Small businesses are in a moment of recovery, says research by FGV and Sebrae

A survey carried out in partnership between Fundação Getúlio Vargas (FGV) and Sebrae showed that the proportion of companies with falling revenue has dropped to the lowest level since the beginning of the pandemic in Brazil.

The survey reveals that small businesses maintained the recovery scenario and none of the 20 observed segments showed a worsening in relation to the financial situation in comparison with the previous survey.

The percentage of small businesses that reported a drop in revenue was 59%. In the previous edition of the survey, the percentage was 68%.

In March 2020, the first edition of the survey, the percentage was 89%. The average level of impact of the pandemic on business was also reduced, with a loss of 23% compared to the pre-pandemic period.

According to the entrepreneurs interviewed, the increase in costs and the lack of customers are being the worst factors of difficulty in business, and not the pandemic anymore.

For 50% of small entrepreneurs, the increase in costs such as inputs, goods, fuel, rent and energy are the factors that are making it more difficult for companies to recover.

Then come the lack of customers (23%), debts with loans (11%), debts with taxes (4%), debts with suppliers (4%) and pandemic (3%).

For Kennyston Lago, Sebrae Strategic Management analyst, although the pandemic is not, in theory, the main problem pointed out, the current economic effects are directly related to the health crisis.

The researcher cited the increasing weight of rents for businessmen as a highlight.

“A new issue that we hadn’t monitored before is about rents. Half still pay rent and this is an important variable. Most reported that the rent was readjusted. So in addition to fuel, energy, rent also increased. And these costs are not being passed on in their entirety to customers,” he explained.

For 66% of micro and small entrepreneurs (MPE) and for 60% of individual microentrepreneurs (MEIs), the rents they pay to lease the physical spaces of their companies have increased.

The survey also indicated the impacts by segments. The most affected segments are, in this order, beauty, crafts, creative economy, tourism and fashion.

The least affected are health, industry, agribusiness, business services and energy. In all these segments, MEIs were the ones that suffered the worst losses.

Despite the improvement in relation to the number of entrepreneurs who reported a reduction in revenue, there was a reduction in the expectation that the situation will return to normal. According to the survey, 41% of respondents said they were worried about the future – in the previous survey the percentage was 39%.

“The businessman’s mood is very much related to his pocket. The less money you have, the more worried you are. We saw that although Covid is no longer the great villain, inflation has worsened. Now the main problem is the issues of rising costs. The health problem is improving, but the effects on the economy are still there and will not be resolved in a short period”, said Lago, explaining the reasons that resulted in this worsening in the perception for the future.