The latest annual report on the state of small businesses by online accounting firm for SMEs, Xero, shows that these enterprises have become resilient, and many expect to survive over the next five years, despite unstable economic conditions. The document also says that a third of the respondents are expanding into new markets, and 30% have reported growth as a result of investing in tech-based skills.
The report, titled “State of South African Small Businesses 2022: Resilience Reimagined” was recently released, with its research based on interviews with 401 small businesses. The report says that small business owners are more optimistic about the future. “A huge 87% of respondents are confident about their businesses in 2022, and 99% expect to survive the next five years, a world apart from earlier worst-case predictions,” it notes.
“Further, over one in three businesses (34%) are planning to grow into new markets in the year ahead.” A total of 30% of small businesses reported that tech had enabled them to reach new customers or expand into new areas. “Last year, more than two-thirds of businesses (67%) struggled to find the right talent to execute their digital strategies,” the document reads.
“Fortunately, companies are investing in upskilling the employees they already have, and many have increased investment in tech skills.” Data shows that 85% of SMEs have invested in tech and cloud training over the past year, which is a 35% increase. “This investment in upskilling teams is making a tangible difference.” Going forward, 38% of the respondents intend to continue with their upskilling efforts this year, and 54% plan on allocating training budgets to upskill their teams in technology use.
Xero South Africa’s Country Manager Colin Timmis commended SMMEs for choosing this path. “Small businesses are doing a great job investing in their teams to close any tech knowledge gaps they have,” he said. “This has been a critical factor in their ability to beat the odds and survive in such difficult circumstances.” However, the report did note that there are challenges that many SMMEs encounter in their day-to-day operations.
For instance, 45% of the respondents reported that their businesses owed over R100,000 in late payments. A total of 51% of the late payments had not been settled in two months, and 34% of those interviewed said some payments could take up to four months. Timmis said that more needed to be done to reduce late payments. “Our ‘Time to Rebuild’ manifesto suggests a number of changes at the government level, including increasing the current R20,000 limit for claims to pass through the Small Claims Court and the introduction of a bill that compels big businesses to release their payments data,” he said.