Inexorably rising costs could cause viable businesses to go out of business, the Small Firms Association warns

Viable small businesses could close this winter because of rising energy, transportation, rent and labor costs, a group of companies warns.

According to a Small Firms Association (SFA) survey, transportation costs have increased by 34 percent and energy costs by 33 percent over the past two years.

Maintenance costs are up 27 percent, while labor costs are up 20 percent since 2020. Rental costs have increased by 19 percent.

“At a time of high inflation and endlessly rising input prices, particularly energy prices, the SFA fears this could result in viable businesses closing because they cannot absorb the rising costs of doing business,” said Sven Spollen-Behrens, director of the association.

“Many operate in low-margin environments, making it difficult for them to absorb cost increases.

“And the demand for value makes it impossible for many to pass the increase on to customers.”


SFA Managing Director Sven Spollen-Behrens. Photo: Julien Behal

Soaring costs are the biggest challenge for small businesses, the SFA said, followed by difficulties in finding and retaining staff.

Companies with fewer than 50 employees face an average monthly payroll of €113,926, which is 82 percent of their total expenses.

Transportation and insurance are the second-biggest monthly expenses for small businesses (5.1 percent), with real estate costs (4.9 percent) and utilities (2.4 percent) making up the rest. The average total cost of doing business for small businesses is €138,814 per month.

The SFA is calling for measures to lower the “cost of doing business” in the next budget, including a reduction in capital gains tax to 20 percent and government support for staff training, digitization and energy security.

Finance Minister Paschal Donohoe said last week he was “confident” the EU would approve a business energy support fund but warned that aid must be delivered in a way “that does not create additional risks for us in 2023”.

The government has expressed concern that pumping too much money into the economy could lead to general price increases.

Inflation slowed to 8.9 percent in August from 9.6 percent in July, the EU statistics agency said last week, although it is expected to top 10 percent when a series of announced energy price hikes for consumers take effect from October.

Irish energy prices slowed slightly from July to August but are up 39.9 per cent compared to August 2021, the Central Statistics Office said. Inexorably rising costs could cause viable businesses to go out of business, the Small Firms Association warns

Fry Electronics Team

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