Over Half of Brazil’s SMEs at Risk of Collapsing within Next Six Months

RIO DE JANEIRO, BRAZIL – The crisis caused by the novel coronavirus pandemic has dramatically impacted the turnover of small and medium-sized Brazilian companies (SMEs).

A new study conducted by Garner’s software company Capterra found that 53 percent of businesses will survive under current market conditions for up to six months. Another 25 percent said they could survive for over a year and 22 percent between six months and a year.

The survey heard 337 employees in management and administration positions in Brazilian companies with up to 250 workers from various sectors in the country. The interviews were conducted between May 19th and 21st.

The size of the company influences the managers’ perception of business health. Among the companies with between two and ten workers, 59 percent of respondents believe that the business will be closed in up to six months. Among the larger companies, with 11 to 50 employees, the rate stands at 49 percent. For companies with between 51 and 250 employees, the average is 51 percent.

According to Lucca Rossi, an analyst at Capterra, the main difficulty for companies at this time is keeping their finances on track: 88 percent of the SMEs interviewed in the study said they consider it important or very important to increase cash flow in the short term. In addition, 86 percent of businesses feel it is vital to cut spending and retain customers in the coming months.

To increase a business’ prospects of surviving the crisis, managers need to rework plans and adapt to a new reality, according to Rossi. “This scenario of constant changes is not new to many companies, but it tends to intensify with this crisis, given that we still do not know when a treatment or vaccine for the coronavirus will be available,” says the analyst.

Source: Exame