New research from Xero reveals 84% of small businesses taking strategic shift towards stability and steady growth in 2026

A new report from Xero, the global small business platform, reveals that South Africa’s small business sector entered 2026 with a clear focus on stability over growth with many taking steps to build resilience in response to a changing economic environment.

Xero’s 2026 State of South African Small Business report, which surveyed more than 400 South African small businesses in January, suggests that local entrepreneurs are adopting a more measured outlook for the year ahead. A substantial 80% of businesses surveyed reported revenue growth over the past year, while 75% increased profits. Yet despite this momentum, 84% said they would prioritise steady growth and stability over aggressive expansion in 2026.

“South African small businesses are some of the most adaptable and resilient in the world, and this 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,” says Colin Timmis, Regional Director EMEA, Xero.

Digitalisation as a defensive shield

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. More than eight in ten (85%) small businesses are prioritising digital adoption, using automation and AI to speed up manual processes and gain better visibility of their business performance.

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.

Precision over guesswork: using data to navigate fluctuating conditions

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.

"In a changing market, looking at your bank balance only tells you where you are today; it doesn't tell you where you'll be when the next price hike hits," says Timmis. "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.”

Accountants remain valuable business partners

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. 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.

“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,” says Timmis.

A foundation for survival

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.