Small businesses have seen a 44.4% cumulative increase in costs, on average, in the past three years, according to the Small Firms Association (SFA) Annual Small Business Survey, published today. The extensive nationwide study was conducted by Amárach of over 400 small businesses surveyed.
The survey also found that 77% of businesses have experienced cost increases in the past 12 months, up from 49% in 2025. The depth of the cost crisis is further reflected in the rate of escalation: among the businesses experiencing rising expenses, nearly a quarter (26%) report that their costs have jumped by more than 10% in just 12 months. The top contributors to increased costs include:
- Employee/Labour Costs: 50%
- Energy (Gas/Electricity) Costs: 44%
- Insurance Costs: 39%
- Raw Materials/Supplies: 37%
- Fuel Costs: 37%
- Property Rent/Leases/Mortgages: 34%
When looking closely at labour issues—which 40% of all small firms cited as an operational challenge—businesses noted aggressive spikes across the board. For those hit by labour inflation, 32% reported wage bill increases between 6% and 10%, while 15% faced wage bill hikes between 11% and 15%. Furthermore, statutory pressures such as sick pay and payroll taxes increased by up to 5% for roughly half of the businesses surveyed.
This prolonged high-cost environment has eroded cash reserves. Last year, the SFA warned that 54% of small businesses would run out of liquidity within six months without additional funding. The 2026 data shows that financial pressures have continued with 59% of small firms having 6 months or fewer of financial buffers.
Compounding this vulnerability is a high barrier to financing. Short-term loans are deemed important by 55% of small firms, yet a staggering 74% of those attempting to access short-term finance describe the process as either "quite difficult" or "very difficult". When asked why certain businesses did not borrow in the past two years, economic uncertainty remains a concern for 1 in 5 when it comes to borrowing. Furthermore, 1 in 5 businesses stated that borrowing costs are too high.
Commenting on the survey findings, SFA Director David Broderick said:
"The clear message from this survey is that almost all small businesses are operating in a high-cost environment in recent years. For many, this is not sustainable. It is deeply alarming to see that nearly half of the businesses surveyed could run out of liquidity within the next three months without additional funding. This comes at a time when small firms are finding it difficult to access the short-term finance, they need to maintain working capital and manage day-to-day cash flow.
“For the third consecutive year, there has been a double digit increase on average costs for small businesses. Many of these costs are imposed by the State such as the National Minimum Wage, increased water tariffs and Auto-Enrolment. With 50% of small businesses admitting that they are reviewing spending plans due to this ongoing high-cost environment, this is the ‘canary in the coalmine’ moment for the wider economy.
"While last year’s figures gave a morsel of hope that cost pressures were somewhat stabilising for a portion of the market, the 2026 data confirms that the cost burden has expanded aggressively across nearly the entire small business community. Government must take decisive policy action to mitigate these spiralling overheads. Small business owners are crying out for targeted reliefs - such as a PRSI rebate and implementing a freeze on commercial rates, to name a few, before viable, community-based enterprises are forced to close their doors permanently."
In response to these cost pressures, 9 in 10 businesses believe the government interventions must include an expansion of VAT reductions to all sectors, a freeze on National Minimum Wage increases, state supports for utility bills, and PRSI rebates for small businesses heavily impacted by minimum wage requirements.
Small businesses are already taking drastic internal actions to survive. In response to energy price increases and wider economic uncertainty, 50% are actively reviewing their spending plans, 23% are pausing capital investment, and 15% have already put a hiring freeze in place.
