Social,Inclusive Businesses in Brazil, A Progress Report
What is the state of the social/inclusive business field in Brazil? A recent mapping by Plano CDE, and coordinated by AVINA Potencia Ventures and The ANDE Brasil Chapter identified 140 social/inclusive businesses throughout the country and conducted in-depth interviews with 50 of them. The mapping revealed several interesting findings and surprising data about the characteristics, progress, and challenges that these businesses still face on their path toward consolidation and growth.
A quick analysis of the founding entrepreneurs behind the 50 interviewed businesses revealed a focus on the following areas: education (34 percent), followed by microcredit/financial services (24 percent), culture (24 percent) and distribution channels (18 percent).
However, based on the products and services offered, we call attention to the low number of businesses in structural areas such as housing (6 percent) and health (4 percent), both critical for ensuring a better quality of life for low-income people. It behooves us to understand why this happens and how we can overcome the obstacles to encourage more entrepreneurs to create more businesses in these areas. The same applies to products and services in the technology area (2 percent), which reinforces the fact that, as in traditional businesses, the social business sector in Brazil still has yet to explore the opportunities of harnessing technology as a service to social inclusion.
Two-thirds of the respondents said they had developed their own business model, but a third said that they had help, especially from universities, or were inspired by international models. This shows that it is possible to adapt and replicate successful models from abroad in Brazil.
The good news revealed by the study is that, despite their short existences — 52 percent of businesses were created in the last five to six years – 64 percent of them reported they no longer depend on donations, half already operate in several regions of the country and 28 percent are international in scope. Some 86 percent of the respondents said that they have their own resources to finance their day-to-day operations, while 10 percent use loans and 4 percent receive help from donations.
When asked about the profile of their clients, these businesses said they sell their products and services mainly to individuals (74 percent) and small and medium enterprises (60 percent). Slightly less than half of them serve large companies (48 percent) and NGOs (26 percent). However, only 18 percent have the government as a consumer of the products/services offered, which strengthens the shared perception of many working people that there is still a lot to develop in the relationship between social businesses and government programs oriented towards the poorest populations.
About Social Impact
The study also sought to understand the cost/social impact relationship. As you know, one of the premises of a social business is to create a low-cost model that allows offering affordable, quality products and services to a large number of people, maximizing its social impact. Of the respondents, 86 percent of the respondents said that providing access to the products and services and 82 percent said that social impact was achieved by the entry of people from the base of the pyramid into the value chain as suppliers, distributers, or owners of their own business. As you can see from the overlap in results, 68 percent of businesses generate impact by both strategies at the same time.
On the other hand, it was very surprising to see that, despite having a main objective of generating social impact, only half of those surveyed said that they collected data on the impact generated, usually through their own methodologies. Taking into account that the main objective of this sector is positively transforming people’s lives, this is an indicator that there is still has a long way to go.