Small businesses set to fuel South African economy with ambitious growth plans

Cape Town - 5 May, 2022 – Despite the challenges of operating through a pandemic, 87 percent of South African small businesses are optimistic about their outlook for 2022 and nearly two-thirds (62%) reported growth over the last year.

This is according to new research from Xero, the global small business platform, in its fifth annual South African State of Small Business report. Businesses are gearing up for growth in the next 12 months, with a third (34%) preparing to expand into new markets - compared to just 15 percent last year - and 85 percent investing in boosting tech and cloud skills.

Colin Timmis, Xero South Africa Country Manager, said: “It’s great to see the entrepreneurial spirit and optimism that has long defined South African small businesses on the rise. Not only are they feeling positive, they are actively investing in key areas like technology, expansion and skills development to fuel future growth. This is great news for our economy and will give our small business community greater scalability and resilience.”

Technology: a lifeline for small businesses

According to the research, two-thirds of small business owners say that technology has become more critical to them since the pandemic began. More than half (51%) have adopted cloud technology in the last two years, and a third (31%) say that adopting cloud technology has simplified their financial processes specifically.

Almost a third (30%) of small businesses say that tech has enabled them to reach new customers or expand into new areas, and a quarter have leveraged the latest software to streamline their processes.

Skills development: a priority for businesses

Eighty five percent of firms have invested in improving their employees' tech and cloud skills in the last year – a 35 percent increase from 2020. Of this group, 95 percent have trained their staff using online or physical courses in tech or cloud skills development.

Over a third (38%) plan to invest in training for staff over the next 12 months, and almost all business owners (96%) said they no longer struggle to hire talent with the right skills.

“Investing in technology alone is not enough, small businesses need the skills to match. Despite the challenges of the last two years, there has been a 35 percent increase in cloud skills development. Those that invest in upskilling in these areas now, will see a big pay-off in future,” Timmis added.

Reality check: challenges remain

Despite strong optimism, businesses still face challenges. A majority (85%) reported that future Covid-19 lockdowns are still a concern, followed by political and economic instability (43%), and crime, poverty, or civil unrest (39%).

Late payments are still a threat to business survival too. Over a quarter of small businesses are currently owed money outside of their payment terms. Of this group, nearly half (45%) are owed over R100 000.

Arthur Goldstuck, CEO of World Wide Worx and a technology expert, said: "The overall conclusion from the research is that small businesses have come to terms with technology as both an enabler and a survival mechanism. It is also clear, however, that many SMEs are ready for the next step, which is to use technology as a springboard for growth."

For more information, read Xero’s State of South African Small Business 2022 report here.

-ENDS-

Media Contact

Hannah Collett | Xero Communications | Hannah.collett@xero.com | +44 780 090 1635

About Xero

Xero is a cloud-based accounting software platform for small businesses with over 3 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. For three consecutive years (2020-2022), Xero has been included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

About the research

The research in the report is based on responses from 401 small businesses across South Africa. The research was carried out by World Wide Worx, who have conducted research across Africa since 2001.