Brasília - Half of all small businesses in Brazil close their doors in the first two years of operation. That, says Silvano Gianni, head of the Small Business Administration (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas) (Sebrae), is one of the highest business mortality rates in the world.

Sebrae just ran a survey of small business mortality and found that 32% of the people who open small businesses do not seek professional help for financial problems. And the survey also found that 90% of them are not active in trade associations or unions.

The survey showed that out of 1.3 million new businesses opened between 2000 and 2002, a total of 552,700 of them closed down before they were three years old, with the vast majority (49%) closing before they reached two years of operation. The remaining 772,600 generated 2.4 million jobs and investments totalling US$6.5 billion (R$19.8 billion).

The Sebrae survey reports that annually some 470,000 new businesses open in Brazil and that the main reason they do not survive is weak management skills resulting in a shortage of working capital and other financial problems, along with unsound or nonexistent market knowledge. Sebrae also blames red tape for many small business problems that lead to failure.

Gianni says the way to lower the small business mortality rate is to train the businessman. He reports that Sebrae will provide that training and open communications channels so they can keep up to date on modern management techniques and practices.

Agência Brasil
Reporter: Stefan Barth
Translator: Allen Bennett
08/12/2004