Category Archives: Business

How will the Irish motor industry be affected

When we listen to the emotional and sometimes inflammatory debate taking place in the UK in relation to Brexit, it’s hard to have any certainty or even confidence in how the decision might go. Because it is all so unclear, confusing and increasingly theatrical, it would appear that many people in Ireland are just ignoring the potential impact of the UK Referendum, and perhaps hoping that it will somehow fizzle-out like the Y2K Millennium Bug that never happened. However, should it come to pass, Brexit would have far-reaching implications for the motor industry in Ireland, writes Alan Nolan from The Society of the Irish Motor Industry (SIMI).

From vehicle distribution, parts and equipment to professional services, the Irish motor industry is entwined with the UK, with a considerable number of businesses trading in the sector in Ireland, either as subsidiaries of a UK parent company or else supplied through the UK. There are also significant volumes of cars and commercial vehicles in Ireland, as well as vehicle parts and accessories, which are actually manufactured in the UK. A substantial trade in cars and commercial vehicles, mostly used, is sourced by dealers from dealers or auctions in the UK, and vehicle parts are often sourced from sellers in the UK. Used car imports total around 50,000 per year. So, if the UK votes to leave the EU, how will the Irish motor industry be affected?

Medium- and Long-term Concerns

In the medium- or long-term there may well be concerns regarding the potential for tariffs and quotas to be imposed on vehicles or parts manufactured in the UK, as a non-EU country. However, given the value of trade between the UK and EU, this may be more likely a consideration in the setting of negotiating positions rather than in reality. Another consideration relates to vehicles or parts, manufactured in another EU member state, but distributed into Ireland through the UK. Although many of these goods are produced in the Eurozone, they are often charged into Ireland in Sterling. Again, given a two-year transition, there is little doubt that such logistical challenges can be resolved satisfactorily from an Irish Motor Industry viewpoint.

Challenging Short-term Issues

From our industry’s perspective, it is the short-term that is likely to provide the biggest and most worrying challenges, especially in relation to currency fluctuations.  According to Swiss global financial services company UBS AG, the value of Sterling could fall by as much as 20% to virtual parity with the Euro, if the UK votes in favour of exiting the EU.  Although Sterling may well rally in due course this may take some time, particularly as the negotiation process – with a UK government damaged by the loss of the referendum – will not be easy and may well move close to collapse before real progress is eventually made. The reality of the UK facing similar terms to Norway for free access to the EU market place could also impact as this may well involve having to contribute to the EU Budget and to adhere to EU Directives and Court rulings, the very issues on which many will have voted to leave.

All of this suggests that Sterling may well remain at a very low exchange rate for some time, with all that this means for our sector during that period. A UK used car priced at £10,000 Sterling last July, would have cost €14,400 whereas it might currently stand at around €12,900 but at parity it would equate to €10,000. And the key issue here is not the potential for higher volumes of imports so much as the potential impact that it might have on used car values in Ireland, and this could very well slow down new vehicle sales, if the cost for a consumer to change their car increases as a result. But this may not only impact on used, or even new, cars as the same price adjustment will be happening in relation to parts and accessories as well.

These would be hugely serious challenges for the sector and for the State’s tax revenues, although the likelihood is that this should at least be short-lived. Sterling may indeed recover somewhat by itself but the EU zone will also have to move to protect trade and current taxation arrangements such as harmonised VAT rules and zero rating for exports. Even allowing EU citizens credit for VAT paid on goods purchased in a non-EU state would suggest that additional barriers may well be moved into place. In addition, the reality of Sterling remaining at such a reduced value for any significant period of time is likely to result in upward pressure on new car prices in the UK, which would in due course push up used car values in that market. Similarly mutual recognition between Ireland and the UK on vehicle approvals and acceptance of Mileage-based Odometers may need to be resolved in a changed context.

Profound implications for the sector in Ireland

  • It is expected that Sterling will depreciate in value by 15%-25%. We have already seen an 8% reduction since the beginning of the year, which will dramatically affect the volume of exports from Ireland to the UK, our largest export partner. This will create an imbalance in load volume, further reducing the viability of UK work, which is already marginal due to competition from UK hauliers.
  • Customs procedures will become more onerous. Since we are the only EU country with a land border to the UK, Irish hauliers transiting through Northern Ireland to the North East will be severely hampered.

    Over 80% of our road freight to mainland Europe transits through the UK mainland and, if customs restrictions are put in place that increase cost or time, this will result in added costs that have to be passed on to customers. Some freight will become economically unviable to transport by road to, or from, mainland Europe, resulting in lost revenue to Irish hauliers and a reduction in trade as import/export volume decreases and transfers to containers.

  • The UK’s current cabotage regulations may alter, with a knock-on effect on the current work practices of Irish hauliers in the UK. The current derogation on car transporter firms using Irish registered units in the UK during peak periods may also be lost.
  • Less than 15% of current commercial vehicle volume in right-hand drive form will remain under EU legislation, meaning a massive increase in cost to service a limited market. This will result in less brands and higher cost. Currently, we have differences in weight and height legislation between Ireland and the UK, which will become more pronounced if the UK leaves the EU.

The international logistics industry

Given its position as Ireland’s most important trading partner, if the UK was to exit the EU the very strong likelihood is that there will be a very negative impact on trade flows between the two countries. The ESRI has estimated that the negative impact on trade between the two countries could be as high as 20%, which would have a significant impact on both economies – most especially on the Irish economy. How this would, in turn, affect individual companies would of course vary. It is reasonable to suggest that small and medium sized enterprises (SMEs) with a higher proportion of their trade with the UK would be more severely impacted than larger companies that tend to have a more diverse range of export markets and are therefore less dependent on the UK as a destination.

Certain Sectors Susceptible to Brexit

The severity of the consequences of Brexit is also likely to differ by industry sector. For example, the pharmaceutical and medical devices sectors, which historically have a significant FDI investment, have a wide range of both EU and non-EU export markets. In contrast, the agriculture and food & drink sectors are more dependent on the UK as a market, so the impact of a Brexit on these sectors would be much more significant. According to a study by IBEC, the UK accounts for over half of all meat exports, valued at close to €2 billion and 30% of Irish dairy exports, valued at close to €1 billion. The UK is also an important market for ingredients and prepared consumer foods, accounting for 70% of exports in this area. However, even if the UK decides to leave the EU, it’s still likely to be an important market as businesses tend to sell perishable goods to nearby markets. Irish firms will still have to apply EU regulations but may also have to shoulder the cost of applying separate UK regulations as well. Regardless of the type of new arrangement it reaches with the EU, if the UK votes to leave the EU, customs and other procedures are likely to become more onerous for exporters to the UK in comparison to the current trade agreements.

 

Some Silver Linings Amongst the Clouds?

It could be argued that British exports to the EU would decline in light of a Brexit and this represents an opportunity for Irish companies to provide similar, substitute products. A recent article in The Guardian in the UK suggests that trade concerns are minimal due to the fact that, should Brexit actually proceed, the most likely outcome would be that the UK would negotiate a free trade agreement. It points out that the UK is the largest export market for the EU and, in that context, it has a strong negotiating position. However, many British business leaders are sceptical about their negotiating power and they point out that while the UK may have 65 million or so consumers, the EU represents 500 million and therefore has significantly more clout.

For Irish businesses that are currently relying heavily on the UK as a market, it may be an opportunity to delve into other international markets. If the UK exits the EU, then the likelihood is that the value of Sterling will decline against the Euro. This will have some implications for Irish exporters to the UK, potentially making their prices less competitive to UK consumers or retailers. A drop in the value of Sterling, along with some potential additional trade barriers, could put some Irish businesses at risk. To mitigate this risk, Irish companies (in particular SMEs that have less product market diversity) should really look to expand their market base to destinations further afield.

For exporters trading exclusively with the UK, the EU is a logical next step in terms of expansion. Operating as a single market, the 28 countries that make up the EU represent a major world trading power. With just 7% of the world’s population, the EU nonetheless accounts for 20% of global exports and imports. Furthermore, 18 of the 28 countries operate within the Eurozone, so there’s no exchange rate risk to these countries. And remember the EU operates as a single market so, for the vast majority of goods and services, there are no customs or regulatory restrictions. That means Irish exporters have unfettered access to the 500 million consumers that make up the EU.

A new farm enterprise or starting out in farming

In the latest edition of AIB Agri Matters two young progressive farmers offer advice to aspiring young farmers in setting up a new farm enterprise or starting out in farming:

 

1.      Know exactly why you’re doing what you’re doing – if you don’t it’s hard for anybody else to know. Explore the options and pick the one that suits you best. Seek advice from others to see what worked for them.

 

2.      Establish a good track record when you’re young – in work, in college and with the Bank – it gives others more comfort you have the credentials to deliver on your plans.

 

3.      Put your best foot forward when meeting the bank – prepare well in advance. Don’t sell yourself short – Have your costing’s and have your research done. Show you understand your business and its profitability and most importantly ensure your lender understands it.

 

4.      Treat the farm as a business – if you don’t look after the business, financial management is useless. The opposite is also true. Costs and cash flow must be controlled and monitored to ensure the business remains profitable and bills can be paid, when they fall.

 

5.      Have a simple system – more easily expanded, and helps ensure consistency and accuracy – especially important where additional labour is employed.

 

6.      Ask for help – you don’t know everything and it won’t all be plain sailing. Build up a goodsupport network and use them.

The unveiling of the first Budget

Thomas Sheerin, Tax Director at KPMG in Ireland, outlines some of the elements affecting SMEs.

 1. Earned Income Tax Credit for Self-employed and USC Changes

In last year’s Budget, the Minister introduced an Earned Income Tax Credit of €550 for small business owners who cannot benefit from the PAYE tax credit of €1,650 available to employees. The Minister announced an increase in this credit to €950 for 2017.

The three lower USC rates have been reduced by 0.5%. Accordingly, all income earners will have a lower tax burden to varying degrees. The ceiling at which the 2.5% USC rate applies is increased to €18,772 – this ensures that a full-time worker on the minimum wage will remain outside the top rates of USC.

 

2. Minimum Wage

The higher cost to employers arising from the increase in the hourly minimum wage from €9.15 to €9.25 will take effect from 1st January 2017.

 

3. Entrepreneur relief

The standard rate of capital gains tax remains at 33%. However, the Minister announced a reduction to 10% in the capital gains tax rate that applies to disposals by Entrepreneurs of qualifying assets. Entrepreneur relief offers the reduced rate of capital gains tax on the disposal by an individual of business assets up to a lifetime limit of chargeable gains of €1 million. The Minister is to review this lifetime limit in future budgets.

To qualify for the relief, the business assets which include shares in a company must have been owned by the individual for a continuous period of at least three years in the five years immediately prior to the date of disposal.

 

4. Share-based remuneration

Following a public consultation and review of share-based remuneration earlier this year, the Minister announced the intention to develop a new, SME, focussed share-based incentive scheme which is to be introduced in next year’s Budget.

 

5. Retailers and Tourism

The reduced 9% VAT rate for tourism and related activities will continue to apply.  The Minister noted that the reduced rate will act as a buffer for the sector against the weakness in sterling which increases the cost of holidaying in Ireland for British tourists.

Improve Your Customer Support

Customer support or service interactions have the potential for a wide variety of outcomes – both good and bad. Customers contact your support team when they have an issue. Understanding this and making the interaction as efficient and effective as possible should be your goal. If you deal with the issue well you’ll have a happy customer, and potentially positive recommendations. Worst case scenario, you could be losing business.

How you use your phone system can be a key determinant of how your customers perceive your support service and their experience with your organisation. The option for the customer to speak to someone in the business over the phone is a communication method commonly offered in customer service. However if your employees are picking up the phone to someone who has already been transferred two or three times, you’ve already given your customer a bad experience.

Identifying ways to improve the experience your customers have with your support function, or company as a whole, can be tricky. One place to start at is when your customer makes the call. Here are four ways which your phone system can improve your customer support experience, before and during each call:

 

1. Use interactive voice response with time of day settings

Interactive voice response (IVR), otherwise known as virtual receptionists are used to direct those calling your business to the appropriate person by providing a menu of options which the customer can select. The longer your customer spends on hold or being transferred from department to department the more you are failing in providing them with an efficient and effective interaction.

Everyone has had poor experiences being left on hold waiting to be transferred. Use an IVR and avoid subjecting your customers to this. When constructing your menu, ideally have an option for each of your main customer facing departments. You should also finish with something similar to ‘for all other queries press 0’. This means even if your customers are unsure, they still have an option to press.

Time of day settings allow you to provide different instructions or menus depending on when a customer calls. For example, if a customer calls outside of office hours you can play a message which tells them your office is closed, what time it will be open at and provide an alternative contact method such as your customer service email address or a specific out of hours number. Accurately setting the expectations of your customer in terms of response or resolution time is critical for good customer service experience.

 

2. Use ring groups

A ring group is a feature which allows a number of phones to ring when one number is dialled. For example, when a customer selects the menu option for support on your IVR, it is possible to have every team member’s phone ring. If each team member’s phone is calling the chances of the call will only be missed or not answerable immediately if the whole team is already busy.

Using a cloud phone system it is also possible to add extra steps if the ring group goes unanswered by the whole team. After a certain amount of time, you could redirect the call to the department manager before eventually to a voicemail box. A common mistake that businesses make is not having a voicemail box as the end point for every possible path a call can take. After waiting on hold to speak to someone and being transferred around the sound of a disconnected line is disheartening to say the least.

Adding a voicemail box will allow you to set a voicemail greeting which can explain that all employees are busy for the moment and once again offer an alternative means of contact.

 

3. Everyone in your organisation needs an internal transfer number accessible via a centralised document

From time to time a customer with an issue is going to call the number for a different department or pick the wrong menu item. In this case, the first step is to get them talking to someone who can help with their problem. This means call transfer.

With a cloud phone system, setting up internal transfer numbers such as 102 or 2007 for each employee can be accomplished with ease. Make sure that each member of your organisation, with a priority on those which are customer facing, have an internal transfer number set up.

An updated and detailed list should be kept centrally via a resource such as Google Drive or Office 365 with each person’s transfer number. Using this, whoever takes a call should be able to easily transfer the customer to the right place. It certainly beats asking your customer to call the organisation’s main number again and dial 3 for support.

 

4. Integrate with your CRM solution

If you are using customer relationship management software, investing the resource in linking your phone system and CRM together could be worthwhile. The outcome of this is that calls made to and received from your customers will be automatically logged in their records on your CRM.

Your employees will be left with a complete overview of each interaction with a customer. The automatic logging of calls can help your employees with the notes which they leave for each log. Rather than focusing on recording that there was an interaction, they can record more insightful and specific details relevant to each individual call. This holds untold value for future interactions with a customer or for when a new starter takes over responsibility for looking that client due to the extra information they will have.

Mobile Working in Your Business

Remote and mobile working – where an employee is working outside the traditional office environment – have become increasingly common. The benefits are hard to ignore. Happier employees chasing a work-life balance and increased productivity from employees on-the-go are something most businesses wouldn’t turn their nose up at, writes Neil Doyle from Blueface.

How is working away from the traditional workspaces now possible? And, more importantly, how do you manage practices that are becoming more and more commonplace?

Improvements in communications technology have helped remote and mobile working become reliable enough for larger numbers of employees to take advantage of the benefits. Remote working has been around for a long time; working from home or outside of the office is not a new phenomenon. However, it has become more efficient in recent years.

Mobile working has taken the business world by storm with seemingly every professional now performing at least some of their daily work tasks via a smartphone or tablet.

 

Why Have Remote and Mobile Working Risen in Popularity?

Improvement in broadband connectivity has allowed for the development of VoIP (Voice over Internet Protocol) – essentially phone calls made over the internet rather than via copper wire in the ground. VoIP is much more flexible than traditional telephony, allowing remote workers to redirect their numbers while out of office with ease or, in some cases, to simply take home their special VoIP-enabled phones and plug them into their own broadband connection.

VoIP is a much more flexible alternative to traditional phone systems and, as it has become more mainstream, remote working has too.

For those working from home or elsewhere without access to a handset, softphones are device applications that mirror the functionality of a handset. After some easy setup, users are able to make inbound and outbound calls over the internet. For those working abroad, softphones over a way around roaming charges.

For mobile working, improvements in mobile networks have been the main enabler. The introduction of 3G, and later 4G, to Ireland and UK allowed mobile users the same level of internet access as desktop users. Sending and receiving files of any type, and using applications no longer meant staring at a loading or buffering icon for prolonged periods.

Cloud-based technology removed the need for applications to be installed on an individual device. Allowing users to access data and business services via the internet has enabled mobile devices to provide the same level of productivity as desktops.

Cloud software and improving mobile networks are the perfect complement, allowing mobile working to flourish.

It wouldn’t be possible, however, without the improvements in smartphones. Super computers are now resident in either our pocket or our hands for most of the day. As processing power has continued to improve, developers have made the most of it by providing employees with cloud-based apps, making the most of what these devices are capable of.

Keeping Your Limited Company Compliant

One of your main priorities as a business owner is to oversee your company’s accounting and tax obligations. A good Accountant is worth their weight in gold, and can take a huge burden off your shoulders. They can take care of your company’s annual returns, payroll, VAT returns, CT returns and statutory annual accounts. It is vital that you choose a dependable Accountant to carry out these tasks as mistakes can be costly.

 

Ensure your company secretary is capable and keep your statutory registers up to date

By law, every Irish company is required to appoint a company secretary. The main duties of a company secretary are to ensure that the company complies with the law, manage the company’s daily administration and any additional duties that company directors may delegate. Whilst there is no qualification requirement for this role, it is important that your company secretary possesses the skillset and knowledge required to keep your company compliant.

The secretary will generally maintain the statutory company registers, which are required to be maintained under the Companies Act. The statutory registers include the register of directors and secretary, members, beneficial owners, transfers, directors and secretary’s interests and debenture holders.

 

Know your dates and put your company on a ‘watch list’

Once your company has been incorporated, it is good practice to add your company to a ‘watch list’.  A watch list will remind you via email that your company’s Annual Return Date is approaching and it will alert you should any changes be made to the company at the Companies Registration Office. Core.ie provides this service free of charge once you register with them.

 

Understand your role as a director

Company directors’ have a wide range of responsibilities which can be quite diverse. Company directors have to comply with the Companies Act 2014 and have duties under Common law. If a director is found to have breached company law, he or she can be liable to penalties that can range from a fine up to €500,000 or a maximum jail sentence of 10 years. There are different categories of offences ranging from 1-4 under the Companies Act.

To avoid such circumstances, company directors should become familiar with the responsibilities and duties of the role. Information can be found on both the CRO and ODCE websites.

The Most of National Digital Week

It might be most famous these days as the home of Olympic heroes Gary and Paul O’Donovan, but Skibbereen is rapidly gaining a reputation as a centre for digital excellence in Ireland. This week, the eyes of the tech world will be on West Cork as the country’s best and brightest come to town for the second annual National Digital Week, backed by AIB. From the 10th to the 12th of November, attendees can take in talks and demonstrations from over 70 experts, visionaries, and movers and shakers in the global tech scene.

As part of our ongoing commitment to the digital sector in Ireland, AIB are the lead sponsor of Skibbereen’s Ludgate Hub, Ireland’s first rural Digital Hub. The Hub offers local businesses world-class fibre-optic broadband in a state of the art 10,000 sq ft facility that rivals anything in Silicon Valley. AIB has also sponsored National Digital Week since its inception last year, and we’ve got big plans this year with a fantastic line-up of speakers on the AIB Brave Stage all week. Read on for our insider’s guide to the best talks, workshops, and entertainment at this year’s National Digital Week.

 

Who to Catch

Kick off the festival on an inspiring note at the AIB Brave Stage, with some uplifting stories from our Digital Champions – including Trendster’s Harry McCann, Lord David Puttnam, and Dr. Seamus Davis from Cornell University. Or dig deep into the future of farming, with talks and demonstrations on tech, innovation and food science, from luminaries like Drone Expo Ireland’s Ian Kiely, THRIVE AgTech’s John Hartnett, and our own head of Agri Business, Tadhg Buckley – all on the Google Stage. We’ll be shining the spotlight on female leadership on Friday, with FM104’s Margaret Nelson, Geraldine Karlsson from DoneDeal, and Ericsson Ireland MD Zelia Madigan taking the temperature of women in digital. On Saturday, we’ll be talking all things Internet of Things, with Leonard Donnelly from ARTOFUS, Donal Sullivan of Johnson Controls Ireland, and Debbie Power from Vodafone. And if you’re a business owner, make sure to stop by the Google Digital Garage all day Friday and Saturday, where Google’s experts will be offering free one to one sessions for all festival attendees to give you a crash course in all the skills to take your company to the next level online.

Through the Lens of a Dedicated Follower

He’s only been in business for five years, but Evan Doherty has already gained a reputation as one of the most sought after photographers in Dublin. The 31-year-old from Bayside counts Dunnes Stores, Debenhams and Ryanair amongst his many commercial clients. What’s more, he regularly shoots fashion advertorials with the top models like Vogue Williams, Rozanna Purcell and Teodora Sutra.

“Most days I’m so busy that the phone is constantly ringing,” he says. “It’s hard work but I’m not complaining.” Although he has long had a love of photography and always showed an artistic flair, Evan studied Sound Engineering after school. He soon found it was not for him and left after a few months to take up a role as an assistant chef working on Irish Ferries. It was only when he was made redundant in 2011 that he decided to study photography.

A Change of Direction

“Taking pictures was always a hobby for me. It never occurred to me to try to make a living from it,” he says. “But when my friend’s mother suggested that I do a year-long course in photography at Marino College of Further Education, I decided to give it a go. After that, I did work experience with fashion photographer Barry McCall.”

Evan was then offered a place on a fine art photography course in Dun Laoghaire Institute of Art, Design and Technology. Although it was a four-year course, Evan found he was being offered work with top clients after just two years and decided to leave. He hasn’t looked back since.

 

Learning on the Job

“I threw myself into it head first,” he laughs. “And in many ways, I learnt on the job. It helped that it was around the time of the changeover to digital from analogue photography.”

However, he emphasises that it’s not just the ability to take a good photograph that makes a good photography business. “You have to have people skills too,” he says. “And be good at marketing yourself. Of course, there is all the admin to manage too. It may sound glamorous – and believe me, it is at times. I travel all the time, work with celebrities and shoot in exotic locations. But it is a lot of hard work and you’ve got to have a good work ethic.”