• SME software provider Xero has released its seventh annual State of Small Business Report.
• The Report delves into the challenges, trends, and opportunities shaping the small business landscape in 2024.
• While several challenges were highlighted by local small businesses in the report, 87 percent of them are optimistic about their 2024 outlook.

Now in its seventh year, Xero has released its annual State of Small Business Report for 2024.

For those unfamiliar with the Report, it surveys small businesses across the regions that the software provider operates in order to highlight the challenges, trends, and opportunities shaping the landscape.

As Xero operates in South Africa, it has also shared some unique insights as it pertains local small businesses.

Here the 2024 Report shows that the general outlook for the rest of the year is quite positive. In fact, 87 percent of small businesses surveyed are optimistic about their 2024 outlook, which represents a 6 percent increase from last year.

Added to this, close to and three-quarters of those surveyed, 73 percent, have grown their business over the past 12 months.

“Our research once again shows an industry driven by optimism, resilience and ambition. But this doesn’t disguise the challenges facing our small business community. Many of them are crying out for more support – this year’s research shows a 50% increase in small firms calling government support insufficient,” noted Colin Timmis, country manager for Xero South Africa.

“This is especially important as we approach the election. We need to work together to create a more connected support system for people to start and grow businesses,” he added in a release shared with Hypertext.

Alongside this relatively optimistic outlook, 56 percent local businesses are also wanting to invest in new technology. Unsurprisingly, the pervasiveness of AI is why many companies are wanting to invest in new technologies.

“When it comes to emerging technology, only 18% say they are using AI currently. The main areas they are using AI are for customer relations (39%), generating content (33%) and data analytics (38%),” Xero explained.

“With over half (55%) planning to invest in new technology this year, it’s crucial that we offer support and advice to help small businesses choose the right tools for them. A part of this is closing the knowledge gap when it comes to emerging tech like AI, with our research suggesting that many don’t understand how it can fit into their business,” added Timmis.

Businesses are wanting to upskill workers too, the 2024 Report explained, with 55 percent indicating a desire to do so, along with 51 percent planning to invest in their employees’ wellbeing.

This all sounds great, but the Report is tempered by some of the challenges and concerns that currently face small businesses in South Africa. As Timmis mentions above, the upcoming national elections will bring with it some uncertainly until the results are known, and the leaders of this country has been selected.

Here the Report found that 55 percent of businesses cited political and economic instability as a concern, along with the long-lasting spectre of persistent loadshedding sitting at 50 percent.

This was coupled with a lack of government support at 49 percent, as well as access to funding at 26 percent, which flies in the face of all the rhetoric being bandied about by government recently regarding the importance of the country’s SME sector and what is being done for it.

“Late payments and cash flow continue to be the primary financial challenges for small businesses. This year’s data revealed 24% experienced some degree of cash flow issues, and out of those, 72% have used personal funds to keep the business afloat,” Xero cited.

In spite of the issues, much likes the businesses surveyed in the Report, Xero and Times are still optimistic that the outcomes of this year can be good, provided the right decisions are made and support is given where needed.

“South Africa has the potential to grow the small business economy through digitalisation, and accountants and bookkeepers will be key drivers of this. We continue to use this research to engage with small business groups, their accountants, banks, government, funders and other technology companies, to collaborate on creating a more connected environment for small businesses,” he concluded.

You can download and read the 2024 Report, as well as past reports, for yourself here.