A new survey shows that energy bills are now the biggest concern facing SMEs on the island of Ireland with 86% citing it as an issue.
This is followed closely by overheads at 84% as the impact of Brexit and Covid-19 decreases.
InterTradeIreland's latest Business Monitor for the first quarter of 2022 reveals that over half of all firms now describe rising energy costs as a "huge issue" - the highest these concerns have hit in over a decade.
But InterTradeIreland's latest monitor also highlights the resilience of businesses in Ireland and Northern Ireland, with sales remaining stable or improving for three quarters of companies.
Today's figures show that businesses are mainly buoyant, with 85% of firms in stable or growth mode.
47% of larger SMEs - those with over 50 employees - reported an increase in their order books, up from 30% in the previous quarter, while 52% repored moderate to rapid growth expansion.
The latest figures also reveal further issues facing larger SMEs despite their growth, with labour and skills challenges outranking the impact of Covid-19 and Brexit on these businesses.
65% of businesses with 50 or more employees now report difficulties recruiting appropriate skills and 59% admitted that they have a lack of appropriate skills in their workforce.
Martin Robinson, InterTradeIreland's new Director of Strategy, said that while Irish businesses have shown "outstanding resilience" over the past two years in responding to the dual challenge of Brexit and Covid-19, their resilience is being tested further as they now tackle the additional challenge of rising costs.
"These latest findings point to a potential impact on profitability, particularly for large energy users. The number of manufacturing businesses that say they are profitable dropped to 40% this quarter, down from 76% last quarter," Mr Robinson said.
"Similarly, the retail/distribution sector, which is also a high energy use industry, has dropped from 60% who were profitable last quarter to 43% this quarter," he stated.
He said that firms are up against a multifaceted range of challenges, including labour and skills issues as well as the cost of doing business.
"Businesses need to identify areas where they can reduce costs and improve efficiency such as through automation and adopting digital technologies. At InterTradeIreland, we are closely monitoring these emerging trends and actively pivoting our range of support services to help firms tackle these challenges," he said.
But he added that today's survey results also highlighted the continued agility and adaptability of companies across the island of Ireland.
"The impact of Covid-19 and Brexit continues to decline in importance, with 42% of cross-border sellers now reporting that they have adapted in full to the new trading conditions, rising from 28% last quarter," he stated.