Five small businesses are joining forces at a two-day event to encourage consumers to buy local, and Irish, this Black Friday.

Owner of online store CHAOS+HARMONY Roisin Scott is behind the ‘Indi Pop-Up Shop’, where herself and four other “hard working mamas” will set up stall and sell their wares.

“I’ve been in business just over two years now, set up just before Black Friday 2016, so I know what the pinch feels like at this time of year,” she told Independent.ie.

“I’ve met other small firms whose sales have suffered similarly, and consumers who follow us on social media know how hard we need to work, so I decided to do something about it.”

Roisin has participated in a number of SME events previously, including with Google and Facebook, but she decided to organise her own pop-up, and asked a number of businesses in her network to come along.

“As the mother of two smallies [Saoirse (4) and Cuán (2)] I thought it would be a nice idea to work alongside other mothers who run businesses, either full-time or on the side, and sell products that complement each other,” she said.

“There are so many other business I would loved to have on the day but were limited due to the space we had available.”

Irish shoppers have embraced ‘Black Friday’ and ‘Cyber Monday’, eagerly participating in the traditional American shopping bonanza, which falls on November 22 this year.
A recent PWC survey of 1,000 adults found that one in five Irish people will do the majority of their Christmas shopping on the Black Friday/Cyber Monday weekend, while a further 37pc are considering it.

The other stores taking part in the ‘Indi Pop-Up Shop’ at The Baths, Clontarf on November Friday 23 and Saturday 24 are Goose and Gander, My Higher Shelf, Primp & Style, and Under The Willow Paper Co.

Leather baby moccasins, children’s books, handmade Italian leather handbags, illustrated prints and children’s clothing will be sold over the two days “with a few bits and pieces for adults too”.

“We want to encourage people to shop local but we also want to push the idea that buying something as a quick gift to simply tick the box shouldn’t be the main goal,” said Roisin.

“Make an effort to buy something of more substance, something that won’t be forgotten, that will stand the test of play time and will be handed down again and again.”

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A third of Irish small and medium businesses have been targeted by fraud in the past 12 months.

The most common types of fraudulent scams encountered by SMEs are phishing emails, which seven in 10 have experienced, according to research carried out to mark National Fraud Awareness week.

Other types of fraud encountered by businesses include invoice redirection scams, which one in five SMEs have experienced.

Of those that have been targeted, one in every 18 attempts at defrauding SMEs has been successful.

Despite considerable awareness among SMEs regarding the threat of financial fraud to their business, the research has found that two-thirds do not have fraud awareness guidelines and training in place.

In addition, more than a third of businesses surveyed stated that they do not confirm the legitimacy of new bank details from suppliers before confirming a payment.

Niamh Davenport, of FraudSMART, said that the impact of falling victim to a financial fraud scam can be devastating.

“I would encourage SMEs to familiarise themselves with the types of scams they can be targeted with, and take the necessary precautions to protect their business,” Ms Davenport added.

Fraud Awareness Week is spearheaded by FraudSMART, an initiative led by Banking & Payments Federation Ireland on behalf of the banking sector. The awareness week, which began yesterday, will focus on financial fraud prevention among SMEs.

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“People come into incubators and very often it’s just for space, they are thinking ‘that’s what I need, a nice space would be good’.

But actually, by the time they exit what you find is that the real value they’ve gotten is the networking, the connections, the monies they were able to attract as a result of making connections and talking to people, and the advice that they got from one another, the pure learning that they have.”

Tom Flanagan is director of enterprise and commercialisation at NovaUCD, an incubation centre for new ventures and entrepreneurs that has supported around 350 companies that in turn have gone on to create more than 2000 high-tech jobs since 2003.

Flanagan has been in the role just over a year, and his own background is in engineering. After graduating from UCD he worked in the UK, then moved to Canada where he worked as an engineer and then found himself moving – up the corporate ranks and out into the wider world.

From Canada, he moved to San Francisco with Nortel Telecommunications. “That was a Canadian company that spread into the US at the time of telecom deregulation and I became vice president for sales and marketing for Canada and a central part of the US for professional services. It was a global job so I was doing work all across Asia and Europe as well,” Flanagan says.

“And then we had the dotcom crash and at that stage there was an opportunity to come back to Ireland. My daughter was four at the time so it was perfect time for her to meet the grandparents and for the grandparents to meet her, and it all worked out nicely – she’s 20 now!”

Back in Ireland Flanagan worked in consulting roles, “supporting people, helping people develop businesses”.

“I found that was really interesting, then I went into Dublin Institute of Technology as the industry liaison person and set up the first tech transfer office in DIT, expanding it out into Tallaght and Blanchardstown and built up the ‘Hothouse’ incubation facilities at the college.

“Then this opportunity [with UCD] came up and this is a great opportunity in terms of coming into an established incubator and tech transfer hub to see what we can do to grow this – I’m a year in now.”

The incubator in UCD works with two types of companies, what they call ‘spin-ins’ and university-grown companies.

Naturally he is a big advocate for the benefits of startup hubs.

“I have seen this before when I set up the first tech transfer office in DIT and in other colleges as well, researchers tend to do great research and they publish papers and they go to interesting conferences, but nothing comes of the research in terms of making new products and services,” he says.

“What the transfer offices do is look at the opportunities, look at the inventions, and see what applications they might have and develop what those applications into real projects, and either you can license it to a company or there is a need to put together a team around the technology and develop a business, and that’s new ventures, so that’s what we would do here,” Flanagan adds.

“There are [professors that set up their own business] but I consider them to be the exception, people that can transition from an academic environment to business.

“More often what we are looking for is the academic who will have a great technology or a great business potential project, then it is important for us to kind of marry them up with somebody that has the business experience, that has the commercial experience.

“We are all the time on the lookout for mentors or people who want to come in and be a CEO, and we would show them the different opportunities that might suit their area.

“They would have to meet with the researchers and the rest of the team and would have to like one another, it works out quite a lot, there are times when it doesn’t work. The researchers recognise the skill set that is needed and that there is a lot of heavy lifting in being a CEO to go get investment, to go convince customers that this is the right product for them.”

On average the hub would develop four or five new ventures a year from different research.

Success stories from NovaUCD include ChangingWorlds acquired by Amdocs in 2008 for over $60m, BiancaMed acquired by ResMed in 2011, and Logentries acquired by Rapid7 in 2015 for $68m.

In addition to the companies it develops, it has around 80-100 inventions that it sees every year, from which it files between 20-30 patents a year. On top of that it is doing 20-30 licences a year to different companies including the likes of Glanbia.

As well as the university founded companies, NovaUCD also has a lot of ‘spin-ins’. “Companies where the idea might have come from another university, or they might have come out of an industry with a business proposition and then they would come in here and we would support them develop that proposition and take it through to raising finance.”

With university-grown companies, UCD will acquire equity in the startup.

“We would typically have 15pc equity in the company on formation, which gets diluted over time as more investments come in.

“For a spin-in company we don’t take equity, we just support them. They pay their way in terms of paying for the facilities here and support services, and we will do everything we can to help them develop. The fees are based on the space that they want to take.”

Giving up 15pc of equity in a business is no small decision for a startup, and the discussion turns to the benefits for companies in being part of an incubator.

“It makes a lot of sense to be in an ecosystem like Nova here or any of the innovation units, where you are surrounded by people of a like mind.

“They learn more from one another than they do from anybody else and they have contacts and connections, so getting into the ecosystem of startups is really important. It will help you shape up your idea, give you access to talent, give you access to finance and plenty of advice to set you on the right direction.”

Flanagan adds: “If you set up a company today and you have a good business proposition and you could benefit from all the services that we provide here then we would interview you to see what the match-up might be; is there research going on that might help your company have a competitive advantage? Is there finance? Could we put you in front of the right kind of investors? Can we add value to your business plan?”

In terms of the type of businesses that NovaUCD is looking for, gesturing with his hand, Flanagan says “rockets”.

“We are not looking for ones that trundle along. It is about high-risk, high-reward, it is about looking at companies that would meet the kind of Enterprise Ireland High Potential Start-Up, the €1m turnover in three years.

“And we would have a mix of companies, it wouldn’t matter what the technology was because UCD has everything from data analytics and computer science all the way through to medical.”

Funding is obviously a big concern for the businesses.

According to Flanagan, most of the companies start out raising finance in Ireland through angel investment and Enterprise Ireland funding and then venture investments.

“Some of them go to the UK and raise money there as well, and some of them go to the US and raise money there through venture funds there. As then as they grow they might get additional investments from corporates also.”

With some companies in the hub looking to the UK to acquire funding, not to mention its proximity as a market for businesses, one imagines that Brexit is a concern for NovaUCD.

“Everybody is very aware of it and everybody has been thinking about it.

“Your suppliers may not be in the UK and they may not appear to be impacted by Brexit, but maybe their suppliers are, so there can be a ripple effect.

“Maybe the customers you sell to aren’t immediately impacted by Brexit, but their customers could be and therefore they will be.

“So, for companies it is about looking in both directions, looking at the impacts on supply chains that they are involved in and the opportunities that are there, the risks that are there, particularly for food and agri-tech companies where the initial market will be the UK.”

However, he says that a lot of the high-tech companies are more focused on developing their product here and selling it in the US.

“If they are doing that then Brexit has less impact on them.”

Before we conclude, the question of advice to entrepreneurs comes up. For Flanagan it’s simple: “Don’t keep your idea to yourself.”

“Talk to people about it because you will get lots of feedback and you need to get lots of feedback to shape up the idea.”

“There can be a tendency to hold off on telling people about it because somebody is going to steal your idea, but people don’t usually steal ideas because it is only the person who comes up with the idea that has that energy to put behind it and has that insights as to how it can be developed.”

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Fewer than one in ten small and medium businesses in Ireland are embracing remote or flexible working.

This is despite the fact that a majority of SME employees are in favour of such working conditions, according to a study of nearly 600 small businesses carried out by Vodafone.

Smart working is the combined use of technology with flexibility and agility for employees to work from home or co-working hub or hybrid model. One in three employees see it as top priority in their current role, while half of SME employees feel that it will be in a future job.

While Brexit is repeatedly highlighted as a concern for many businesses, nearly 90pc of SMEs are predicting growth between now and 2021.

This optimism was shared by employees, with nearly two thirds expressing confidence about the future prospects of their company. Munster is the most optimistic region, with 67pc of SME employees living in the region feeling confident about the future prospects of their company.

When asked about investment, 60pc of SME business owners surveyed confirmed that they plan to invest in their business within the next 12 months; with the majority (71pc) being spent on staff attraction and retention.

This is followed by sales, cited by two thirds as an area of investment and technology & digital tools (57pc).

When looking at digital skills, 22pc of employees felt that they did not have the necessary skills required for their role, with a further one in five unsure whether they had the relevant digital skills required.
Commenting on the findings, Sven Spollen-Behrens from the Small Firms Association said that the economy is growing and so is Ireland’s SME sector.

“However, we need to take measures to protect this growth.”

“Whilst we are seeing confidence among our members we also see concerns around our competitiveness especially in light of Brexit. Challenges like attracting and retaining talent, the increasing cost of doing business in Ireland and a tax system that puts smaller businesses at a disadvantage need to be addressed.”

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09 Nov 2018
November 9, 2018

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Irish banks must shed a further €9bn of bad loans to meet ECB targets, Moody’s has warned.

Unlike the early period after the crash, when sales of commercial real estate and developer loans dominated the great bank sell-offs, further disposals will be dominated by home loans, the rating agency said.

“This is because legacy mortgage arrears, which take a long time to resolve internally in Ireland due to legal constraints on home repossessions, now account for most of their remaining non-performing loans (NPLs).”

The report by Moody’s Investors Service said Irish banks’ high stock of problem loans is still a burden, despite action since 2013 to reduce the scale of the issue.

And it confirms that the target to cut bad loans to the European average is becoming harder to hit, as the average elsewhere declines.

“The largest Irish lenders will need to shed about €9bn of problematic exposures to bring their ratios of NPLs to gross loans into line with the European average, which has now fallen below 4pc,” said Roland Auquier, a Moody’s assistant vice president

At the start of this year the main banks here came under pressure from Europe’s Single Supervisory Mechanism (SSM), a regulator, to cut their bad loans to around 5pc of all lending, the then average.

That prompted major loan sales this year including by AIB, Ulster Bank and Permanent TSB, and has triggered Bank of Ireland and KBC to rethink their previous and long-held policies of working through customer loans rather than selling.

Bad loans remain a major issue on bank balance sheets here, Moody’s noted, despite, Ireland’s strong economy although it will drive further problem-loan reduction.

Moody’s expects real gross domestic product (GDP) to grow by 5pc in 2018 and 3.5pc in 2019, fuelled by rising employment and investment rather than credit growth

Irish banks’ NPLs will drop to 8pc by the end of 2018, once portfolio sales planned by Permanent TSB, KBC Ireland and Ulster Bank are completed, Moody’s said.

One reason mortgage sales now dominate is that bad loans across other lending areas – such as property, SME, development and buy-to-let property loans happened faster and earlier.

Residential mortgages account for over half of the stock of remaining bad loans, Moody’s said. If they are not sold, the rating agency says they’ll take years to resolve.

“In the absence of loan sales, we expect that the legacy portfolio of non-performing residential and buy-to-let mortgages would require a long time to wind down, as it consists largely of long-term arrears,” Mr Auquier added.

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Our podcast is now live. (A search for voxgig on iTunes will bring it up.) It is, as with most things we do, a soft launch. There’s only one episode just yet. Our general strategy for getting things done is accept embarrassment with version 1, and then iterate our way out of mortification. It might be a little painful at the start, but it helps us avoid wasting resources – it’s easy to be wrong about what you think people want.

Before we get into our tactical approach to publishing a podcast with a new episode each week, let’s step back and review the strategic reasons for going to the effort of doing so.

We’re a Software-as-a-Service (SaaS) business. That means we need people to come to our website, like what they see, sign up, and use the system.

Getting people to visit your website is something you have to work very hard at. The cost of doing ends up as the major cost for any SaaS business. It is technically known as the Customer Acquisition Cost (CAC). This is an important metric for our business model, as it helps you determine if you have a real business.

You couple it with another metric, Lifetime Value (LTV), which is the total revenue you’ll generate from a customer over the total period that they use your service. For example, if your service costs €50 a month per user, and each customer has on average 10 users, and the average customer stays for 20 months, then the LTV is 50 x 10 x 20 = €10,000. If you add up, on a monthly basis, all your marketing and advertising costs, and I mean everything, including salaries, and divide that by your number of customers in that month, you can estimate your CAC. Let’s say it’s €5,000 (If you’ve ever spent money on Google or Facebook ads, you’ll know that’s easy to rack up).

That means that for every €1 you spend on marketing, you can generate €2 in revenue. That’s good! You can express this idea as a ratio: LTV/CAC. If it’s greater than one, you’re good. If it’s less than one, you might have a problem.

Things are not quite as simple in real life as my example workings. There are more accurate ways to calculate these metrics, and you might push your LTV/CAC under one to gain market share. A quick google will turn up far more than you ever wanted to know about LTV/CAC if you go looking.

One way to reduce your CAC and improve the ratio, and hence improve the ‘unit economics’ of your business, is to use inbound marketing. Instead of paying for expensive high-volume advertising (you will end up doing this later anyway), concentrate on building a highly qualified audience for good quality content. This gives you a initial community to kick start things when you launch.

To build our community we’ve invested in the speakers’ newsletters – you get the numbers on that each week. We’ve also decided to launch a podcast, where we interview public speakers about speaking at conferences. Both of these activities are very much focused on the needs of the reader or listener. We’ve not talking about more traditional product newsletters or pitches here. This is about community-building. The other way we build community is via our event professionals meetups (I’ll need to give you an update on those next). And we also plan to launch a newsletter for event organisers soon. All of these things come together to generate an highly-engaged audience that will hopefully both trust us (great content, no ads), and find our product useful.

How will we know if we are succeeding? You have to track ‘conversions’. That means, of your monthly audience, what percentage are turning up at the website, and what percentage are signing up for user accounts? We will live and die by these numbers. In practical terms, we will continue to experiment with the content and production of our inbound marketing mix, and try to find ways to increase the audience and improve conversions. This approach has to be quite scientific – the content costs money to produce, and the premise is that it is a least an order of magnitude less expensive than simply advertising all the time.

So that’s why we do a podcast. Now, how do we do a podcast? We’ve figured out how to produce the audio, but we’re still figuring out the promotion piece. As with the speakers’ newsletter, we need to ‘operationalise’ the podcast – turn it into a weekly, disciplined and measured process.

For the newsletter, we use a project-management tool (asana.com – highly recommended) to track each recurring weekly task. Every day brings together some element of the newsletter so that we can hit ‘send’ on Fridays. For the podcast, we’ll need to work out which day of the week we’ll publish on (it is received wisdom that some days of the week will see higher audience engagement – we’ll see), but unlike the newsletter, we have a much longer preparation period.

The biggest challenge with publishing a weekly podcast that is based on guest interviews, is scheduling those interviews. Great guests are great speakers, and tend to be very busy successful people who travel a lot. The scheduling effort (and associated costs) was not something we fully appreciated. Then each podcast episode needs: a separately recorded introduction, audio preparation, written show notes, a blog post, updates to our website, quality review, and uploading to the distribution service (we use libsyn.com – I’ll let you know how it goes). Most of those activities do not happen in the week of publication. Our challenge is to track the flow of work for each podcast and ensure that every week we have one ready to go. Our initial strategy is to build up a reserve library of recording as we figure this out – we have 12 podcasts in various stages of readiness right now, but it has all been pretty ad hoc so far. That will need to change once we launch. Then we need to build a process to promote the podcast. We need a social media strategy, of course, but we also need an outreach strategy – just like the newsletter we may decide to reach out to people who would probably be interested in subscribing. Finally, the newsletters, podcasts, and all of our material needs to cross-promote – and we’ll need to figure out the best way to measure all this.

If that sounds like a lot of work, you’re right. We have had a lucky break that makes all of this possible – a new head of marketing will be joining soon, and will take on much of this work. In a startup you always hire only when the need is utterly desperate and you just can’t keep up with the workload anymore. When it comes to our marketing, we’ve reached that point.

(Newsletter update: 4,624 subscribers, and an open rate of 14pc. Podcast update: six downloads – well, you’ve got to start somewhere)

Richard Rodger is the founder of voxgig and former co-founder of Nearform, a Waterford-based tech consultancy

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Regulators’ ‘worst case’ scenario by factors in house prices here falling by 5.1pc
HIGH stocks of bad loans and a relatively pessimistic ECB view of Irish growth prospects will weigh on AIB and Bank of Ireland in the EU’s latest bank stress test results today.

However, both banks go into the current process in better shape than in 2016 when they were ranked second and fourth weakest in Europe by regulators.

The stress tests by the European Banking Authority cover 48 of Europe’s biggest banks and have been billed as the toughest ever.

Permanent TSB is seen as the most vulnerable of the Irish-owned banks to a crash, but is too small to be included in the current tests.

The aim of the process is to ensure that banks have enough capital to withstand shocks and to ensure that taxpayers won’t end up footing the bill to rescue them if there was another recession.

There is no “pass” or “fail” in the tests which model a so-called baseline scenario in which the economy grows steadily for the next three years, then one in which there is a sharp hit to growth – in Ireland’s case amounting to an 11pc shortfall from main forecasts. The “worst case” scenario also sees house prices here falling by a cumulative 5.1pc.

It is under this scenario that the loan portfolios of AIB and Bank of Ireland would be hit hard.

A base level for the measuring risk is the ratio of Common Equity Tier 1 capital, which measures a bank’s capital against its assets.
While no level has been set in this assessment, the 2014 ratio of 5.5pc is viewed as the unofficial hurdle ratio.

Bank of Ireland’s most recent ratio was 15.1, based on its third-quarter earnings, while AIB’s stood at 17.9.

In 2016, AIB had a CET1 ratio of 4.3 based on the adverse scenario, while Bank of Ireland was at 6.1. “The stress test results might lead banks to issue more capital,” rating agency DBRS said in a preview of the results.

The 2014 tests were criticised for putting Irish banks in a worse starting position than their peers as the rules penalise countries that have experienced a banking crisis and gave little or no credit for their success in reducing non-performing loans. The current worst outcome economic scenario puts Ireland in with seven Eastern European countries as well as Luxembourg, Cyprus and Malta in applying heftier economic and financial shocks so that the 2020 growth outcome is negative, as part of the test methodology.

The downside applied to Ireland’s growth prospects would see the economy 0.2pc smaller by 2020 in the worst outlook and that is a full 11 percentage points smaller than under the baseline scenario, a figure that is larger than the EU average of 7.8pc and the eurozone’s 8.3pc. In addition, a property crash is modelled into the extreme scenario, under which house prices fall by a cumulative 5.1pc by 2020, a level that is 19.8pc below the base assumptions.

Ireland’s financial sector as a whole is far less fragile than it was in the run-up to the financial crisis.

Data released this week showed that far from a borrowing binge, consumers here were squirrelling away money and that deposits at banks hit an all-time high of $103bn.

Mortgage and other consumer lending remains low, raising concerns among economists that the pace of economic expansion here could slow.

Among foreign banks, German giant Deutsche is will be watched closely after it posted three years of losses while Italy’s banks are expected to be in the firing line and an adverse performance in the tests could fuel more anxiety over their resilience and over Italy’s ability to withstand a shock in its confrontation with the European Union over the country’s budget.

Italian banks have large holdings of the country’s debt which has come under pressure since a eurosceptic coalition took power earlier this year.

The latest economic growth data showed the country was flat-lining.

Weak growth will feed into concerns over Italy’s ability to service its debts, although any action by the European Commission is not expected until next year.

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Kerry-based fintech company Fexco has acquired London’s leading retail foreign exchange company Thomas Exchange Global (TEG).

It is understood that the acquisition is valued at around £10m (€11.2m).

TEG has over one million customers across its 15 branches in London.

The deal, the company’s eight acquisition in the UK since 2012, means that Fexco now has a 12pc share of the estimated £9bn foreign exchange market in London.

“We are very pleased to have acquired a business with the reputation and reach of TEG, the largest London-based FX retailer,” Joe Redmond, MD of retail foreign exchange division, Fexco, said.

The deal confirms our belief in the future of cash and the incomparable role it plays in a balanced payments and travel money portfolio.”

Fexco’s Retail FX division now employs 500 people serving the travel money requirements of over four million customers through its UK and Ireland wide network of 125 branches.

Commenting on the acquisition, Sakthi Ariaratnam, CEO of TEG, said that the deal presented a “fantastic opportunity” for the two companies to “further capitalise on the significant opportunities present in the national and international FX marketplace.”

Founded in 1981 today Fexco employs over 2,300 people across the group. The company has operations in 29 countries across Europe, the Middle East, Asia-Pacific, North America and Latin America.

Last month Fexco announced the creation of 175 new jobs at its headquarters in Killorglin, County Kerry

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Europe will face a gas shortage and price spike as soon as the next decade if it doesn’t decide quickly to boost imports from Russia as gas purchases from the US or Qatar fail to match (more…) read more →

The vast majority of global corporates have identified Ireland as a possible or likely location for data-driven investment in the next year, new research has found. (more…) read more →