“Deeply optimistic”: South Africa’s business resilience shown as 80% of small firms grow despite challenges

Cape Town — 14 May 2025 — Small businesses continue to display resilience in challenging times, with 83% growing their revenue over the past year and 90% optimistic about their future growth.

This is according to new research from Xero, the global small business platform, shown in its 2025 State of Small Business Report.

Despite nearly two-fifths (39%) having concerns over political or economic instability and more than a quarter (27%) expecting challenges with service delivery like loadshedding, South African small businesses are beating the odds and showing optimism for the year ahead. The research shows that small businesses are planning to invest in upskilling staff (42%), hiring more staff (40%), and developing skills in new technologies like AI (39%) in the next 12 months.

Colin Timmis, Country Manager, Xero South Africa, said: “Entrepreneurial spirit appears to be stronger than ever amongst South African small businesses, but they are crying out for more accessible support, tailored training and better access to funding. But their hunger to invest in their people and in new technologies like AI is a testament to their forward-thinking approach. Not all small businesses want to grow but this research shows clear ambition among South African entrepreneurs.”

Gugu Mahlangu, CEO of small agricultural business, House Harvest, shares the prevailing sentiment of many South African businesses: “This year, I feel excited and deeply optimistic about where we’re heading. Despite the ongoing challenges in infrastructure and access to funding, House Harvest continues to grow powered by innovation, grit, and purpose. The key to our resilience? Staying curious, embracing technology and building networks that uplift other small farmers.”

Businesses eager to deepen tech use to unlock efficiency

Technology continues to play a crucial role in small business success, as nearly half of small businesses (45%) cite technology as one of the most valuable factors to their business in the past year. Small businesses are leveraging technology to streamline processes, innovate and operate efficiently. For those using cloud based technology, more than half (58%) say it has helped them better manage their finances or simplify financial processes, and 40% say it allows them to reduce admin or automate tasks, saving them time.

The report also reveals a strong appetite to embrace new technology, in particular AI. Many small businesses are already experimenting with AI, using it to communicate with customers (34%), manage information (32%), and analyse data (31%).

However, the report identifies critical barriers hindering the full potential of technology adoption. A substantial 38% of small businesses cite a lack of resources to embrace new technology and a shortage of skills needed for these emerging tools (38%). Furthermore, 35% reported challenges in integrating new technology with existing systems.

In addition to technology adoption, small businesses indicated the top areas they need more support with are training and skills development (28%), and generating funding (28%).

Accountants and bookkeepers crucial to success

As small businesses embrace the future with confidence, accountants and bookkeepers are vital allies in a small business’ support system: for those that use them, 80% agree they are their most trusted business advisor. Small businesses say the most valuable areas of support their accountant provides are guiding business decisions (51%), navigating VAT and tax requirements (49%), and providing financial reporting and insights (45%).

“This year’s research highlights a clear appetite for innovation and growth. To fully unlock this potential, business owners need the right tools and support to be able to realise their ambitions. At Xero, we remain committed to standing alongside this community and helping supercharge their business success in the year ahead,” said Timmis.

You can read the full report on Xero’s website.

ENDS

Survey methodology

Xero partnered with KLA to survey 414 small businesses with up to 200 employees and 105 accounting and bookkeeping professionals who work in practice in South Africa. Responses were collected from a mixture of job roles across a range of sectors. Fieldwork was conducted via an online research panel between 7 March and 20 March 2025.

Media Contact

Xero South Africa Communications | Sophie Whitney | sophie.whitney@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.