The Small Firms Association (SFA) has today launched a report which examines the cost of doing business in 2022 for Ireland’s small business community.
The report finds that the total average cost of doing business for all Small (20-49 employees) Micro (less than 10 employees) firms is €138,814 per month. The average for Micro businesses is €66,426 and €193,535 for Small firms. On average labour costs amount to 82% of overall monthly business costs. Banking and other costs (5.6%) is second highest, followed by transport/insurance (5.1%), all property costs (4.9%), and all utility costs (2.4%).
Furthermore, half (52%) of all businesses with fewer than 50 employees are currently managing debt. Bank loans (63%), other financing loans (28%), and tax debt (22%) are the three biggest forms of debt for businesses.
The average debt for Micro and Small businesses is €80,903, lowest for Micro firms at €56,774 and highest for Small businesses at €107,149. The report finds rising business costs is the top challenge facing small firms.
For Small firms with rental or lease costs, more than half (55%) have had a rent increase or have been approached by their landlord about a need to increase rent. Small enterprises are under pressure to increase employee wages (56%), provide additional employee benefits (26%), and more remote working supports (18%).
In Budget 2023, the SFA is calling for measures to support the retention and upskilling of staff to help small businesses survive these challenging times. The association would like Capital Gains Tax to be reduced to 20% and the lifetime limit for CGT Entrepreneur Relief increased to €15 million and greater investment in digitalisation, circular economy practices and energy security to enable the transition to a Green Economy.
Speaking at the launch of the report, SFA Director Sven Spollen-Behrens said, "Ireland’s Micro and Small enterprises are facing cost challenges in every area of business be it labour, transport, insurance, banking, and utility costs. Many operate in low margin environments, making it difficult for them to absorb cost increases and demand for value makes it impossible for many to pass the increase onto customers."
He added, "At a time of high inflation and no end in rising input prices, notably energy prices, the SFA is concerned that this may lead to viable enterprises closing due to their inability to absorb rising business costs. To avoid this and safeguard our domestically owned businesses, Budget 2023 must provide certainty on costs and maintaining competitiveness."
Source: www.businessworld.ie
