FINANCIAL FACTORS - WHAT TO EXPECT IN 2020 FOR YOUR BUSINESS

Updated: Jan 15

Regardless of the size of your hair, beauty or spa business, it is vulnerable to the ongoing uncertainty associated with Brexit and any risks to the Irish economy.

Budget 2020, which was unveiled by the Government in October, put a focus on protecting Irish SMEs while putting a major emphasis on the impact of Brexit. The Government laid out its financial plans for responding to Brexit with a total package of €1.2bn, with €650m of this to support agriculture, enterprise and tourism sectors, and to help stabilise the worst affected regions. With Brexit continuing to be a never ending saga, it’s estimated that Ireland’s GDP would shrink by 0.6pc in the event of a no-deal. Regardless of the outcome, Finance Minister Paschal Donohoe, when announcing the Budget in October said the Government must increase the level and range of supports to ensure that the Irish economy is protected. 


Earlier this year, CSO figures showed that Ireland still has one of the highest per capita debt levels in the world. This equates to €44,365 for every man, woman and child in the State or nearly €90,000 for every worker in the economy. And while this represents a slight reduction from the peak of €47,514 in the first quarter of 2013, it is still more than four times higher than the pre-crisis level of €10,667 recorded in first quarter of 2007. The Government has been repeatedly warned that having such a large debt pile leaves the economy more at risk to shocks such as Brexit.


Enterprise is considered to be among Ireland’s most vulnerable sectors, and if the country is faced with a no-deal situation, €220m of the €650m will be deployed immediately. It will be divided into two streams, one being an enterprise stream to fund ‘limited, targeted interventions for vulnerable but viable enterprises’. Minister Donohue has insisted the Government is ready for Brexit, “whatever form it takes”.

 

Support for hairdressers

Minister for Business, Enterprise, and Innovation Heather Humphreys announced that €110m out of the €650m will be allocated to her department to tackle a no-deal Brexit. “I’m providing Microfinance Ireland with an additional €5m to support our small businesses, from hauliers to

hairdressers,” she said. 


Microfinance Ireland provides loans of up to €25,000 to small businesses and start-ups based in Ireland. It is supported by the Irish Government and the EU. It provides the loans through the

Government’s Microenterprise Loan Fund.The purpose of the fund is to help start-ups and established businesses to start up a small business or expand their existing business. A microenterprise is classified simply as a small business (including a self-employed person) with fewer than 10 employees and an annual turnover of less than €2m. Microfinance Ireland helps these businesses by providing unsecured business loans of €2,000 to €25,000 for commercially viable proposals. Sole traders, partnerships and limited companies are all eligible to apply. It works closely with all its partners, including Local Enterprise Offices (LEOs), the Irish Local Development Network (Local Development Companies and Area Partnerships – LDCs for short), as well as all the major banks to provide viable businesses with the support they need to get started or to grow their business and create jobs. The LEOs and LDCs can help the

applicant to prepare the documents to apply for a loan from Microfinance.

The €110m for enterprises has been identified for the first wave of funding for targeted new interventions to help vulnerable firms adjust. These interventions will support firms of all sizes at all levels of difficulty. Besides the extra €5m for Microfinance Ireland, other supports include a €45m Transition Fund; €5m for a Local Enterprise Offices Emergency Brexit Fund; and €3m extra for regulatory bodies.


Black market threat

Meanwhile, the Hair and Beauty Industry Confederation (HABIC), a newly launched organisation representing professionals in the hair and beauty industry, said recently that the black economy here is threatening the legitimate industry, with thousands of people providing services in their homes. It claims that this market is causing a severe skills crisis for businesses and damaging standards across the industry, and that it is now as big as the legitimate market and is undermining businesses and dumbing down the industry.


“In Ireland we estimate the hair and beauty business is worth about €2bn, but there is also a sizeable black market,” CEO of HABIC Margaret O’Reilly Daugherty told RTE’s This Week.


Salon owners maintain that many staff have left full-time jobs to work from home as it is more attractive for them to do that because they don’t have to pay taxes. Revenue don’t have the resources to track down people hairdressing at home and the longer this goes under the radar, the more people will do it.



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