Why Supporting Meaningful MSMEs and Startups Creates Positive Impact for Communities
ebrae RS is the regional branch of Sebrae Brazil, a national consulting and investment firm supporting micro and small businesses all across the country.
With a background in law and business administration, André Vanoni de Godoy has over two decades of experience in the upper management of Sebrae RS, in addition to running his own law firm. He has been an active participant in the evolution of the Rio Grande do Sul market since the turn of the century.
Sebrae RS, the largest accelerator in the region, has accelerated over one thousand startups in the past five years. It assists startups through five different tracks, helping them to scale, digitalize and connect with global partners, among others. Its greatest success stories include national financial institutions Warren and Yours Bank and tech platforms such as Sirros IoT and Rocket.Chat, which are used by major enterprises globally. In addition to its VC work, Sebrae RS raises awareness of and supports entrepreneurship and innovation by running hackathons, bootcamp and startup battles, and by supporting founder participation in fairs and other events.
Brazil is known around the world for its entrepreneurial culture, which is demonstrated through its creative individuals. Micro and small companies account for 30 percent of the gross domestic product, generating over R$420 billion in income each year. This sector is responsible for more than 78 percent of jobs generated nationwide in addition to promoting the large-scale productive inclusion of individual micro-entrepreneurs.
Rio Grande do Sul in particular is an extremely entrepreneurial region. In 2020, Sebrae RS participated in the GEM (Global Entrepreneurship Monitor) survey, along with forty-three other regions around the world. Among those surveyed, Rio Grande do Sul placed in the top five in terms of number and quality of entrepreneurs and for its focus on social impact work. Based on this GEM survey, it is one of the most entrepreneurial regions in the world, especially when it comes to micro and small companies.
The primary economic sectors in Rio Grande do Sul are agribusiness and livestock, which drive the entire production chain, but the economy, particularly for micro, small and medium enterprises (MSMEs), is very diversified, with textile and footwear production, viticulture, production of equipment for cargo transport (road and rail), heavy equipment and machinery for agriculture, extractivism (fishing, wood and ornamental stones) and tourism. This diversity allows Rio Grande do Sul to serve not only the Brazilian domestic market but also the world. China, the EU, the US, South Korea and Vietnam are some of the largest importers of goods from Rio Grande do Sul, and exports are growing every year. The state’s manufacturing sector alone grew 21.7 percent in 2022 compared to the previous year.
It is important to remember that financial viability is crucial for the success of a business, and that a focus on community impact should be integrated into all aspects of operations and marketing.
Other sectors growing rapidly for MSMEs include green- and environmental-focused businesses and technology. “At Sebrae RS we observe strategic sectors, and we highlight companies focused on specific niches,” says André. “We are now seeing more representation in terms of age, race, gender and orientation among MSMEs, propelling an expansion into the creative and digital economy, experience tourism, smart industries and even sustainable agriculture, among others.”
In addition, the growth of renewable energy, ESG (environmental, social and governance) and carbon capture/renewal brings many opportunities. With the increasing digitalization of various industries, there is a growing demand for technological solutions that can help businesses improve efficiency, reduce costs and better serve their customers.
MSMEs are a great example of how individuals can impact their immediate communities. These businesses use commerce as a force for good and create innovative solutions to help lift people out of poverty.
MSMEs provide agency and participation for marginalized groups. Brazil is a continental country with a huge domestic market, which is both an opportunity and a problem. “Sometimes our small companies miss global opportunities because they are focused on the local market,” says André. “MSMEs provide a variety of opportunities for local communities, such as employment, economic development and empowerment for underrepresented groups.” MSMEs and startups are capable of generating impact beyond their communities, directly or indirectly. The solutions they create are already transforming the whole country and the region. Local solutions help people around the world while creating jobs and income back home in the state.
Women entrepreneurs in Brazil are also making significant contributions to the economy and local trade, representing approximately 34 percent of total Brazilian entrepreneurs. Having a diverse range of business owners and entrepreneurs is beneficial for the economy as a whole and leads to new ideas, innovations and job creation. Additionally, increasing opportunities for women entrepreneurs can help promote gender equality and empower women to take leadership roles in business and the wider community.
André's most important tips for startups:
- Involve your market. Founders of MSMEs can take several steps to ensure that their businesses have a positive impact on their own community and others. Entrepreneurs should strive to interact with community members and gather their perspectives on the business and its impact from the very start. This will foster trust and ensure that the business aligns with community goals and values.
- Understand community priorities. It is crucial to comprehend the local community's requirements and priorities. This will guarantee that the business offers products and services that fulfill actual needs and contributes to the community's well-being.
- Buy local. MSMEs should attempt to acquire materials and supplies from local sources in order to support the local economy.