John Cradden on how to optimise returns and minimise risks for your business.
Every successful small business needs a growth strategy. Not just any growth strategy, but one that matches the profile and long-term aims of their enterprise. That strategy could be a simple one that settles around slow, bootstrapped organic growth, funded by reinvested profits and maybe some modest financing.
Or you could take a smarter approach that seeks out strategic investment opportunities but without sacrificing your essential short-term liquidity. In other words, you don’t have to choose between securing cash flow and achieving growth.
“With a plan that involves sensible screening of investment opportunities you could achieve a level of growth that is both durable and scalable”
With a plan that involves sensible screening of investment opportunities, retaining a decent cash buffer and clever use of the tax reliefs and grant supports available to SMEs, you could achieve a level of growth that is both durable and scalable.
Financial buffers
The first step is to create your liquidity buffer, a sum of money an instantly accessible account that you can easily dip into if needed. A common rule of thumb (much like for domestic households) is 3-6 months of operating expenses – maybe more if your revenue tends to be seasonal or you have a relatively small number of customers that you rely heavily on.
The next step is to determine what you’ll use to fund your investments, whether that’s external equity, operating cash flow or debt. You could use overdrafts or invoice financing for stock and receivables, and fixed-term loans or asset finance for critical equipment.
The Strategic Banking Corporation of Ireland (SBCI) recently teamed up with the European Investment Bank to enable up to €560m in new lending to SMEs at very competitive rates.
Tax efficiency
It’s a good idea at this point to look at tax-efficient investment strategies. If you are an SME in manufacturing, technology or product development, Budget 2026 will see the R&D tax credit rise from 30% to 35% next year with simpler qualifying rules for employee costs. If at least 95% of an employee’s time is spent on qualifying R&D work, 100% of their salary can now count as eligible expenditure. Track your company’s time, materials and subcontractor costs meticulously and claim.
For SMEs looking to commercialise their in-house R&D, a complement to this is the Knowledge Development Box (KDB), whereby profits from qualifying IP (patents and copyrighted software, among others) can be taxed at an effective 6.25% after certain KDB conditions are met.
If you’re considering investing in new machinery or improving the energy efficiency of your premises, do look at Accelerated Capital Allowances (ACA). You could get a 100% allowance on the expenditure on more efficient machinery or solar PV panels.
Standard wear-and-tear capital allowances remains at 12.5% over eight years for most plant and machinery, but ACA pulls the deduction to year one and is currently available for approved equipment.
If you’re raising equity, the Employment Investment Incentive Scheme (EIIS) offers tax reliefs to Irish investors—helpful for closing rounds while keeping valuations sensible. Make sure your company and the shares meet Revenue conditions.
Don’t forget also that the lifetime limit for the Irish Entrepreneurs’ Relief, which provides a reduced 10% Capital Gains Tax (CGT) rate on qualifying business assets, was increased from €1 million to €1.5 million in Budget 2026.
Government supports
You can really stretch your euro by aggressively pursuing relevant government supports from your Local Enterprise Office such as Priming Grants for early-stage companies and business expansion grants for those at a later stage in their growth cycle. LEOs also offer mentor panels, digital supports and Lean for Micro, which can co-fund pilot projects, equipment and jobs, helping you to reduce risks as you scale up.
If you’re export-oriented and looking to scale globally, look to Enterprise Ireland for innovation vouchers, R&D and market development supports, leadership programmes and trade missions.
Since its foundation in 2016, Galway dental products firm Spotlight Oral Care reinvested cash from its original hero teeth whitening product to develop a global range. A key stage in its journey was a €13 million investment from Development Capital and other investors in 2021 allowed it to expand into the UK, Scandinavia and the US while also investing in brand and product innovation. This year the company announced it would target $10m in US sales.
Sports and lifestyle clothing brand Gym+Coffee expanded into retail stores and international markets by reinvesting cash from its early success as an online retailer, later securing €17 million in capital growth funding that underwrote new inventory, stores and marketing campaigns. Last year saw it reach its 1 millionth customer in Ireland both online and through seven retail locations, while also achieving 20% year-on-year growth in the UK and ambitious plans to expand in that market.
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