Rising energy, transport and operational costs are beginning to pinch.
Irish business owners are feeling the impact of rising costs, according to the Enterprise Nation Quarterly Small Business Barometer.
71% of entrepreneurs said the crisis would ‘reduce the profitability’ or ‘severely reduce the profitability’ of their businesses this year. Carried out in April 2022, the Irish sample represented 6% of the overall sample but was largely in line with the findings from across the UK.
“The small business community is bracing itself for a difficult trading environment”
In the second quarter of 2022, they expect energy costs will go up by +25.8%, transport cost by +23.3%, operational costs (for things such as broadband, phones, insurance etc) by +14.0 % and staff costs by +9.0%.
However, despite the impact of the Ukraine war, challenges of higher energy bills, inflation, higher fuel bills and the cost-of-living increases, two thirds of small businesses rated their business outlook positive.
Most SMEs confident about the future
The survey also found two thirds (64%) of Irish business owners surveyed felt ‘quite confident’ or ‘very confident’ their business would survive in 2022. However, almost one third (30%) said they weren’t sure. Almost half (45%) of the businesses plan to increase the staff number this year whereas 48% said they are unlikely to and will stay as sole proprietors.
“The most challenging thing I’m facing as a small business owner is the rising costs in energy bills”
Almost seven in ten (68%) were confident that their business would grow in the next quarter of 2022. Meanwhile 23% of firms felt their business would stay at the same level. Only one in ten (9%) expect their business to shrink.
“The small business community is bracing itself for a difficult trading environment,” said Emma Jones, founder of Enterprise Nation.
“They understand they need to prepare for higher costs and for some, lower profits. But it’s good to see there are still signs of relative optimism. Small businesses have been through a lot. Even those that are in the early stages have existed through unprecedented times, so they have built resilience and understand that opportunity sometimes springs from adversity.
“Small business owners and entrepreneurs need support and education to develop the skills required to manage in a more difficult trading environment, whether that’s by going digital to access new markets and help spread the risk, or options for sourcing finance.”
Small business owner Jane Byrne, founder of Studio Dancewear in Carlow, said, “The most challenging thing I’m facing as a small business owner is the rising costs in energy bills, because you just don’t know where it’s going to go and you don’t know how far it is going to go. I would like to see better government supports for niche businesses starting out, with a better understanding of sole traders building a business from home, particularly if that business is not positioned to export.”