How collaboration can drive
small business in SA

Growing a business in tough economic times is no easy feat, but there are solutions, a new study reveals.

For small businesses in South Africa specifically, socio-economic factors are further compounded by issues of political uncertainty, volatile global markets, rising operating costs, and the often lonely path of the solopreneur.

 All these factors contribute to a tipping point for local small businesses at which radical change must come to thrive.  Yet, small businesses remain optimistic.

“Even though Xero’s 2024 State of Small Business report again points to optimism and ambition with 87% of small businesses in South Africa reportedly positive about their outlook for 2024, a lot more still needs to be done to foster growth,” says Colin Timmis, country manager of Xero South Africa. “We need all stakeholders to ask themselves how we can create enabling structures, collaborations, and technology to remove the red tape and other barriers, to enable sustainable growth.”

The impact of digital adoption 

Driving greater digital adoption is key to boosting small business growth and productivity. Data from Xero’s report supports this, with technology named the most significant factor in helping small businesses stay afloat over the past 12 months. Aside from saving entrepreneurs valuable time through the automation of menial tasks, it also supports critical areas like faster access to funding, moving into new markets, gaining stronger insights on performance, and streamlining operations. 

The study, conducted by World Wide Worx for Xero, shows that cost (66%), a skills gap (65%), and not knowing how to get started (41%) are the main barriers to adopting more technology, but the research suggests that there is room for further digitalisation.  

“When looking at adoption of technology it is important to understand the granular issues that businesses are trying to solve and how technology can help,” says Timmis. “These challenges could be around how technology could help fix their cash flow problems, secure more sales, or help manage their teams better. For us, it’s about putting systems and controls in place that help guide financial interactions.”

Accountants will lead the path to digital revolution 

According to Xero’s State of Small Business report, 81% of small businesses placed their accountant or bookkeeper as their most trusted business advisor. This shows the importance of the relationship between the business owner and the accountant. Timmis believes that there is huge potential to grow the small business economy through digitalisation and that accountants and bookkeepers will be at the forefront of this revolution as they are the untapped resource of the South African economy. 

Accountants support small businesses in so many ways, often acting as digital advisors to help them adopt tools that help streamline their financial operations. This can include using cloud-based accounting software and other digital tools that provide real-time financial insights and analytics, allowing them to identify areas for improvement and make more informed business decisions.

Partnering for small business growth 

“The role of accountants is key, but it’s also critical that we create a better environment for people to start and grow businesses – this requires more collaborations with the stakeholders that play a critical role in supporting small businesses. A connected, enabled environment will create the change we need; where entrepreneurship is a leading, considered pathway to economic independence.’’

Aligned with this sentiment, Daniel Goldberg, co-founder of alternative lender Bridgement, says: “It’s about getting the basics right and creating a more connected ecosystem with greater collaboration between financial institutions, accountants, fintech solutions and government to support SMEs – making it easier for businesses to do business. Great digitalisation of SARS has been great to make it simpler for small businesses to become compliant, but we need more tax incentives and tax breaks for smaller firms that encourage research, development, and innovation.”