Guide to help small firms to cut rising costs in the months ahead
Alma O’Brien, head of tax at Azets Ireland.
Small firms need to take proactive steps to manage the rising costs of doing business in the months ahead, advises Alma O’Brien, head of tax at business advisors Azets Ireland.
Business costs are stubbornly high and continuing to climb, placing relentless pressure on small and mid-sized firms across the country, says Alma.
She cites costs including the introduction of pension auto-enrolment to hikes in the minimum wage and new statutory entitlements, a series of cumulative labour cost increases continues into 2026.
For many businesses in sectors already struggling to stay afloat, the next few months will be crucial.
In this Q&A interview, Alma offers suggestions on actions that can help alleviate some of the immediate pressure facing firms. Without a proactive response, there is a real risk that many businesses could face closure in the months ahead, she cautions.
Family-run businesses, high-potential startups, and mid-sized firms play in a critical role in our economy. Together, they employ two-thirds of Ireland’s workforce and are the beating heart of local economies in towns, villages, and cities across the country.
Many of these small indigenous businesses, already struggling to cope with the challenges of rising labour costs and economic uncertainty, are now navigating the economic impact of geopolitical events. SMEs simply do not have the capacity to hedge against this level of volatility and rising costs in the way larger organisations can. Without targeted and timely intervention, many will be left exposed.
Small and mid-sized firms in the hospitality, retail, logistics and manufacturing sectors are particularly exposed to the impact of this geopolitical shock. SME representative body ISME recently indicated that some firms could see monthly energy costs rise by up to €8,000.
While the recent support package announced by Government, including reductions in excise duty and enhanced supports for transport operators, is an important step forward in addressing immediate cost pressure, a targeted energy support package for SMES is now needed.
With many small businesses under significant financial pressure, and jobs in the real economy under threat, the Government needs to act quickly and decisively in bringing forward measures that support SMEs. Reintroducing a Temporary Business Energy Support Scheme (TBESS), or similar system, could help provide streamlined access to ensure rapid delivery of supports to affected businesses.
Bringing forward the planned VAT reduction for the hospitality sector from July 1st to April 1st, which continues to face a combination of elevated operating costs and a likely softening in consumer demand, would also support one of the sectors under the greatest pressure. This could help save valuable jobs in family-owned businesses across the country.
At the same time, we need to use this moment to strengthen the resilience of mid-sized businesses across the country. Increasing capital allowances for energy efficiency investments and enhanced supports for businesses investing in onsite energy generation such as solar can help reduce exposure to future shocks and enhance long-term competitiveness.
As firms navigate a period of sustained cost pressures, it is crucial that they have access to capital and adequate financing. Expanding the Strategic Banking Corporation of Ireland backed working capital schemes can ensure that SMEs have access to liquidity as they navigate this period of disruption.
With global volatility the new normal, it’s time that Ireland puts indigenous businesses at the heart of its economic future. As we navigate the shifting international landscape, there is an urgent need to rebalance our economy and ensure that Irish SMEs and indigenous businesses can become true drivers of economic growth.
A more balanced approach to taxation – one that incentivises risk-taking, innovation, and job creation within the real economy – should be a top priority.
Irish SMEs looking to scale up have long struggled to do so due to limited access to capital. Laying out a roadmap to reducing the rate of Capital Gains Tax to 20 per cent for Irish start-ups and scaling companies would ensure that indigenous firms scale up from this island and compete globally from here. Unlocking access to capital while simultaneously reducing the significant regulatory and cost burden business would provide our SMEs with the best possible chance of future success.
Many indigenous firms struggle to attract and retain skilled talent, particularly in sectors where multinationals offer significantly higher salaries and benefits. Targeted measures such as enhanced tax credits for employee share options and building a stronger supply of skilled domestic talent can help to level the playing field for small business.
By taking bold action we can support ambitious businesses around the country overcome the obstacles ahead and fully unlock their growth potential. There is no better opportunity to create a more resilient and sustainable economy, powered by thriving domestic enterprise.
Strengthening Ireland’s indigenous business sector can help to enhance our national economic resilience long-term. By supporting SMEs to grow, scale, and compete internationally we can develop a more balanced and self sustaining economy that is less vulnerable to global shocks.
A more diversified tax base, supported by both continued multinational investment and a thriving domestic enterprise sector, will provide greater long-term stability for Ireland’s public finances. This means tackling the range of persistent challenges our indigenous businesses face head on – including elevated costs, limited access to capital, and difficulty attracting skilled talent.
Doing so can unlock their full potential and strengthen Ireland’s ability to withstand future economic shocks.
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