Every year, Xero, which is one of the world’s fastest growing cloud-based accounting platforms, reports on the state of small businesses in South Africa.
South Africa’s economy depends on small businesses and in order to understand how they’re getting on, and what they need to continue thriving, we have to ask them the right questions.
By talking to 400 small business owners and 200 accountants, we get a better idea of what they’re struggling with, and what their plans are.
This year’s report focuses on two main and current themes for small businesses: instability and uncertainty, though not without a bit of optimism.
While small businesses report they’re already feeling the benefits of technology and plan to adopt more of it in the future; present infrastructure is holding them back, with load shedding and poor internet connections cited as key challenges.
First, let’s look at the challenges. I think we can all sympathise with the majority (59%) of respondents who said that load shedding posed a significant challenge. But on top of that, over two-fifths (43%) said that their internet connection was ‘OK, but not 100% reliable’.
This is really significant – you need power to get your Wi-Fi working. And if you have power, you need a steady Wi-Fi connection, because without it, you can’t get on with your work. In fact, over half (53%) said they haven’t adopted cloud technology yet because of these connectivity problems, which is disappointing when you consider over half (58%) had cloud technology in their plans for 2018 in our previous report.
Moving on to some of the more optimistic findings. Nearly all the small businesses we spoke to identified a large increase in profit (98%), and an increase in efficiency (99%) through the adoption of new technology. This is huge. We’ve been saying it for ages, but the results here confirm our belief that when technology is used to its full potential, it can help businesses grow in significant and measurable ways.
Our research shows that over half (56%) of small businesses use basic automation, whether in operational or accounting tasks, while a quarter (25%) said they were using Internet of Things (IoT) technology and just under a fifth (19%) said they used cloud computing. This is certainly a good start, but it also brings us back to those connectivity problems. If we want more South African small businesses to adopt and benefit from cloud technology, we need to first make sure they have a more reliable internet connection.
South Africa’s small businesses are adaptable and resilient. Now is the time to support them, and give them the infrastructure that they really need, to adopt the technology that will help them grow.
If you’d like to read the full report, you can download it here