Xero report reveals small business growth in the face of economic adversity
Political, economic instability and loadshedding top issues; small firms optimistic about business survival and growth
Cape Town — 16 May, 2023 — South African small businesses are determined to face a challenging economic environment with optimism and resilience, according to Xero’s sixth State of South African Small Business report.
New research from global small business platform Xero, reveals the three main concerns for small businesses are political and economic instability (70%); revenue loss due to loadshedding (46%) and crime, poverty, and civil unrest (19%).
While there are many challenges, South Africa’s small businesses have thrived in the face of adversity. Almost three-quarters (74%) have grown over the past year – up from 62 percent last year. Growth is driving optimism, with more than 95 percent expecting to survive the coming year and nearly 90 percent the next five years.
Colin Timmis, Xero South Africa Country Manager said: “These findings signal the grit and tenacity of small businesses in the face of incredible challenges, and how they’re equipping themselves with the tools they need to succeed and grow.”
“As well as most (74%) small firms using generators to survive loadshedding, they also count on new technologies to automate manual processes, operate and sell online, as well as reach new customers – and on their accountants to navigate regulations and complex tax requirements.”
Technology enabling business survival and success
The two most significant contributors helping small businesses survive and grow in the past year were technology (41%) and their accountant (28%).
Nearly three-quarters (74%) say the importance of technology has increased in their business, with 43 percent reporting that technology has enabled them to reach new customers - up 13 percent compared to last year. And 39 percent say it has helped to boost profits.
As a result, over half (56%) of business owners have increased their investment in technology over the last 12 months, and 40 percent intend to build on this in the coming year.
The secret weapon of small businesses: the accountant
The research shows almost half (49%) of small businesses go to their accountants for business advice, well above any other source of advice - only 6 percent would turn to the government for guidance.
Small businesses also recognize the wider value that accountants add, as 60 percent believe accountants are key to economic growth, and nearly two-thirds (64%) say more skills development initiatives are needed from the government to support advisors.
“Government, banks, funders, accountants and technology companies need to work collectively to support small businesses. Only concerted, collective efforts can help businesses navigate the challenges and complexities of operating in South Africa, and help them come out the other side stronger, smarter and more successful,” says Timmis.
Investing in your people
The report revealed small businesses are willing to invest in technology skills, as well as supporting wellbeing.
Eighty six percent are investing in online or in-person training courses to increase knowledge and improve tech skills. Nearly half (48%) also allocate budget to train their team in technology use and implementation.
There is also a strong focus on diversity and inclusion, with 77 percent of small businesses placing great importance on promoting diversity, equity, and inclusion in the workplace.
The research in this report was based on interviews with 300 small businesses across various sectors in all nine provinces in South Africa, conducted in February - March 2023. For more information, read Xero’s State of South African Small Business 2023 report.
Xero Communications | Hannah Collett | firstname.lastname@example.org | +44 780 090 1635
Xero is a global small business platform with 3.5 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. For four consecutive years (2020-2023) Xero was included in the Bloomberg Gender-Equality Index. In 2021 and 2022, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero is a FIFA Women’s Football partner.
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