Small business group ISME says the last 12 months have shown a dramatic improvement in the performance of many firms.
In its end of year statement, it points to increases in business confidence, employment and investment.
But the body says there are still 'considerable concerns', citing high costs as a significant threat to sustaining and developing future economic growth within the SME sector.
ISME says small businesses have experienced an overall 30% increase in production costs in the last three years, almost three times the rate of inflation in the same period.
'The majority of these cost increases are as a direct consequence of Government intervention or imposition of stealth taxation,' it says. ISME adds that a weaker dollar and high oil prices are a continuous concern and need to be factored into future projections.
ISME also says that the level of pay increases in small companies continued to rise 'well beyond' our European counterparts in 2004.
In its statement, the Small Firms Association highlighted local authority costs, calling on the Government to pursue 'a more rigorous, efficient and equitable means' of delivering such services in 2005. The SFA also said Irish energy costs were now 25% higher than the EU average.
