Basically I arranged this activity where 8 people were meant to come (including myself). We were meant to pay when we got there, but I emailed them a day before saying we can't make it. I was surprised to find I got an email saying there was a cancellation fee. With money as tight as it is I've already decided there's no chance I was paying that. Not being stubborn or anything but it's not my fault if they operate a business like this.

operate a business like this?

You book and reserved something. This means that the business was unable to resell it because they promised it to your group. AND!!!! your group promised to come and pay for it.

You are 100% wrong. You promised to come and pay; and you didn't. You owe the cancellation fee.

The only thing I believe the business did wrong was not getting a deposit from you up front.

PS. your money problems are NOT! the problems of other people.

I'm guessing a hotel? Most hotels will give you a timeline on how long before you have to cancel before getting a fee. So I'm guessing you didn't make that time. So yes you get a fee since that is time and space they were holding and now they can't rent it in such a short notice of time.

Yes you owe them money. Cancellation fees are very common. They held space for you and lost money if they couldn't fill those spots.

You apparently didn't read the fine print when you set up the stay. Virtually all businesses have some sort of cancellation policy, because they RESERVED their limited assets (room, etc) and can not sell them when you cancel on a short notice.

That is 8 peoples money they have lost on that day. Of course they want paying. They are a business not a charity.

no it is YOUR fault f - every business will charge a cancellation fee when you cancel the day before you are supposed to be there. Now that business is now losing income because you may have taken spots they could have given to other people - they will keep coming after you and sue you