2024-12-04 15:19:00
The majority of businesses opened in Brazil cannot survive for more than three years: 51.15% of them close their doors in this period of time. This is what a survey carried out by BigDataCorp (a company specialized in capturing, structuring, storing and distributing data) and reported by CNN Brasil.
Among the various factors that can lead a business to close is the lack of planning and correct analysis of the numbers, as Wallisson Deziderio explains. An accountant by training, he is CEO of Billion Contabilidade, a company that assists business owners in matters such as accounting, tax and personnel departments.
“The fact that many companies are at risk of closing their activities due to a lack of analysis of accounting and financial statements is a point that is often neglected, which can lead to serious consequences for the sustainability and survival of the business”, analyzes Deziderio.
He highlights the need to analyze the balance sheet, the income statement for the year (DRE, which show the performance of a business in a specific period) and other reports to identify possible financial, operational and management risks. Based on this, the company is able to make decisions considering accurate information and organize itself better.
Deziderio also mentions other indicators that should not be forgotten by anyone who has their own business. They are: current liquidity (measures the company’s ability to pay its short-term obligations), dry liquidity (similar to current liquidity, but excludes inventories) and debt ratio (measures the company’s degree of dependence on external financing to finance its operations)
“Without these indicators, managers are unable to make well-informed financial decisions, which can result in insolvency, cash flow difficulties and increased dependence on debt. Ultimately, the absence of data can significantly contribute to the closure of the business due to poor financial management”, warns Deziderio.
The term “insolvency” that the expert referred to is used to describe when the business can no longer meet its financial obligations. This is the case, for example, of a company that incurs debts so large that paying them becomes unfeasible.
“The combination of lack of financial planning, inadequate management, lack of adaptation to the market, undercapitalization, problems with cash flow, intense competition and lack of management qualifications are some of the most frequent causes of failure”, assesses the CEO of Billion Contabilidade .
For Deziderio, it is essential that entrepreneurs seek knowledge, carry out solid planning, regularly analyze financial indicators and be prepared to deal with market challenges. “This minimizes the risks of bankruptcy and increases the chances of business continuity”, he summarizes.
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What are the biggest factors contributing to the high failure rate of new businesses in Brazil?
## Brazil’s Startups Struggle to Survive: An Expert’s Insight
**Host:** Welcome back. Today we’re discussing a troubling trend in Brazil: the high failure rate among new businesses. A recent study found that over half of all new businesses in Brazil close their doors within just three years. Joining us today is Wallisson Deziderio, CEO of Billion Contabilidade, a leading accounting firm specializing in assisting small businesses. Wallisson, thanks for being here.
**Deziderio:** Thank you for having me.
**Host:** Let’s dive right in. Over 50% failure rate is alarming. What are some of the biggest factors contributing to this?
**Deziderio:** The lack of proper planning and analysis of financial data is a major culprit. Many entrepreneurs neglect analyzing key documents like balance sheets and income statements. This lack of insight can lead to poor decision-making and ultimately, business closure. [[1]]
**Host:** So, are you saying that crunching numbers is truly the key to survival?
**Deziderio:** It’s certainly a critical element. Understanding your financial health through these reports allows you to identify potential risks – financial, operational, even managerial – and address them proactively.
**Host:** What kind of concrete steps can new business owners take to avoid becoming part of this statistic?
**Deziderio:** First, they need to embrace financial literacy. Understand the importance of regularly reviewing financial statements. Second, they should seek professional help. Accountants and financial advisors can provide invaluable guidance in interpreting data and making sound decisions. Lastly, they shouldn’t shy away from using key indicators like liquidity ratios which provide a snapshot of a company’s short-term financial health.
**Host:** That’s some practical advice. Thank you for shedding light on this important issue, Wallisson.
**Deziderio:** My pleasure. It’s crucial that entrepreneurs understand the importance of financial awareness for the survival and success of their businesses.
