Brazil: Small businesses generate income of US$78 billion per year

RIO DE JANEIRO, BRAZIL – Small businesses generate around R$420 billion (US$78 billion) annually, equivalent to one-third of the Brazilian Gross Domestic Product (GDP).

The estimate is included in the Atlas of Small Businesses, launched by Sebrae (Brazilian Service to Support Micro and Small Enterprises), which completed 50 years this Tuesday, July 5, 2022.

According to the survey, smaller businesses inject R$35 billion per month into the Brazilian economy. The survey analyzed the participation in the economy of micro and small companies and MEI (individual microentrepreneurs).

According to the publication, MEIs generate R$11 billion monthly, which means R$140 billion annually. Micro and small companies generate R$23 billion monthly, moving R$280 billion annually.

Currently, smaller businesses account for 30% of the GDP. According to Sebrae’s president, Carlos Melles, the participation may reach 40% of the GDP if the country grows 3% a year in the next few years.

“In developed countries, the participation of small businesses in the GDP is around 40% to 50%. If we promote this growth in ten years, the whole economy will benefit, thanks to the power MPEs [micro and small companies] have to generate income and jobs,” he assessed.

The survey found that of 15.3 million owners of small businesses in activity in Brazil, 11.5 million depend exclusively on business activity to survive. Concerning MEI, the proportion reaches 78%, equivalent to 6.7 million people.

Among the owners of micro and small companies, 71% have their primary source of income in the small business, representing 4.7 million people.

GROWTH

From 2012 to 2021, the number of self-employed workers in Brazil will grow 26%, from 20.5 million to 25.9 million.

In the same period, the number of formalizations among MEI increased from 2.6 million to 11.3 million, an increase of 323%.

It is a growth 12 times greater among individual microentrepreneurs compared to business owners who have not been formalized.

According to the Sebrae survey, 28% of the MEI were working outside the formal market when they adopted the special tax payment regime.

Of this total, 13% had informal entrepreneurship as their primary occupation, and 15% worked as employees without a signed contract.

The proportion of informal people has been falling over time. Around 2.5 million people were taken out of informality (28% of the 8.7 million individual microentrepreneurs in activity) because of the MEI registration.

Concerning micro and small companies, 13% of entrepreneurs were informal before opening the business. Of this total, 6% worked as informal entrepreneurs, and 7% were employees without a formal contract.

REGIONS AND STATES

The Small Business Atlas also shows peculiarities among regions and states. The North has one of the highest proportions of young and black people running a business.

Sergipe is one of the states with the highest proportion of entrepreneurs in the Northeast. In the Center-West, the Federal District has one of the highest proportions of business owners with higher education.

The South has the highest proportion of entrepreneurs who contribute to Social Security. The Southeast has the largest number of small businesses, with three states – São Paulo, Minas Gerais, and Rio de Janeiro – concentrating 40% of the small business owners in Brazil.

Rio de Janeiro, Alagoas, Paraíba, and Sergipe have the largest shares of individual microentrepreneurs among the open enterprises.

Maranhão, Amapá, Paraná, and Piauí have the highest proportion of micro-enterprises in business openings.

In opening small businesses, Mato Grosso, Pará, Amazonas, and Amapá are the leaders.

Rio de Janeiro, the Federal District, and Sergipe have the highest proportions of women among business owners, with 38%, 37%, and 37% of the total, respectively.

The proportion of entrepreneurs who classify themselves as black (black and brown) reaches 84% of the total of business owners in Amazonas and Acre.

In Santa Catarina and Rio Grande do Sul, the proportion of blacks reaches only 15%.

With information from Poder360