A look back at the year in business

The message still coming through loud and clear is that there has never been a better time to start a business in Ireland , writes Caroline Madden

The summer holidays are now tantalising close, with just the final hurdle of exams standing in the way of a well-deserved break.

However, revision is in the air now so this is a good time to draw together the different strands of business that we have looked at over the year and see how they intertwine to form the bigger picture.

Before Christmas we examined the key role that Ireland's corporation tax regime has played in our economic success, attracting an influx of foreign direct investment over the years. However, the recent spate of job cuts announced as multinationals relocated to cheaper locations has made it clear that Ireland cannot afford to rest on its laurels.

As we can no longer compete on a cost basis alone, Ireland Inc is being repositioned as the destination of choice for high added-value biopharmaceutical manufacturing and research

and development (R&D) investment. In addition, greater emphasis is being placed on our indigenous small and medium- sized enterprises (SMEs) sector, which is being hailed as the engine room of the economy.

Various programmes, grants and supports are now in place to encourage people to take a leap into the unknown and start their own business.

Last week we found out about Navan students Colm Gore and Séamus Crosbie, who spotted a gap in the market, created a profitable company (Business Illustrated) and took the top prize at the recent Student Enterprise Awards.

In November, we learned about young entrepreneurs Mark Duckenfield and Conor McCarthy, who won the David Manley Emerging Entrepreneur award for the Street Performance World Championships they had organised in Dublin.

The message coming through loud and clear at all of these award ceremonies is that entrepreneurs are valued by society, SMEs are the lifeblood of our economy and there has never been a better time to start a business in Ireland.

Almost 20,000 new businesses were started last year, an 11 per cent increase on 2005, while the number of companies that went into liquidation fell to a 20-year low.

However, experts warn that even a slight change for the worse in the economy could spark a higher rate of business collapses, and start-ups are particularly prone to failure.

Poor cash-flow management claims many fledgling ventures. Founders often assume that strong sales alone are enough to keep their new business afloat.

For entrepreneurial types who want to be their own boss but don't want to start from scratch, franchising is becoming an increasingly popular solution. Franchises have an impressive success rate - 93 per cent are still going after five years, compared to 50 per cent of start-ups - as the franchisee buys into a tried-and-tested business format such as McDonald's or Eddie Rocket's.

A common problem encountered by Irish businesses, from small start-ups to established multinationals, is finding and retaining quality employees. As a result of staff shortages, human resources management (HRM) is fast becoming critical to the success of a company.

One aspect of HRM which is becoming increasingly competitive - particularly in the financial services sector, where the labour market is especially tight - is the area of incentives, perks and benefits. This is great news for employees, but on the downside, it is pushing up our cost base and contributing to Ireland's reputation as the rip-off Republic.

We also saw that the corporate world is becoming more politically correct, with equality and diversity legislation in place to protect employees, and a plethora of financial regulations to protect consumers. As the business world reacts to increased consumer awareness of social and environmental issues, we have been inundated with corporate social responsibility (CSR) initiatives.

Diageo, for example, sponsors campaigns promoting sensible drinking. Even KPMG e-mails now carry the tag that the accountancy practice is the first "carbon neutral" firm in Ireland.

We also considered the importance of marketing and the contribution that business tourism makes to our economy. In September these two concepts came together at the Ryder Cup golf tournament, which was sponsored by An Bord Bia, among others.

The latest figures show that the event injected €143 million into the economy, which surpassed even the most optimistic projections. US corporate visitors proved to be big spenders, parting with an average of €600 a day.

One final piece of the business jigsaw is the thorny issue of succession planning.

Ensuring that indigenous family companies survive the handover from one generation to the next requires plenty of advance planning, but it is critical to Ireland's continued prosperity, as these family companies could well become the multinationals of the future.

Best of luck in the exams!

Series concludes