Brazil is experiencing a real boom of small and medium-sized companies. According to data from Sebrae, an entity supporting entrepreneurship in Brazil, small brands already account for 27% of the Brazilian gross domestic product (GDP), and this upward trend is far from reaching a peak. Until 2022, the number of small businesses is expected to increase by 43%.
The expansion of small and medium-sized enterprises in Brazil represents a great opportunity for Software-as-A-Service (SaaS) companies. Such figures leave no doubt that there is a growing demand for technological solutions that make the life of entrepreneurs easier.
Which are the characteristics of the Brazilian market that explain the proliferation of small and medium-sized companies? Why has Brazil become the promised land for Saas companies?
LABS answers these questions.
Entrepreneurship on the rise
It is no exaggeration to say that Brazil is in the height of entrepreneurship. Numbers confirm this statement: In 2018, 2.5 million new companies were created in the country, 15% more than in 2017. Most of them – 8 out of 10 – consists of individual micro-entrepreneurs, referred to as MEI in Brazilian legislation. Entrepreneurs who have an annual turnover of up to R$81 thousand per year fall into this category.
The industries that have most grown in recent years were food, hygiene services, building maintenance, clothing retail, publicity and advertising, among others.
After the economic recession the country went through in 2015 and 2016, many Brazilians saw a promising future in entrepreneurship. Today, as the economy recovers, the numbers show that opening small and medium-sized companies has been one of the main career options for Brazilians.
In most cases, they are entrepreneurs who are entering the business world for the first time and, as such, have to deal with complex issues such as planning and logistics.
Because they are seeking to consolidate their brands, they need technological solutions that make management easier and create optimal conditions for growth. Here’s the opportunity for SaaS companies: more than ever, Brazilian small and medium-sized brands need agile solutions, both to streamline management and to improve customer relationships.
On the other hand , the growing demand for technological solutions is not Brazil’s prerogative. Other Latin American countries are also experiencing this favorable moment in their markets . The boom of startups and Fintech companies and the expressive data on connectivity in this region have made Latin America stand out, technology-wise.
Without a doubt, it is a breeding ground for entrepreneurship. And also an opportunity to escalate the bottom line of SaaS companies that are capable of meeting the needs of these new companies.
High demand and low competition
Although some Brazilian SaaS companies are selling their services domestically, there is still a large gap to be filled. According to the Brazil SaaS Landscape 2017 report, more than 90% of SaaS companies headquartered in Brazil have from 1 to 50 employees. The survey also points out that 54% of these companies have up to 100 customers, which does not do justice to the expressive number of companies located in the country.
Data indicates that, even though there are local solutions, the growing demand creates the need for more mature products, which opens a range of opportunities in Brazil for international and better developed SaaS companies. In a country with at least 49.3 million entrepreneurs, providing technology solutions that facilitate the daily routine of millions of small and medium-sized companies can be promising.
Unlike large companies, where short-term scalability is lower, due to the required bureaucracy regarding data protection and also because they need larger and more complex services, small and medium-sized brands need more entry-level and scalable SaaS solutions, as of now.
The needs of this industry are evident and solutions that really meet the needs of this audience are still rare. Which means this is the right time to invest. The market is growing and, although competition exists, the market is far from overcrowded. If solutions offered by your company are in line with the needs of small and medium-sized Brazilian entrepreneurs, your company can take advantage of the best opportunity scenario of this wave of entrepreneurship.
A successful expansion will depend, of course, on the accuracy of strategies adopted by each SaaS company. Localizing the product to the local language, for example, is the first step. Although it requires a high initial investment, having a dedicated sales strategy and a user-friendly product for Brazilians may be directly responsible for increased earnings in the country.
Understanding the Brazilian market
The size of the Brazilian market and its positive features have been attracting more and more investments to the country. The Middle-Class boom in recent years, the growing wave of entrepreneurship and the surprising presence of the Internet among the population make Brazil a land of opportunities.
As we have seen, SaaS companies have a lot of ground to cover. At this point , understanding the profile of small and medium Brazilian entrepreneurs makes the whole difference. How to enter the country and gain market share in this fast-growing business scenario? What kind of solutions do small and medium-sized companies in Brazil need?
The first step is to identify the weaknesses of Brazilian entrepreneurs that can be mitigated by technological solutions. By understanding how your company can help them, it is much easier to convince them about the value for money of your products.
Besides, it is crucial to adapt your prices to the reality of small and medium entrepreneurs in Brazil. These are not high-earning brands: they actually seek in SaaS companies a possibility to save time and money to grow more. Your company must be aware of this feature.
Last but not least, affordability is a key point in the strategy of SaaS companies. When hiring a product, small and medium entrepreneurs need to be sure that the investment will bring more time and security so that they can dedicate themselves to other demands of their companies. Not to mention that by offering customized and straightforward service, the SaaS provider is also keeping costs down.
A promising market
Time to invest in Brazil is now: the boom of entrepreneurship is a recent phenomenon and the demand for technological solutions only tends to increase.
SaaS companies that manage to take advantage of this growing scenario will certainly come out ahead and will be able to fill the gaps in the largest market in Latin America.