South Africa’s small business resilience shown as 80% of small firms grow despite challenges

South African small businesses are continuing to display resilience, demonstrating remarkable resilience and optimism for the future in the face of political and economic uncertainty.

A recent report, The State of South African Small Business 2025, conducted by the global small business platform Xero reveals that a staggering 83% of small businesses witnessed revenue growth over the past year, while 90% expressed confidence in their prospects for growth moving forward.

Despite concerns that loom over the business landscape—nearly two-fifths of the surveyed entrepreneurs were worried about political instability, and more than a quarter anticipated service delivery challenges such as load shedding—small businesses are showing optimism for the year ahead.

According to the report, within the next year, 42% of small businesses plan to invest in upskilling their staff, while 40% aim to hire more personnel. Furthermore, 39% of these entrepreneurs are focused on developing skills in burgeoning technologies like artificial intelligence (AI).

Colin Timmis, country manager for Xero South Africa, said there was so much resilience amongst small businesses though they yearned for some support.

“Entrepreneurial spirit appears to be stronger than ever amongst South African small businesses, but they are crying out for more accessible support, tailored training and better access to funding,” Timmis said.

“But their hunger to invest in their people and in new technologies like AI is a testament to their forward-thinking approach. Not all small businesses want to grow but this research shows clear ambition among South African entrepreneurs.”

Gugu Mahlangu, CEO of small agricultural business, House Harvest, also shared the prevailing sentiment of many South African businesses.

“This year, I feel excited and deeply optimistic about where we’re heading. Despite the ongoing challenges in infrastructure and access to funding, House Harvest continues to grow powered by innovation, grit, and purpose,” Mahlangu said.

“The key to our resilience? Staying curious, embracing technology and building networks that uplift other small farmers.”

Technology has emerged as a critical enabler for small business success, with nearly half (45%) citing its value over the past year.

Notably, 58% of businesses leveraging cloud technology reported improved financial management, while 40% found it useful for reducing administrative workload and automating tasks.

Small businesses are not only utilising technology but also actively exploring AI applications: roughly 34% are employing AI for customer communication, 32% for information management, and 31% for data analysis.

However, the report also highlighted significant barriers to full-scale technology adoption.

A lack of resources and necessary skillsets remains a challenge for 38% of small businesses, while 35% struggle with integrating new technologies into their existing systems.

Alongside tech adoption, businesses expressed a pressing need for support in training and skills development (28%) as well as funding (28%).

In this proactive environment, accountants and bookkeepers have proven vital allies for small businesses.

A robust 80% of respondents who utilised these financial professionals regarded them as trusted advisors, with key areas of support including guidance on business decisions (51%), navigating tax requirements (49%), and providing valuable financial reporting and insights (45%).

Xero's report underscored a profound appetite for innovation and growth within South Africa's small business landscape.

“This year’s research highlights a clear appetite for innovation and growth. To fully unlock this potential, business owners need the right tools and support to be able to realise their ambitions. At Xero, we remain committed to standing alongside this community and helping supercharge their business success in the year ahead,” said Timmis.

Visit: www.businessreport.co.za