Higher costs, COVID recovery and election uncertainty are biggest challenges for SMEs

Higher costs are one of the major challenges small businesses are expected to face this year, according to a survey carried out by the Chamber of SMEs.

The survey found that 16% of SMEs identified an increase in general costs as their major challenge this year, with 14% saying recovery from the COVID-19 pandemic was a major test. However, 10% of businesses said uncertainty surrounding the general election was a major challenge, while a further 10% identified labour shortages as a significant problem for them.

The results form part of the 2021 Business Performance Survey unveiled on Monday by the Chamber of SMEs. The survey polled 250 respondents about their performance last year and their outlook for 2022.

The survey found that 44% of businesses expect 2022 to be better than last year, while 39% expect the next 12 months to remain the same. Additionally, 17% of businesses believe this year will be worse than 2021.

When asked specifically about the biggest concerns related to financial constraints in 2022, 19% of businesses cited sales levels as their biggest worry, with cash flow (16%) and uncertainty due to the pandemic (15%) seen as next biggest challenges.

2021 results

Asked about their turnover in 2021, 23% of businesses reported similar figures, but more than 33% said they registered less than the previous year. However, 39% reported better figures in 2021 when compared to 2020.

A decrease in turnover was attributed to COVID-19 (25%), loss of spending power among consumers (13%), increase in costs (11%) and a decrease in consumer confidence (9%). On the other hand, increase in turnover was attributed to more stability when compared to the previous year (32%), more consumer confidence (19%) and better marketing (12%).

For 32% of respondents, profitability in 2021 remained the same; 29% reported more profits and 39% were less profitable.

Reduce quarantine

On the pandemic, 71% of small businesses strongly feel that quarantine should be reduced, while 58% strongly agree travel rules should be harmonised. The majority also strongly agree (56%) that a decrease in COVID-19 restrictions is in order, while 71% strongly believe that learning to live with COVID-19 is a must.

Asked on the festive season, 29% said they were satisfied, 5% were very satisfied, 24% were dissatisfied, 10% were very dissatisfied and 32% were neutral.

Compared to the previous festive season, the majority (40%) said it remained the same, with only 1% registering increases of more than 30%. 34% reported decreases, while 26% registered increases.

Chamber proposals

Reacting to the findings, the chamber submitted a series of proposals aimed at helping small businesses in 2022.

It proposed the removal of excise tax on every-day consumer goods such as water, toileteries and non-alcoholic beverages. It also recommended the reduction of the general VAT rate to 15.5% from 18%.

The chamber also said that government should consider reducing quarantine to five days, in line with recommendations by the US Centers for Disease Control and Prevention (CDC).

In order to combat labour shortage, the SME Chamber said authorities should ensure a steady supply of Third-Country Nationals (TCN) by having a more streamlined system. Identifying key countries, through a centralised system could help in fast tracking employment, the chamber said.

It also said travel rules should be harmonised.