As a result, while 82 per cent of businesses continue to hold their ground or to grow, there has been a 50 per cent increase over the year in the number of businesses that are struggling (12 per in Q1 2016 to 18 per cent in Q1 2017).
Those facing the greatest competitive challenges are in the ‘retail, distribution & other services' sector and the construction sector, where 27 per cent and 24 per cent of businesses respectively describe themselves as reducing, surviving at all costs or winding down.
In these sectors, many businesses are more likely to face challenges dealing with rising costs either in absorbing them or passing them on in the face of intense competition. Micro-businesses are also finding it more difficult to compete, with 20 per cent reporting difficult conditions compared with only 4 per cent of firms employing more than 50 people.
Larger companies and those that export are also more likely to be growing (62 per cent and 55 per cent respectively) compared to around a third of micro-firms (35 per cent) and non-exporters (32 per cent).
However, the findings of the Q1 Business Monitor also reveal a strong level of business and consumer confidence. A greater number of firms are reporting a growth in sales in Q1, up from 59 per cent last quarter to 63 per cent. Across all sectors more businesses have increased their employment than reduced staff numbers, and looking ahead confidence remains positive.
Aidan Gough, director of strategy and policy at InterTradeIreland said: “ The results from the Q1 business monitor show the economy remains buoyant but operationally challenging, with many counter-balancing issues to deal with.
“ In such an environment it's easy to lose sight of strategic moves that can protect and grow businesses. InterTradeIreland's support programmes such as FUSION and Acumen, which help firms to develop opportunities in innovation and export, are delivering lasting, tangible benefits to particpants."
The Business Monitor also found 98 per cent of firms are still not making any plans for the UK’s exit from the European Union.
“Brexit is an issue that will affect business right across the island so it is concerning that almost all of those surveyed have not started any forward planning. The intensely competitive environment may explain this, with firms more focused on facing the current challenges, in addition to the lack of information available on the various potential avenues of impact.
"InterTradeIreland’s message is simple, while we recognise the pressures facing small business owners dealing with the here and now, there is, nevertheless, a window of opportunity that must be grasped to prepare for the challenges and indeed the opportunities that will be presented by a new cross-border trading relationship set to emerge over the next few years. Our new Brexit Advisory Service is available to support and encourage businesses to ‘Plan, Act & Engage' in preparation for Brexit.”
Other key insights revealed by the InterTradeIreland Business Monitor include:
- 82 per cent of firms across the island are reporting stability or growth
- 98 per cent of firms have not made plans to deal with Brexit
- Half of businesses surveyed report that the cost of overheads is an important issue
- Followed by energy costs (38 per cent)
- 7 per cent of firms have increased employee numbers, with 4 per cent reporting a decrease