Survival rate of start up firms up dramatically

THE survival rate for start up businesses in the Republic has improved dramatically, according to an internal Forbairt document.

The report shows that 86 per cent of companies started under a development programme since 1991 are still in business, compared with less than half in the 1978-92 period.

The new figures, which monitor companies started under the Enterprise Development Programme (EDP) in the period 1991-1995, show an average of 13 start ups a year.

"Of 63 companies that started trading, 54 are still trading as of June 30th, 1996," the review says.

Some weeks ago, the Irish Banking Review reported that of the 239 firms that began trading under the EDP between 1978 and 1992, only 110-46 per cent - were still in business.

Employment for the more recent period sees 1,151 people still at work this June; an average of 230 jobs a year. The total number of jobs approved under the scheme (1991-95), including projected employment until the end of 1997, totals 1,769.

A sectoral break down shows 23 per cent in both electronics and food, 14 per cent in plastics and 12 per cent in engineering.

"The average sales per company is £1.2 million, with the average employment being 21 people; 9 per cent of the companies approved already have employment in excess of 50 people," the document says. Some 75 per cent of the firms export part of their output, with 48 per cent exporting more than half their produce.

The EDP programme cost a total of £7.9 million, but Forbairt holds equity in the companies valued at some £3 million. The grant per job rate is £6,850 - significantly lower than in the previous period.

"Given that the objective of the programme is to support companies with the potential to develop into exporiented businesses employing in excess of 20 people within three years, the above figures indicate that the programme is continuing to perform," a Forbairt note on the document remarks.

Observers pointed last night to a significant overhaul in the EDP in 1990, crediting this with the improved success rate. At that time, the agency noted that companies with higher external investment, and with more involvement by senior management, were most likely to succeed.

The level of external equity has now risen to 37 per cent from 25 per cent, and the average number of "promoters" per company has risen to 2.4 from 1.9.