?? 5 Trends defining the business landscape in 2025

With the Bureau of Economic Research projecting potential economic growth of 2.2% in 2025, and S&P’s recent positive outlook change for South Africa, South African small business owners might see economic growth double compared to 2024.

Heading into a new year, small business owners can overcome day-to-day challenges and be empowered to take full advantage of the new opportunities that digital transformation presents.

Here are the five trends set to shape the business landscape and impact SMEs in 2025.

1. Flexibility is king: New financial service models for SMEs

Technological innovations in banking now offer alternative solutions to SMEs. The financial sector is extending its service offerings from traditional banking to digital tools that allow for smart cash flow management.

These solutions consolidate the process of financial management, streamlining processes to allow for more cash flow control.

Thomas McKinnon , Chief Growth Officer at Lula, says, “Banks and fintechs are naturally diving into things like cash flow management tools and leaning into AI-driven insights to make cash flow management smarter than ever before.” These financial tools can aid business owners to flexibly grow their businesses in a way that traditional banking does not allow.

How to prepare

Evaluate your business processes to identify areas that could benefit from flexible financial tools. Is seasonal demand affecting your cash reserves? Are upfront payments not coming in??

Look for a financial services provider that can help you manage your cash flow and operations efficiently, and that offers scalable solutions to help your business grow.

2. Funding gets personal: More financing options, better fits

Data is bringing transparency to business and finances. Thanks to increased access to transaction data, payments data, and data overall, lenders now have a better view of a business’s financial health – and can tailor financing options to match.?

It’s no longer only banks that are tailoring funding options. Alternative funders are also proliferating. Government and NGO initiatives are also stepping up to support micro and women-owned businesses with guarantee schemes, creating a broader safety net.

With tailored financing offered by more players in the lending market, getting approved for funding will become easier for the 67% of businesses that traditionally haven’t had access to credit.?

Access to appropriate funding can be a make-or-break factor for small businesses looking to grow or navigate challenging economic periods.

How to prepare

Familiarise yourself with alternative types of business funding like capital facilities or capital advances. Which funding solutions fit your business’s needs best??

To better plan and prepare for your funding needs, look into your cash flow and make a cash flow projection to prepare for challenges in the months to come.

Finally, it’s important to maintain detailed financial records and ensure you are meeting your current debt repayments and obligations, to improve your chances of securing fast funding when the need arises.?

3. Mobile first: Digital commerce booms and goes mobile

The digital economy is projected to account for 15-20% of South Africa’s GDP by 2025, doubling in size from 8-10% in 2020.?

Driving this shift is increased internet penetration, growing from 68% in 2023 to over 75% by 2025. But internet usage alone doesn’t fully account for the boom in the digital economy. E-commerce is expected to rapidly grow at a 21.4% compound annual growth rate (CAGR) by 2030.?Within the online retail space,?77% of South Africans do their shopping on mobile phones, while 54% make their purchases on laptops.

“Digital commerce is more than just a trend, it’s actually creating new opportunities and markets for SME owners,” McKinnon comments on the rise of the digital economy.

He adds that high mobile penetration is fuelling mobile commerce, allowing businesses to “reach customers on their phones – wherever they are.”

How to prepare

Bring your business to the digital era and invest in a user-friendly e-commerce website. Ensure your website and online services are fully optimised for mobile devices.

Consider partnering with tech-savvy businesses or joining online marketplaces to increase your online presence.

4. Just a swipe away: Payments are getting smoother

The South African payments landscape is evolving to meet not just digital consumers’ demands but those of both digital and bricks-and-mortar businesses. While cash is still widely used by SMEs, 58% of SMEs already use digital transactions.

“B2B options, consumer payment innovation, and contactless solutions are helping SMEs reach more customers while simplifying their checkout processes,” says McKinnon.

More than just simplifying the checkout process, offering digital payment services as an option to both B2B and B2C customers is crucial for South African SMEs to break into the growing e-commerce market.?

How to prepare

Adopt mobile and digital payment solutions, like implementing mobile wallet and QR code payments or offering EFT services like Ozow and Payfast for e-commerce transactions.

Bricks-and-mortar shops should look into contactless payments and affordable, digital payment terminals.?

5. In the cloud: Investments in digital infrastructure and tech

Digital transformation will continue to play a pivotal role in the country’s future, with projections indicating it could contribute almost 20% to the GDP by 2028 and create 300,000 jobs.?

Today, massive investments hold up tomorrow’s promise. South African telecom companies have invested R200 billion in the past five years to establish fibre optic networks and data centres, improving connectivity and supporting?the shift toward a digital economy.??

The public cloud services market is expected to grow at a CAGR of 25% until 2025, the International Trade Association (ITA) predicts. Similarly, the number of Internet of Things (IoT) connections is anticipated to increase to 43 million by 2025 from 17 million in 2020.?

Digital technologies like IoT, artificial intelligence (AI), and cloud computing have the power to transform traditional sectors and SMEs making use of these and other emerging technologies.?

Think of real-time monitoring and data collection of production processes, improving efficiency and customer experience, and automating routine tasks. All of these improvements through technology give your SME an edge and could allow you to compete with other, often bigger businesses.

In fact, 73% of African SMEs that have adopted technological solutions increased their competitiveness, while 87% said it accelerated business growth.?

How to prepare

You can prepare your business by first assessing your current digital capabilities. Address any digital skills gap that you might encounter and develop a road map for adopting technologies that can help you reach your business goals.?

This is an extract from the original article published on www.lula.co.za.