What next for small businesses in post-pandemic world?
Just as tech played a vital part in ensuring small businesses survived the pandemic, it can further propel them to success in the future.
Small businesses have been fighting for survival during the COVID-19 pandemic and continue to remain optimistic as they progress through 2022.
The State of South African Small Business 2022 report shows they’ve been adopting new technologies at unprecedented rates and turning to their accountants for business advice to support their recovery.
The small business sector employs approximately 80% of South Africa’s workforce, so it’s safe to say the sector’s recovery is key to the broader economy of the country. However, our small business economy won’t reach its full potential unless we all rally to support them.
These companies will need support from big corporations, banks, tech firms, government and others in the business community to empower them to do their part in rebooting the national economy.
Tax is one of the key areas in which small businesses need support from their accountants. The latest SARS tax stats show tax revenue collection (for the fiscal year 2020/21) was down a worrying 7.8% compared to the previous year. This shows just how critical it is to empower the small business community so they can boost the economy and help close our tax gap.
We have about 3.8 million registered companies and about a million of these businesses are expected to file a return. Then there are about 850 000 VAT registered companies, of which 440 000 hand in their returns and are active VAT vendors.
It’s interesting how many companies are registered, but just don’t hand in returns. The company income tax rate has decreased from 32% to 16% and the amount of tax being paid by companies has halved in the last 10 to 12 years.
We need to work together to arm small businesses with the tools they need to grow and create a fairer trading environment. Small companies can be encouraged to participate in a collaborative environment that is ultimately for their benefit and growth.
Enabling digital acceleration
Just as technology played a fundamental role in enabling small businesses to survive the pandemic, it can also continue to form a vital part of their recovery. According to our data, two-thirds of business decision-makers say technology has become more critical to their businesses since the pandemic began.
In our survey, 30% of small businesses report that technology has enabled them to reach new customers or expand into new areas, and over a quarter have leveraged the latest software to improve their processes.
We need to work together to arm small businesses with the tools they need to grow and create a fairer trading environment.
We’re also seeing small businesses proactively taking steps to gain the skills and knowledge to get the most out of the tools they’ve adopted. The report further shows that 85% of SMEs have invested in technology and cloud training over the past year – a 35% increase over 2020.
We must create a conducive environment where small businesses can connect to stakeholders using digital technology to access banking, accounting services and new markets, and more importantly, these stakeholders can connect to SMEs.
That’s where the opportunity is − to build an environment where data is more easily shared, that will enable more small businesses, their advisors and communities to benefit.
Making it easier to share data
The traditional way of accounting doesn’t allow the sharing of data, which is why there are so many accountants and small businesses using manual, paper-based methods to run their companies.
Now that this process is becoming more automated with technology, we’re seeing the acceleration of digital accounting. Making this process seamless and digital testifies to the integrity of the data that businesses rely on to make decisions.
It’s about creating an environment of high-integrity accounting data that small businesses can rely on in an end-to-end solution.
However, tech shouldn’t be channelling information in only one direction, but also connect and pull information back because practice management is often about two things – jobs to be done, and the status at SARS.
This is the direction the future of bookkeeping and accounting is going. Small businesses have never been connected to SARS before, only accountants have. That’s why technology is giving small businesses and advisors the ability to see the status of their returns from SARS, allowing information to be shared both ways.
South African small businesses are feeling optimistic and are eager to turn their eyes to growth, expansion and opportunity once again.
Small businesses are investing in their teams to upskill and gain the knowledge to make the most of the tools they’re using. This has been a critical factor in their ability to beat the odds and survive in such difficult circumstances.
Now is the time to embrace new opportunities by embracing technology and reigniting the entrepreneurial spirit that exists among South African small firms.
South Africa country manager, Xero
Colin Timmis is South Africa country manager for Xero, the cloud-based accounting software platform for small businesses. In 2011, he founded South Africa's first cloud accounting practice, Real-Time Accounting. By 2015, the company had become SA's first member of the US-based Thriveal CPA Accounting Network, a global network of accountants founded to support each other and share best practices.
Colin Timmis is South Africa country manager for Xero, the cloud-based accounting software platform for small businesses.
In 2011, he founded South Africa's first cloud accounting practice, Real-Time Accounting. By 2015, the company had become SA's first member of the US-based Thriveal CPA Accounting Network, a global network of accountants founded to support each other and share best practices.