Alan Bromell, KPMG’s Head of Private Enterprise, outlines the key findings from the KPMG Enterprise Barometer 2024 and what they mean for indigenous businesses and entrepreneurs.
The KPMG Enterprise Barometer 2024 unveils optimism and ambitious growth among Ireland’s indigenous businesses, with nearly two-thirds (65%) expecting to increase turnover within the next 12 months, compared to 55% in 2023.
On behalf of KPMG, RED C surveyed nearly 200 decision-makers in indigenous businesses and entrepreneurs across a broad range of industries.
Almost two-fifths (39%) plan to recruit more staff, and seven in ten (71%) expect to increase staff salaries in the next year.
Meanwhile, over half (58%) plan to grow their business and nearly seven in ten (69%) intend to finance their expansion primarily through their own balance sheets.
Cost challenges
Most (85%) say increased labour costs will be their most significant business challenge this year, doubling from 43% in 2023.
Other business challenges that could impede growth and profitability include staff recruitment and retention issues (68%) and rising inflation (64%).
Speaking about the KPMG Enterprise Barometer 2024, Alan Bromell, Head of Private Enterprise at KPMG Ireland, acknowledges the resilience of indigenous businesses and entrepreneurs but says, “Understanding entrepreneurs’ aspirations and concerns is vital for informed policy-making.
There is a need for more proactive measures to support domestic entrepreneurship grappling with the cost pressures on business operations.”
The majority (86%) have been impacted by the current cost inflation, regardless of their number of employees or location in Ireland.
Over half (53%) attribute the escalating cost of doing business to wage inflation, a significant increase from 22% in 2023, while energy costs have decreased as a concern from 42% in 2023 to a modest 16% in 2024, reflecting possible stabilisation in this sector.
Recruiting challenges
Over three-quarters (76%) say the availability of residential accommodation in Ireland remains a hurdle in recruiting and retaining staff.
Recruitment remains a significant hurdle for businesses, with nearly two-thirds (64%) facing problems finding suitable candidates, compared to 60% last year.
Over two-fifths (41%) consider the current tax regime in Ireland a disadvantage to recruiting and retaining skilled employees.
But on a more positive note, the majority (88%) are confident their management team has the right skill set.
Diversity declines
Our research shows a decline in management team diversity among respondents. Two-thirds (65%) have a diverse management team, a decrease from 76% in 2023.
Meanwhile, only half have policies and strategies to address any gender balance gap in their management team, a fall from 62% in 2023.
Tax sentiment and Budget 2025
When asked for their views on the current tax regime, less than a third (29%) believe it encourages entrepreneurship and growth, a slight increase from 24% in 2024.
Seven in ten believe the Irish tax regime is more challenging for domestic businesses, while six in ten voiced concerns about the administrative complexity associated with the Irish tax system.
Over a third (36%) anticipated that the €10 million cap on retirement relief, set to take effect from January 1, 2025, would affect Irish businesses.
The top three tax measures businesses would like to see in Budget 2025 include introducing tax measures to encourage sustainable behaviour (78%), amending Capital Gains Tax rates or rules to encourage investment in Irish companies (78%) and enhancing the Employment Investment Incentive Scheme (73%).
Building resilience
Resilience will be critical as businesses adapt to sustainability, cyber-security, digital transformation, and AI.
Most (84%) of the surveyed enterprises feel prepared for a potential cyber-attack, with only one in five (23%) having experienced a cyber security attack.
Our respondents maintain a cautious stance towards AI.
Only one-fifth (21%) have a defined AI strategy, with one in five attributing their competitive advantage to AI, while 15% anticipate employing fewer staff due to AI.
Sustainability remains a crucial issue for most, with eight in 10 supporting more action on climate change.
However, concerns persist regarding the financial implications of green initiatives, with 57% worried that an increase in green initiatives will lead to a rise in costs for their business.
HOW KPMG CAN HELP
Whether you are establishing or scaling a new venture, planning an investment or exit, KPMG’s Private Enterprise teams work across the country to support privately-owned businesses.
They can assist you in all areas of business.
Search KPMG Private Enterprise to visit our website and learn more about our extensive services for Irish Private Enterprise.
Photo: Alan Bromell, KPMG’s Head of Private Enterprise