Looking forward to 2011, the old joke about directions to somewhere – "If I were you I wouldn't be starting from here" – comes to mind.

The challenges domestically and internationally are difficult and complex but not insurmountable as long as the government makes the right decisions, politically, economically and socially to dispel the economic uncertainty so that businesses are allowed to regain our competitiveness and pay our way in the world through trade and exports.

When we start to pay our way, we will restore our national pride, which has been so damaged by government ineptitude, bankers' greed and a political system unfit for purpose. This has pawned our sovereignty and left our people feeling abandoned, while still being expected to bail out failed banks and maintain an inefficient and expensive public sector through an unaffordable Croke Park deal.

The goal must be to harness the strengths of the Irish people by restoring confidence in the system. To do that we must have a government with a clear mandate to govern, based on pre-disclosed policies to reform government, the electoral system, the state and semi-state sector, the tax and banking systems. The goal must be to support rather than hinder our national aspirations, fiscally, economically, socially and culturally.

I believe future growth will be determined by the success of our businesses, particularly smaller indigenous companies, the backbone of the economy. For that growth, it is essential that government introduce pro-enterprise policies that will support business to create, grow and retain jobs.

We must acknowledge the importance of the role of entrepreneurs in rebuilding the economy. They will be instrumental in getting us out of the economic crisis; they must be given support to ensure they can compete with the best and achieve success.

From the SME perspective, the next few years are going to be difficult on the domestic front, with increased income taxes inevitably leading to wage pressure and national spending cuts having a negative impact on growth prospects. These challenges are additional to the existing economic uncertainty, late payments, access to bank credit and excessive government-driven costs, as a result of the high cost of the public sector.

The Irish Small & Medium Enterprises Association's fourth-quarter trends survey confirmed a general improvement in business trends in the last three months of the year, albeit from relatively low levels. It is quite noticeable that there is a continuing divergence in performance between companies that operate in the domestic economy and those trading internationally. This is reflected in the very positive performance of the export sector compared to companies reliant on the domestic marketplace, which are affected more by weak demand.

These export figures provide a ray of light, confirming that companies trading internationally are seeing a significant bounce in trade and an increase in export values, the highest rate in over three years. This is an encouraging turnaround and indicates that future growth in 2011 is going to emanate from this sector.

For domestic companies, economic uncertainty continues to dominate the landscape, with businesses remaining cautious on their investment decisions. With the National Recovery Plan and the budget now in place and an election on the horizon, it is hoped that some certainty and confidence will return, sooner rather than later, which will assist in business expansion planning and hopefully lead to an increase in consumer spending, crucial to investment and jobs.

The current prompt payments legislation is not working and the evidence suggests small companies are still being forced, particularly by accountancy-led big businesses, to accept credit terms outside those outlined in the legislation. The law does the exact opposite to what was intended in allowing powerful, large customers to abuse their dominant position and dictate unreasonable credit terms to their smaller suppliers.

Maintaining business liquidity can be difficult for many small businesses, and is made more difficult when late payment tips the cash-flow scales. The fact that so many companies are being forced to wait longer for payment shows that the legislation is a sham, as small businesses continue to be squeezed by their larger counterparts. Consequently some SMEs will simply be driven out of business in 2011.

The lack of affordable, accessible bank finance has starved business owners of the cash they need to run their enterprises. Consequently, investment has dramatically reduced.

In 2011 the government could create a specific business lending bank, similar to ICC in the 1970s, staffed by people with experience of dealing with SMEs, who would be able to assess their requirements accordingly. The state has bailed out the banks and the state, as guarantor, must demand that they facilitate small business banking, as has been done in the US, EU and UK. Decisive government action in 2011 will engender banking competition and stave off further closures and job losses in the SME sector.

Overall the signs are that the export sector will continue to grow in 2011, as a result of anticipated growth in international markets. The domestic sector is more uncertain, reliant as it is on Irish consumer sentiment, the employment market and business conditions. The indications are that there will be sluggish, jobless growth over the next 12 months unless action is taken to address business concerns, including cost competitiveness, access to finance and late payments.

Mark Fielding is chief executive of the Irish Small & Medium Enterprises Association (ISME)