The Cost of Doing Business for SMEs

5th September 2022

Posted In: Be In The Frame

The Small Firms Association (SFA) launched a Small Business in Ireland: Cost of Doing Business report today, which examines the cost of doing business in 2022 for Ireland’s small business community.

The report outlines the range and extent of costs associated with doing business in Ireland and provides insights on challenges faced by our smallest employers.


Analysis from the report shows:

•The total average cost of doing business for all Small (20-49 employees) Micro (< 10 employees) firms is €138,814 per month. The average for Micro businesses is €66,426 and €193,535 for Small firms.

•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%).

•Half (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.

•Rising business costs is the top challenge facing small firms.

•For Small firms with rental or lease costs, more than half (55%) have had a rent increaseor have been approached by their landlord about a need to increase rent.

•Small enterprises are under pressure to increase employee wages (56%), provide additional employee benefits (26%), and more remote working supports (18%).

Speaking at the launch of the report, SFA Director Sven Spollen-Behrens said: “Ireland’s Micro and Small enterprises are facing cost challenges in every area of business be it labour, transport, insurance, banking, and utility costs. Many operate in low margin environments, making it difficult for them to absorb cost increases and demand for value makes it impossible for many to pass the increase onto customers.

“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. To avoid this and safeguard our domestically owned businesses, Budget 2023 must provide certainty on costs and maintaining competitiveness.”

Small business priorities for Budget 2023:

•Tackling the increasing costs of doing business

•Sustain investment and retain talent through the tax system

•Preparing small firms for the future

•Support the transition to a green economy

Mr. Spollen-Behrens added: “In Budget 2023 SFA is calling for measures to support the retention and upskilling of staff to help small businesses survive these challenging times. 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 €15 million and greater investment in digitalisation, circular economy practices and energy security to enable the transition to a Green Economy.

“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”, Spollen-Behrens concluded.