By: Tebogo Mokwena
New research by small business tech platform Xero has revealed that SMMEs in the tourism sector are feeling more optimistic about the festive season than they did two years ago. However, Xero pointed out that the sector was not out of the woods yet due to the negative impacts of Covid-19, and called for a greater need to invest in and promote the benefits of technology, especially for SMMEs. The research, released earlier this week, was conducted Censuswide and surveyed 150 small businesses in the tourism sector last month.
A total of 74% of the businesses reported that they were more upbeat about the festive season. Despite the positivity, 77% of the respondents reported that their revenue dropped on average by 21% in the last two years. The report also revealed that 34% of these businesses cited a lack of financial skills as their primary challenge, 32% cited highlighted poor tax compliance as another top challenge, and 35% called on the government to invest more in helping them with digital skills and innovation.
Xero’s South Africa Country Manager Colin Timmis noted that 27% of the businesses wanted the government to do more to attract large numbers of tourists into the country. However, he did note that visitor numbers were on the increase. “There is a lot riding on this tourism season,” Timmis said. “The sector is a contributor to the GDP and a third of those we surveyed are looking to hire in the next 12 months.”
Timmis warned, however, that this growth could not be achieved if SMMEs were not supported in areas like digitisation, financial management, load-shedding and reducing late payments from big businesses. He also pointed out that small businesses risked being left behind due to poor financial management skills. He said that 44% of the respondents were planning on investing in digital skills and training in the next year, but 38% were being left behind due to how they managed their finances on spreadsheets.
“Many could be improving their outlook by using digital tools that help automate tax filing and give them control over their cash flow,” he said. “It’s worrying to see so many businesses still using spreadsheets or even paper to manage their finances. “These businesses risk being left behind and will struggle to do simple things like apply for funding in the future if they do not adapt,” Timmis said.