Ever-rising costs could force viable businesses to close, warns Small Firms Association

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Viable small businesses could close this winter due to rising energy, transport, rent and labor costs, a business group has warned.

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

Maintenance costs have increased by 27%, while labor costs have increased by 20% since 2020. Rental costs have increased by 19%.

“At a time of high inflation and continued increases in input prices, especially energy prices, the SFA is concerned that this could lead to the closure of viable businesses due to their inability to absorb rising costs. businesses,” said the director of the association, Sven Spollen-Behrens.

“Many operate in low-margin environments, which prevent them from absorbing cost increases.

“And the demand for value prevents many from passing the increase on to customers.”

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SFA director Sven Spollen-Behrens. Photo: Julien Behal

SFA director Sven Spollen-Behrens. Photo: Julien Behal

Rising costs are the biggest challenge facing small businesses, the SFA said, followed by difficulties finding and keeping staff.

Companies with less than 50 employees face an average monthly payroll of €113,926, or 82% of their total costs.

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

SFA calls for measures to reduce ‘the cost of doing business’ in next budget, including reduction of capital gains tax to 20% and state support for staff training, digitization and energy security.

Finance Minister Paschal Donohoe said last week he was “confident” the EU would approve an energy support fund for businesses, but warned that aid must be delivered in a way “that does not create no additional risks for us in 2023”.

The government has expressed concern that injecting too much money into the economy could lead to a general rise in prices.

Inflation slowed to 8.9% in August from 9.6% in July, the EU’s statistics agency said last week, although it is expected to top 10% when a series of announced rises in energy prices for consumers will come into force from October.

Irish energy prices slowed slightly from July to August, but are up 39.9% from August 2021, the Central Statistics Office said.

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