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São Paulo 2014 Blog: Six Facts about SMEs in Brazil

There are over 6 million small- and medium-sized businesses in Brazil. (Image: Government of Bahia)

Wednesday, March 12, 2014

As Brazil’s economy grows, so do opportunities for entrepreneurs. The country currently has around 6.3 million small- and medium-sized enterprises (SMEs). Brazil’s National Development Bank classifies these businesses as companies with annual operational revenue of $38 million or less. To kick off the 2014 Latin American Cities Conferences: São Paulo blog, AS/COA Online takes a look at facts and trends for Brazilian SMEs.

1. SMEs contribute to 20 percent of Brazil’s GDP.

According to the Brazilian Institute of Geography and Statistics, SMEs are responsible for 20 percent of the country’s GDP. And it’s not just the expanding economy that has boosted these businesses. A law passed in 2006 to benefit these types of companies helped create the “individual micro entrepreneur” by allowing businesses that make up to $25,000 a year to become formalized. Also, improvements in education helped foment small businesses: around 60 percent of new enterprises opened in 2012 were headed by people who finished high school.

2. Over 50 percent of Brazil’s formal jobs are in SMEs.

The country has more than 6 million small- and medium-sized enterprises, representing 52 percent of Brazil’s formal jobs. In January 2014 alone, SMEs created 47,700 new jobs in Brazil, according to the Brazilian Service of Support for Micro and Small Enterprises.

3. More women are starting SMEs.

Between 2002 and 2012, the number of women starting SMEs in Brazil grew by 18 percent. In the last three years, 52 percent of SMEs were headed by women. Women represent around 48 percent of those who open franchises in Brazil, says a 2014 Rizzo Franchise report. Last year, nearly 500,000 women applied to buy a franchise branch, while women’s participation in the franchise sector grew by 6.9 percent.

4. In Brazil, technology has a growing role in SMEs.

According to a 2013 Deloitte report, 29 percent of the 250 fastest-growing Brazilian SMEs focus on information technology and the internet. Plus, a 2013 Boston Consulting Group study found that Brazilian SMEs that adopt new technologies grew their revenue 16 percent more than their counterparts and generated 11 percent more jobs.

In a bid to spur more tech startups, the federal government launched the Start-Up Brasil program last year. The program partners with Brazilian accelerators and invests in tech startups, as well as providing training and support.

5. Entrepreneurship is a growing career choice, rather than a necessity.

A 2013 Global Entrepreneurship Monitor survey found that having a business is the third most common wish among Brazilians after the desire to own a house and to travel. More than 80 percent believes opening a company is a desirable career path. Around 71 percent of entrepreneurs said they started their business based on the opportunity, rather than necessity. This represents a change from 2002, when 58 percent of entrepreneurs began an enterprise out of need.  “Brazil has been known as a very entrepreneurial country, but for what we call ‘necessity entrepreneurship,’” Start-Up Brasil COO Felipe Matos told AS/COA Online last year. “This has been changing in the last few years to what I call ‘opportunity entrepreneurship.’”

6. São Paulo has the largest share of fastest growing SMEs.

São Paulo is home to 40 percent of entrepreneurs who head the fastest growing SMEs in the country. The Brazilian Southeast (Espirito Santo, Minas Gerais, Rio de Janeiro, and São Paulo) is home to 57 percent of the 250 fastest growing SMEs. These businesses grew an average of 25 percent between 2010 and 2012.