40% of SMEs focusing on emerging technologies to upskill workforce

 From an outsider’s perspective, the current business landscape looks quite onerous, but according to the latest State of Small Business Report by Xero, the outlook is not as dire as some may have you believe.

In fact, the 2025 edition of the report found that 83 percent of small businesses have grown their revenue in the past year, and 90 percent are optimistic about their future growth. According to Xero, this optimistic outlook is driven by one thing in particular – a push for more emerging technologies.

More specifically, 45 percent of small businesses surveyed attribute technology as one of the most valuable contributors to their business over the past year. 

“Across the country, entrepreneurs are embracing digital platforms to manage their finances, automate admin, and gain real-time insights into their operations. Tools like Xero are helping business owners and their accountants or bookkeepers stay on top of their numbers, freeing up time to focus on things like strategy and customer service,” the company explained in a release shared with Hypertext.

This is not just a trend influenced by what is happening globally, as the same as being seen in South Africa too.

“This shift in mindset is profound. South African SMEs are no longer adopting technology purely for efficiency but as a tool for empowerment. This approach gives small business owners the confidence to scale, the agility to adapt, and the tools to compete on a global stage. In a country where SMEs account for over 60% of employment, this transformation has the potential to uplift and revitalise entire communities,” continued Xero.

Here, over 40 percent of small businesses plan to upskill their teams over the next 12 months, according to the report, with a strong focus on emerging technologies such as artificial intelligence (AI) being highlighted.

“This enthusiasm for experimenting with new technologies like AI highlights a forward-thinking approach among South African small businesses, who recognise the potential of AI-powered tools to drive efficiency and supercharge the running of their businesses,” added Colin Timmis, country manager, Xero South Africa.

Despite the generally positive outlook, Xero is also cognisant of the fact that significant hurdles still stand in front of most local small businesses. The company does, however, point to the embracing of emerging technologies to address highly specific local concerns.

“While VAT remains at 15% for now, the Budget 3.0 revealed the general fuel levy will increase by 16 cents per litre for petrol and 15 cents per litre for diesel from 4 June 2025. This is the first increase in three years and, while slight, it may contribute to rising input and distribution costs – particularly for businesses reliant on transport and logistics. SMEs will likely need to consider reviewing their cost structures and pricing models to accommodate this change,” noted Timmis.

“Despite this and the many other challenges that SMEs face, many entrepreneurs are not just hopeful, they are proactively looking for ways to future-proof their businesses – with the guidance of expert advice, and technology, especially AI playing an increasing role,” he emphasised.

With local small businesses needing to work both smarter and harder, being capable of implementing emerging technologies appears to hold a distinct advantage, especially as the current economic landscape shows no indication of improving anytime soon.

9:03 AM