big and acting globally will be the best defence for the economy against perils that may await in 2017.
Sean Davis is Enterprise Ireland Regional Director for North America
Sunday Indo Business