Xero said 84% of small businesses plan to prioritise steady growth and stability over aggressive expansion in 2026, reflecting a shift towards long-term sustainability amid a changing economic environment.
Image: Supplied
South African small businesses are entering 2026 with a strong emphasis on stability, resilience and digital transformation, according to the latest report by Xero.
The company’s "State of South African Small Business 2026" report, based on a survey of more than 400 small businesses conducted in January, reveals that 80% of respondents experienced revenue growth over the past year, while 75% reported increased profits.
Despite this positive performance, the majority of businesses are opting for a cautious approach in the year ahead.
Xero said 84% of small businesses plan to prioritise steady growth and stability over aggressive expansion in 2026, reflecting a shift towards long-term sustainability amid a changing economic environment.
Colin Timmis, regional director for Europe, the Middle East, and Africa at Xero, said that South African small businesses are some of the most adaptable and resilient in the world.
Timmis said the report shows they are navigating challenges with greater strategic precision and intentionally looking at ways to strengthen their foundations.
“Many have been building their own anchors of stability, leveraging digital tools and adapting revenue models for operational resilience,” he said.
The report said that even before global shifts, a third (33%) of businesses cited economic instability and 28% cited rising prices as concerns, highlighting the extent to which uncertainty was already shaping decision-making.
“Yet, 91% of small businesses said they were optimistic about the year ahead.”
The report explores digitalisation as a proactive strategy against economic strain. It found that more than eight in 10 (85%) small businesses are prioritising digital adoption, using automation and AI to speed up manual processes and gain better visibility of their business performance.
The report said that a key component of this digital resilience is the adoption of AI to drive efficiency and free up valuable time.
“More than half (52%) are using AI tools daily or weekly to help with creating content, analysing data (50%), and automating processes (44%). However, the report also identifies a knowledge gap, with 34% feeling overwhelmed by AI information and 56% seeking more support to understand how it fits their specific operations.”
The report added that many are also turning to digital tools to solve day-to-day challenges and navigate fluctuating conditions.
“With 62% of small businesses experiencing cash flow issues over the past year, nearly half (45%) have already adopted online invoicing with payment links to speed up collections and improve liquidity. They are also keeping a closer eye on business health. Two thirds (66%) are monitoring cash flow and 63% are checking their bank balance daily or weekly, although support from accountants in monitoring metrics will be crucial to navigating any change in conditions.”
Timmis said that in a changing market, merely checking your bank balance tells you where you are today; it doesn't indicate where you'll be when the next price hike occurs.
“Small businesses need to move beyond checking the metrics that feel immediate and work closely with an advisor who can help them understand what metrics to look at, what they mean and what actions to take.”
Xero said that entrepreneurs are increasingly relying on a diverse package of support that blends digital resources with human expertise.
“While business owners are finding significant value in online channels, turning to Google (36%), social media and GenAI tools (28%) for immediate support, professional advice is still a crucial part of the package,” it said.
“The research shows that 77% of small businesses view their accountant or bookkeeper as their most trusted advisor, with 78% stating these professionals have been crucial in helping them survive previous economic headwinds.”
Timmis said that in times of uncertainty, accountants and bookkeepers remain the number one trusted expert, providing the critical filter that can turn a sea of online information into a specific, actionable strategy for survival.
The report concluded that the research underscores that while global factors like fuel prices and inflation will likely add pressure, the foundations laid by South African small businesses provide a proactive posture.
“By focusing on operational rigour and digital efficiency, local entrepreneurs are well placed to weather the current economic conditions.”
BUSINESS REPORT