Confidence among small businesses took a hit amid a new round of restrictions on hospitality venues which were introduced just before Christmas.
The Small Firms Association said that 41% saw the business environment improving in winter 2021 compared to 55% last Summer.
Many businesses are also dealing with increased costs and supply chain delays, which is impacting commerce globally.
Today’s survey show that 43% of small businesses saw Covid restrictions on their ability to trade as their biggest challenge of the past 12 months.
Meanwhile, 61% of small business see the green economy as a priority for their business in 2022 with high costs identified as the most significant challenge that small businesses face as they consider the green transition.
SFA Director Sven Spollen-Behrens said that many small businesses find themselves back in a situation of Covid restrictions, which they did not expect in the earlier half of the year.
“This has affected their ability to trade optimally. They have been particularly affected by issues such as an increase in the costs of doing business, the cost of raw materials and restricted supply chains,” the SFA Director said.
He noted that domestic economic growth continues to be the primary driver of business opportunities.
“The final quarter of 2021 was a difficult one for the small business community with the stop, start nature of Covid restrictions causing a fall back in confidence levels,” Mr Spollen-Behrens said.
“We must now need to find a way to live with Covid safely given the highly successful uptake of booster vaccinations. The SFA will remain focused on working and supporting members, as they navigate this uncertain period,” he added.