Almost two thirds of small business owners in South Africa are concerned with overcoming financial instability
According to research announced by Xero, the global small business platform, the top five priorities for South Africa’s SMEs as they look to grow are: expanding revenue streams (63%), preparing for financial instability (62%), improving operations with technology (54%), improving financial literacy (47%) and training staff (33%).
The findings come as South Africa’s unemployment rate reaches an all-time high of 34.4%, with the economy only set to recover to pre-pandemic levels by 2025.
With the research revealing that just under two in three business owners (62%) consider preparing for financial instability a primary goal, they will need all the support they can get to recover and begin growing again.
In response, Xero is setting out nine recommendations for the government and wider business community to make life easier for small firms and unlock economic growth. This comes in the form of the new Time to Rebuild: accelerating small business growth manifesto.
Colin Timmis, Country Manager for Xero South Africa, said: “We have a huge opportunity to improve South Africa’s outlook if we better support the engine of our economy: the small business community.”
“Our country has the potential to revolutionise the world of business through digitisation, innovation, expanding the taxpayer base and creating fairer trading conditions. But it won’t happen on its own. We need greater action from the government and stronger collaboration amongst the wider business community to drive change.”
According to the research, 76% of SMEs are feeling “extremely” or “somewhat” optimistic about their business performance in 2021 and 2022. The data also reveals that 25% of businesses adopted new financial technology during the pandemic to support their survival and better prepare for the future.
Timmis continued: “It’s great to see small businesses feeling more positive about the future and looking to focus on critical areas like tech adoption, skills and building new revenue streams. This shows the ambition is there, but the government needs to work to create an environment where this can actually happen.”
“We’re calling on the government and the industry to ensure small businesses have the right support to rebuild,” Timmis adds.
The nine recommendations in the Time to Rebuild report focus on key areas such as driving digital adoption, closing the digital skills gap, access to finance, simplifying tax compliance, improving late payments and boosting open banking innovation.
One of the most critical areas is technology adoption. As recently as 2020, 41% of SMBs felt they are only just keeping up. This year, over half of businesses (54%) responded to our survey that improving their technology was a top priority. However, the efforts of individual businesses can only go so far, and Xero is calling on the government to increase its support. Xero’s manifesto recommends that the government launch a campaign to create better awareness of technology’s benefits and breaks down the barriers to access through tax relief.
You can find out more about Xero’s Time to Rebuild recommendations here.