A new report shows the country's micro and small enterprises are facing cost challenges in every area of business, including labour, transport, insurance, banking and utility costs.
The Small Firms Association (SFA) today launched its "Small Business in Ireland: Cost of Doing Business" report.
In its report, the SFA warns that many small businesses operate in low margin environments which makes it difficult for them to absorb cost increases. Demand for value also makes it impossible for many to pass the increase onto customers, it adds.
The SFA report shows that the total average cost of doing business for all Small and Micro firms is €138,814 a month.
The average for Micro businesses is €66,426 and €193,535 for Small firms.
The SFA defines a Small business as one with 20 to 49 employees, while a Micro business has less that 10 employees.
Today's report shows that 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%).
Meanwhile, 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 SFA report reveals.
SFA Director Sven Spollen-Behrens said the country's Micro and Small enterprises are facing cost challenges in every area of business.
"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," Mr Spollen-Behrens said.
"To avoid this and safeguard our domestically owned businesses, Budget 2023 must provide certainty on costs and maintaining competitiveness," he added.
The SFA is calling for ways to tackle the increasing costs of doing business in this month's Budget, while it also wants to see measures to sustain investment and retain talent through the tax system.
It says the Government should introduce plans to prepare small firms for the future as well as more supports for the transition to a green economy.
"To make Ireland a better country for entrepreneurs, SFA would like Capital Gains Tax to be reduced to 20% and the lifetime limit for CGT Entrepreneur Relief increased to €15m and greater investment in digitalisation, circular economy practices and energy security to enable the transition to a green economy," Mr Spollen-Behrens said.
He said that introducing these measures and reducing the cost of doing business would mitigate some of Ireland's current vulnerabilities and give confidence to business owners.
"With indicators suggesting a difficult winter ahead, the SFA will remain committed to helping small business, as they attempt to manage the current challenges the economy is facing, with the Russian invasion of Ukraine and inflation" he added.
