The individual microentrepreneurs sector (MEI) is the one with the highest business mortality rate in up to five years, according to a survey by the Brazilian Micro and Small Business Support Service (Sebrae).
According to the Survival of Companies (2020) survey, carried out based on data from the Federal Revenue and a field survey, the mortality rate in this business area is 29%. Micro-enterprises have a rate, after five years, of 21.6% and small ones, 17%.
The president of Sebrae, Carlos Melles, told the Brazil Agency that the lowest survival rate among small businesses is related to management capacity, greater experience and knowledge of the field. “When we assess the reality of most MEI, the survey shows that, in this segment, there is a greater proportion of people who were unemployed before opening their own business and, therefore, were unable to adequately train themselves and improve management” .
Added to this fact, the mortality rate in the MEI area is also influenced by the greater ease of opening and closing this type of enterprise, when compared to the micro and small business segments.
Difficulties in the pandemic
Melles highlighted the additional difficulties that the pandemic brought in this unfavorable scenario for the MEI. “Among small businesses, individual micro-entrepreneurs were the ones that suffered the most losses in revenue. We have no doubt that the covid-19 pandemic has intensified the difficulties and posed other challenges. When we look at the financial management aspect, for example, the situation became even more complex. Finances are a challenge for most MEIs and in the uncertain scenario of the pandemic, this has become a big problem,” he said.
According to Sebrae, the smaller the size of the company, the more difficult it is to obtain credit to maintain working capital and manage to overcome obstacles such as those caused by the covid-19 pandemic. More than 40% of respondents cited the pandemic as the cause of the company’s closure. For 22%, the lack of working capital was essential for closing the deal. The survey also found that 20% of former entrepreneurs complained about the low sales volume and the lack of customers.
Among companies that went out of business, around 34% of respondents believe that having access to credit could have avoided closing. Also according to the survey, only 7% of this group of companies applied for bank credit and were successful.
By analyzing survival by sector, the survey showed that the highest mortality rate is found in commerce, where 30.2% closes their doors in five years. Next, come the manufacturing industry (with 27.3%) and services, with 26.6%. The lowest mortality rates are in the extractive industry (14.3%) and agriculture (18%).
Minas Gerais is the state with the highest mortality rate, 30%. The Federal District, Rondônia, Rio Grande do Sul and Santa Catarina presented an index of 29%. Amazonas and Piauí were the ones with the lowest mortality rates (22%), followed by Amapá, Maranhão and Rio de Janeiro (23%).
Melles remembers that Sebrae offers more than 100 free courses online and, this year, it began offering training through whatsapp.
In addition, he added, the institution has closed partnerships so that individual micro-entrepreneurs are able to sell their products in large marketplaces (business online).
Joining e-commerce is part of the survival strategy in the midst of the pandemic. The survey on the Impact of the Pandemic on small businesses, carried out by Sebrae in partnership with the Getulio Vargas Foundation (FGV) shows that 70% of small businesses already sell products over the internet.
“The entrepreneur must always seek innovation and training. Preparing to enter the business world is the first step to be successful with a company”, highlighted Melles.
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