Small firm owners demand action on costs

Hospitality sector march on Dáil – ‘It costs a fortune to be an employer in Ireland’

Small businesses are struggling with increasing costs and a lack of government support, according to the proprietor of a Ballymore coffee shop, Nicky O’Callaghan.

The SiP Coffee Garden owner attended a Day of Action along with more than 1000 other members of the hospitality sector, who feel they have been let down by government policies and disappointing budgets two years in a row.

The Day of Action was organised to highlight “the unsustainable costs of doing business in Ireland” and “to challenge the lack of support from the government to small businesses and employers” in Budget 2025.

“There were over 1,000 people in attendance, and some counted nearer to 2,000 when the march finished up on Kildare Street at Leinster House,” Ms O’Callaghan told the Westmeath Examiner.

“While there was a huge sense of safety in numbers, there was also, undoubtedly, a real sense of foreboding for the hospitality industry.”

Those who marched are hoping to achieve a reduction of the current VAT rate in hospitality of 13.5% to 9%, a reform of PRSI costs imposed on the small business employers, a removal of the auto enrolment of pensions and the appointment of a dedicated minister for hospitality.

While SiP Coffee Garden receives significant support from local customers, the business is not paying Ms O’Callaghan a satisfactory living wage due to the fact that it is “being imposed on” by a huge change in government policies and a surge in increased costs, which she is struggling to pay.

Those include weekly staff costs, including holiday pay, sick pay and pay for all 10 bank holidays, food and coffee costs, monthly P30 costs to revenue, rent, energy costs, VAT costs to revenue and council rates and insurance.

“As a newly establishing business, we have limited cashflow and absolutely no savings or reserves. We have no access to loans as we cannot produce adequate cashflow projections for the business based on the impact of future increased costs of business imposed by government policies,” Ms O’Callaghan said.

“Our businesses are viable, they are busy, demand is high. We want to succeed and keep our doors open. Small hospitality businesses were well able to hold their own prior to government policies changing too much and too fast.

“Grants and rate supports are not good enough to just ‘power up’ small businesses. The €4,000 rate grants being offered in Budget 2025 is a load of rubbish, it is an entirely false headline as it is subject to terms and conditions.

“It costs a fortune to be an employer in Ireland. Our industry is labour intensive. Our food and stock costs are increasing on a weekly basis. Energy costs are unpredictable.”

Many small businesses would happily invite ministers and TDs to visit their businesses and “view the books” so that they can “see the reality”, Ms O’Callaghan said.

Small businesses are busier than ever and, as the “backbone” of society, they offer employment and an opportunity for young people to learn transferable skills.

“Small businesses add so much value to small villages and, ultimately, to the national workforce. Many cannot access training funds, which would help when hiring young people.

“Small businesses teach the basic, fundamental, transferable life skills needed to grow careers. We hire young people into a labour intensive industry and we train them,” she said.

Staff costs, she added, should range no higher than 30 to 35% – however, in the first six months of 2024, wage costs for SiP were at 47%.

“The sick leave policy doesn’t add up for small service run businesses. Paying someone who’s genuinely sick, while paying for their cover and all the while still paying higher PRSI – someone has to pay the extra days being added annually by new government policies.

“In terms of bank holidays, I, personally, have found the additional bank holiday at the start of the year, when labour costs are still high but sales are low, so hard to recover from. There are 10 bank holidays to pay out on in the year, and we don’t even open on bank holidays!

“This is very frustrating,” she said. “I would love to open Sundays and bank holidays but again, staff and running costs just do not make it a feasible option. We tried opening Sundays over the summer, and while the ambiance of Sunday morning breakfasts was magic, and people were really happy, it just did not cover the costs, surprisingly.”

There have been more than 700 business closures in the year since the 13.5% VAT was reinstated, Ms O’Callaghan pointed out, and it is predicted there will be another 1,000 in the next year.

“Those are businesses that people said were flying! Yes, there has been a focus on reducing the VAT to 9%, and this will help, but it has to be in the context of a wider support and systemic change in government policies, specific to smaller, locally-owned businesses.

“There is trepidation among the most experienced business owners, and so, as a young entrepreneur and passionate business owner, that is worrying for me,” she concluded.