Microentrepreneurs use reserves to maintain business

Small business owners are burning their personal reserves, earmarked for raising their children or buying their own home, to keep their businesses alive. They attribute the problem to inflation, which has raised production costs and driven away customers. In the last 12 months, official inflation is 11.73%.

This is the case of pedagogue Rosângela Tavares, 45. Unemployed since the beginning of the pandemic, she opened a small bakery inside her home, in Vila Santa Catarina, south of São Paulo. In two years, she was so satisfied with her new job that she gave up going back to her area of ​​training, but the escalation in the prices of basic materials for making cakes, honey bread and alfajores has affected her budget.

Creator of Doces Joaninhas, Rosângela has used the money from her personal reserve, intended for the education of her son Nicolas, 14, to continue working. She says that a can of condensed milk, which two years ago cost R$4.50, today is close to R$9. The 2.5 kg milk chocolate bar jumped from R$28 to R$60, and 1 kg of refined sugar, which in 2020 cost R$2, now it costs at least R$4.

“I had to get my hands on my reserve, I need to cover the hole somehow. [dinheiro guardado] suffer,” he says.

According to data from the IPCA (National Broad Consumer Price Index), official inflation in Brazil, the price of condensed milk rose 6.27% in the last 12 months. Chocolate bars, in turn, rose 10.18% and refined sugar, 35.74%.

Rosângela declares that it is easier to withdraw money from the account than to raise the prices of her products. She sets a monthly goal of selling at least 30 cakes, the flagship of the house, but it’s not always possible. The simple cake costs R$25, and the confectioned one costs R$45 to R$90. “If I increase it, the customer doesn’t understand. It’s better for me to live with little than to lose my clientele.”

Although she faces setbacks, she says that her current job guarantees a better quality of life compared to her former job as a pedagogue.

Entrepreneur is scared of rising prices

Camila Alcântara put the brakes on the dream of her own home to buy more expensive materials for her company

Image: Personal archive

Entrepreneur Camila Alcântara, 28, has also made her personal reserve balance smaller each month. With a degree in history, in January this year she opened the company Realejo, a bookbinding and restoration company, and says she won customers in the first few months.

But the price of raw materials surprises him every time he goes to a stationery store in Juiz de Fora (MG), he says. The IPCA recorded an increase of 8.69% in stationery in the last 12 months.

Today, Camila says she pays R$ 24 for a pack of 500 A4 sheets — two months ago, it cost R$ 18. The 1 kg glue, as essential as paper, rose from R$ 28 to R$ 33, he says. Even against her will, she uses the money saved to buy her dreamed home with the aim of keeping Realejo standing.

She receives an average of 15 to 20 orders per month, but depends on the seasonality of commemorative dates to hit her billing goal. Passing on the price of inputs for your services is out of the question. She charges up to R$50 to create notebooks from scratch and R$70 to restore books.

“I’m fully aware that I’m starting now and it’s not easy for anyone. When I talk about how much it costs, some people don’t even look for it anymore. It’s difficult, I practically don’t make a profit.”

Brazilian prioritizes rice and beans, says entrepreneur

Julia Berengani says that the sale of organic yogurts has fallen by half - Personal archive - Personal archive

Julia Berengani says the sale of organic yogurts has fallen by half

Image: Personal archive

Fired at the start of the health crisis, care assistant Julia Berengani used her unemployment insurance to start her own business. She has the dual task of dividing herself as a cultural producer and partner-owner of Berelu Orgânicos, which sells vegan and organic yogurts, and has her brother, Pedro, 32, and her sister-in-law, Cristina, 30 as partners.

She lives between Santo André, in ABC Paulista, and her family’s farm, located in Cerqueira César, in the interior of São Paulo.

From the beginning, she says that her objective was to offer her product at an affordable price, which did not exceed R$ 4.50 for the consumer. Today, however, organic establishments sell the product at R$ 8.50, depending on the unit.

With the rise in prices, Julia had to follow the same pace to avoid accumulating losses. A kilo of organic strawberry costs R$ 10 – she paid half the amount three months ago. The yam, which is used as a base for yogurt, is sold direct from the producer for R$5 a kilo, not R$3 more.

The strawberry accumulates a significant increase of 57.63% in the last 12 months, according to the IPCA. The price of yam rose 3.67% in this period.

In addition to competing with big brands, which dominate the shelves of the establishments, Julia attributes to the most expensive basic food basket the decrease in sales. At the beginning of this year, Berelu sold 200 pots a month and, nowadays, it fluctuates between 70 and 100.

“The economic crisis has made people buy less and less of our product,” she says, recognizing that the search for rice and beans has been a priority for Brazilians.

Julia believes that the company’s situation may improve from 2023 onwards, with the attempt to put its product in the lunches of schools and universities.

Raising prices drives away customers, says expert

Sebrae-SP consultant Paula Pereira says that the combination of excessive inflation and the loss of Brazilian purchasing power affect mainly those who are MEI (individual microentrepreneur) and MPE (micro and small entrepreneur).

A survey released in May of this year by the entity with more than 13 thousand participants showed that the increase in costs (50%) and the lack of customers (21%) are the factors that most bring difficulties for those who have small businesses.

According to her, these professionals do not have the bargaining power of a large brand because they buy on a smaller scale and, as a result, leave prices as they are. “Consumers naturally reduced their spending. If you pass on the increase, he runs away,” she says.

Although she considers it valid to hold prices, Paula says that it is essential for business owners to have a well-adjusted financial control, including all the money that comes in and goes out.

“It is necessary to understand that your margin has decreased, but expenses increase. Having this control today is essential to survive.” According to the Sebrae survey, 41% of entrepreneurs are concerned about the future of their company.

She recommends that entrepreneurs practice the staggered adjustment, that is, make the price change gradually, ideally with an interval of one or two months.