Small business sentiment up but rising business costs a significant concern in the months ahead – SFA

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  • Small business sentiment increased 9 points since summer 2022 according to a new survey 
  • Rising business costs identified as biggest risk by small firms
  • Ireland’s dynamic economy continues to be the primary driver of business opportunities for entrepreneurial small firms
  • Small Firms Association will be calling for measures in Budget 2024 that continue to back Ireland’s small business owners

Confidence among small business owners has improved despite many ongoing challenges, according to the latest ‘Small Business Sentiment Survey’ report from the Small Firms Association (SFA), published.

David Broderick, SFA Director said: “Our ‘Small Business Sentiment Survey’ report indicates that Irish entrepreneurs’ mood has improved this summer. As encouraging as this is, small business owners are still struggling with rising business costs.

“The cost of labour is the most significant driver of business costs in small firms followed by energy and insurance costs. Small business owners reported prioritising increasing pay and conditions, additional training and upskilling and retention and performance related bonuses to entice and retain staff in Ireland’s highly competitive labour market. These cumulative impacts alongside the introduction of a statutory sick pay scheme, a new public holiday and changes in employment regulations, this year, have added to employment costs and greater administration burden on Ireland’s micro and small employers.

“Small firms continue to be cautious when it comes to accessing external sources of funding. Intentions to apply for credit decreased from 37% in summer 2022 to 33% this year. With both Ulster Bank and KBC having left the Irish market, entrepreneurs seeking finance now have fewer options.”

“The proposed recommendation by the Low Pay Commission to increase the National Minimum Wage to €12.70 per hour from January 2024, as part of the introduction of a National Living Wage in 2026, will place additional pressure on employment costs, especially for small businesses in theretail, food manufacturing sectors and across the experience economy. Ahead of a decision on this proposed increase, SFA recommends thatgovernment consider how employers with a substantial proportion of minimum wage employees can be supported during the progression to a National Living Wage.”

Despite these challenges 33% of SFA members feel the business environment is improving, compared with 24% in summer 2022.

Speaking about the survey Broderick noted “Ireland’s dynamic economy continues to be the primary driver of business opportunities. It is a testament to the resilience and adaptability of small firms that they want to invest and expand their businesses and have an appetite to explore new markets.

“The fundamentals of the Irish economy and forecasts remain strong for the remainder of 2023 but for small firms to feel confident, SFA will be calling for measures in Budget 2024 that continue to back Ireland’s small business owners and take firm action to reduce the costs government imposes on the economy, so that it is not causing negative impacts on small businesses”, concluded Broderick.