OPENING AND CLOSING OF COMPANIES IN A BRAZILIAN CITY OF SÃO PAULO STATE: AN ANALYSIS FROM 2010 TO 20 Bruno Celestino Mateus Bachelor in Business Administration FHO Uniararas E-mail: bmateus.89@hotmail.com Karina Aparecida Fernandes Bachelor in Business Administration FHO Uniararas E-mail: ka.fernandes_@hotmail.com Thiago Ferreira Quilice Masters Degree in Business Administration at University of São Paulo Business Administration Professor at FHO Uniararas E-mail: thiagoquilice@uniararas.br Lucas Silvestre de Carvalho Masters Degree in Business Administration at Federal University of Lavras Business Administration Professor at FHO Uniararas E-mail: lucas.carvalho@uniararas.br Nelson Oliveira Stefanelli Masters Degree in Business Administration at University of São Paulo Business Administration Professor at FHO Uniararas E-mail: nelsonstefanelli@uniararas.br Luiz Eduardo Gaio PhD in Business Administration at University of São Paulo Business Administration Professor at FHO Uniararas E-mail: gaio@uniararas.br ABSTRACT This paper aims to identify the quantity and the main branches of companies that have opened and closed in the city of Araras, State of São Paulo, from January 2010 to December 20. A survey was conducted to analyze the data and characteristics of all these companies. It was possible to find the total amount of 6,362 companies in this period. The results showed 5,385 opened companies and 977 closed companies, and the retailing market of apparel and accessories as the most relevant (both in openings and closings), followed by ii. hairdressing services and iii. foundations construction services as the second and third (in openings), respectively, and ii. snack bars, teahouses, juices and iii. retail of general goods, especially food products, as second and third (in closings), respectively. Keywords: Opening, Closing, Entrepreneurship. Society for Business Research Promotion 16
1. INTRODUCTION The concept of entrepreneurship has been intensified in the 1990s, but the theme of consolidation and its relevance to Brazil took place from the year 2000 (Dornelas, 2015). A company interviewed 43,000 people in 21 countries, in 2000 the results placed Brazil in world first place of entrepreneurial spirit, where one in eight Brazilian were opening or considering to start a business (Maximiano, 2011). Having your own business is increasingly present in people's lives, as confirmed by the data of Serasa Experian Index (2015) the number of opened companies in Brazil has grown every year, and comparing 2013 to 20 there was an increase of 1.4% the number of opened companies in the country, comparing 2012 to 2013 this number was 8.8%, showing that even with a lower percentage growth in 20 compared to 2013, the opening of companies continues to grow. With the number of companies in Brazil increasing annually and placing Brazil at the top of the countries with entrepreneurial spirit, this paper aims to analyze and identify the branches of opened and closed companies from January 2010 to December 20, in Araras, a city in the State of São Paulo, with an area of 643.46 km2 and a population of 1,898 inhabitants, according to the latest census conducted in 2010 by the Brazilian Institute of Geography and Statistics (IBGE) (2015) with an estimate of 127,661 inhabitants in 20, according to the same institute. This analysis of branches and quantities, monthly and annualy, search to find if the opening of businesses in Araras is also growing, as well as in Brazil, trying to identify if there is a pattern of growth or decline of the companies analyzed during this period. The paper also includes an analysis of the lifetime of the companies that were closed during this period. With the analysis and results of this research seeks to find in what situation is the opening and closing company, with branches in the city of Araras, may have a detailed analysis of this situation with your progress or retreat during the years analyzed. 2. THEORETICAL BACKGROUND The origin of the word entrepreneur comes from the French entrepreneur, which means one who takes risks and start something new (Dornelas, 2015). The idea of an entrepreneurial spirit is associated with fulfilling people, that mobilize resources and take risks (Maximiano, 2011). It can be seen that the definition of the word entrepreneur is directly linked to the practices and characteristics of an entrepreneur. There are several circumstances where an entrepreneur is born, which may or may not have been a reflection of personality (Bernardi, 2012), thus showing that an entrepreneur does not necessarily is born with this feature in itself, it also may arise from circumstances. A survey conducted by Sebrae (Brazil's Micro and Small Business Support Service) (2007) reveals that among the main factors justifying the opening of a company, the first place is the identification of a business opportunity, followed by previous experience and affected by unemployment, respectively. The possibility of starting a business most of the time not only depends on the entrepreneur's willpower or the idea itself; behind this dream there are many bureaucratic requirements to be able to open your business within all the regulations and standards imposed by the law. According Maximiano (2011), Brazil does not have a cozy backdrop to the entrepreneur, with a few lines of credit and financing, high interest rates and taxes that represent a high burden of costs to the entrepreneur. Entrepreneurship can be classified in two different types: i. entrepreneurship of opportunity, in which the entrepreneur analyzes the opportunities and creates a preplanning of his goals; and ii. entrepreneurship of need, who are those who open their business due to own needs, venture on a journey because of lack of choice, are unemployed or have no working alternative (Dornelas, 2007). Society for Business Research Promotion
The Brazilian Institute of Planning and Taxation (BIPT), which operates since 1992 in order to study and enlighten people and businesses on the tax burden in the country, conducted a study which found that the state of São Paulo in 2013 there was a total of 1.380.437 active companies and in 20 this number increased to 1.545.405 active companies, i.e, an increase of almost 12%. In the state of São Paulo the average mortality rate for companies with up to one year of activity is 35%, so that the trading companies are those with the highest rates of mortality, and about 39% of them close before completing its first year of activities, according to a survey by Sebrae (2007). 3. METHODOLOGY 3.1. Research Type The methodology used for the survey and data analysis was the quantitative literature method. All data were collected at the Board of Trade of São Paulo (JUCESP) website, which provides on its basic information database of all companies, duly registered in the state of São Paulo. The information provided are: company name, type of company, the national registration number of legal entity, branch of work, initial capital and business address. Such information were consulted without any restriction. 3.2. Object of Study The object of study consists in all open and closed companies, from January 2010 to December 20 in the city of Araras, Brazil, which is located 4 km from the state capital of São Paulo. Araras has an area of 643,46 km² and an estimated population in 20 of 127.661 inhabitants, according to the Brazilian Institute of Geography and Statistics (2015). 3.3. Data Collection Based on information provided by the JUCESP website it was collected information from all opened and closed companies in the city of Araras, SP, from January 2010 to December 20. The process of gathering the information necessary to perform the analysis was carried out manually, only by following the information provided by the JUCESP website, company by company, raising a total quantity of 6.362 companies:5.385 opened companies and closed companies. The steps of the data collection process on the website is described below: Step 1 Website JUCESP: www.jucesponline.sp.gov.br. Step 2 - Click the "Advanced Search" item. Step 3 - Fill in the fields according to the search criteria. The authors of this paper used the field "city", "opening date" or "date of dissolution" and the item "show only active companies" is unchecked because if this field is with marking the search would not fit to the research procedures; ultimately the search button must be clicked. Step 4 List of registered companies is exhibited, according to the search criteria, after this the "NIRE" button must be clicked to access the data of each company. Step 5 - Data presented from each company were transferred to a spreadsheet, in ".xlsx" format. 3.4. Data Analysis This study performed a quantitative data analysis methodology for all companies that have been opened and all that were closed during the period of five years, which is January 2010 to December 20, based on information collected on the Board of Trade of the State of São Paulo (JUCESP) website. The quantitative analysis method uses statistical techniques, aiming to identify the presence, measuring intensity and frequency of behaviors, generating accurate and reliable measures to be applied to the studied object (Cruz, 2009). The presentation of the results was divided into three points, the first point (1) refers to the information of the companies opened in the city, the second point (2) is about the information of the companies closed in the same period, also being analyzed the lifetime of these Society for Business Research Promotion
companies, and the final point refers to the conjoint analysis relating the two sets of findings (points 1 and 2). 4. RESULTS This section addresses the results found after the execution of the research. It is initially reported the data collected from opened companies, then the data of the closed companies and finally is made a comparison between the results obtained from opened and closed companies 4.1. Opened Companies From January 2010 to December 20, it was found the amount of 5.385 opened companies. In Figure 1, it is shown the number of businesses started each year in the city during the stipulated period. Analyzing Figure 1, it can be seen that the amount of opened companies grows every year, from 792 in 2010 reaching 1343 in 20, which represents a 69.57% increase in the period. During the five years analyzed there were no decrease in the number of opened companies, every year the amount increased, with a 9.09% increase between 2010 and 2011, 27.20% between 2011 and 2012,.11% between 2012 and 2013 and 4.35% between the years 2013 and 20, representing the lowest increase over the previous year; the largest increase in this comparison was between the years 2011 and 2012. It was also performed an analysis on a monthly basis, as shown in Figure 2, which represents the total amount of opened companies during the twelve months of the year in the analyzed period: Figure 2 shows that during the twelve months of the year, March was the month with the highest amount of opened companies, with a total of 538, followed by September with 532. On the other hand December with the amount of 326 was the month with the lowest incidence of opened companies of the period. The three branches of companies more opened during the period are shown in Table 1. The results presented in Table 1 shows that the branch with more businesses opened during the period was the "Retail trade of apparel and accessories", with 8.67% of the total opened companies, followed by the second placed "Hairdressing Services" with 4.27%, and third placed "Construction Services" with 2.93%. It can also be noticed that from the three branches of companies with the highest opening rate, two are related to services and a branch is retail trade. Retail trade is 20% higher than the sum of the second and third places. 4.2 Closed Companies From January 2010 to December 20, it was found the amount of 977 closed companies. Analyzing Figure 3 it can be seen that the number of closed companies is increased by 38.04%, comparing the closures of 2010 with 20. In the annual comparison, it is noticed an increase of.% between the years 2010 and 2011, an increase of 5.76% between 2011 and 2012, a reduction of 2.97% between 2012 and 2013 and finally an increase of,80% between the years 2013 and 20. It was also performed an analysis on a monthly basis, as shown in Figure 4, which represents the total amount of closed companies during the twelve months of the year in the analyzed period: Figure 4 shows the evolution of companies closed during the months of the year. February had 100 closed companies followed by December with 95 companies. On the other hand, January had the lowest amount of closed companies (69), followed by September with 70 and November with 71 closed companies. The three branches of companies more closed during the period are shown in Table 2. Society for Business Research Promotion 19
The results presented in Table 2 shows that the branch with more businesses closed during the period was the "Retail trade of apparel and accessories", with 6,86% of the total closed companies, followed by the second placed " Snack bars, teahouses, juices " with 4.91%, and third placed " Retail trade of general goods, especially food products " with 3,48%. It can be seen that all are related to Retail trade. It was possible to catalog the lifetime that these companies remained active, starting from its opening to the month of its closure (see Table 3). Table 3 allows us to observe that of all the companies that were closed during the period, 41% of them had a lifetime from one to five years, 22% with a lifetime from six to ten years and % with a lifetime up to one year. Only 1% of the analyzed companies survived more than 30 years. 4.3 Comparison between the Opened and Closed Companies Performing a comparison between opened and closed companies in the period, shown in Figure 5, it is possible to notice that the number of closed companies do not exceeded the amount of public companies in any year. During the five years analyzed the number of opened companies increased by 69.57%, against 38.04% of closed companies, showing that not only the amount but also the percentage growth of starting a business is higher when compared to closed companies. With the classification of the three branches of more opened companies in the period compared to the three branches of most closed companies it was possible to identify that in both cases the branch in the first place was the "Retail trade of apparel and accessories": 8.67% (opened companies) 6.86% (closed companies). Regarding the lifetime of closed companies in the period, it was found a large concentration in lifetime from one to five years, whose percentage was 40% of the total analyzed. Companies with lifetime up to one year was % - less than the displayed index to the state of São Paulo, which was 35% (SEBRAE, 2007) for the same lifetime. 5. CONCLUSION Through the content researched and analyzed it was possible to verify the quantitative progress and some characteristics of opened and closed companies Araras, São Paulo, from January 2010 to December 20. With the collected data it was possible to identify the annual advance of opened and closed companies during this period. The number of opened companies has always been higher than that of closed companies, and opened companies have always maintained an increase between years and regarding companies closed only in 2013 there was a reduction, but it increased again in the next period. Regarding the company branch, the "Retail trade of apparel and accessories" was the branch of most businesses opened and closed, showing that while this business branch is emerging more frequently than others, it is also the sector that most closed in the period. The lifetime analysis of the closed companies in the city has shown that half of the companies closed with five years and this is an opportunity for future work: identify the reason why this early closure happened. The aim of this paper, which sought to find the main branches of opened and closed companies and their characteristics has been reached. It was possible to make a quantitative analysis of all companies that were opened and closed in the city in the period. This information can be useful to all stakeholders and for future studies about this subject, in addition to serving as a basis for the development of policies to support entrepreneurship and can be used by potential entrepreneurs who are analyzing the market for opportunities. Society for Business Research Promotion 20
REFERENCES BERNARDI, L. A. (2012) Entrepreneurship and Management Handbook: Fundamentals, strategies and dynamics. 2. ed. São Paulo: Atlas. CRUZ, V. A G. (2009) Scientific research methodology. 1st ed. Sao Paulo: Pearson Education. DORNELAS, J. C. A. (2015) Entrepreneurship: transforming ideas into business. 5. ed. Rio de Janeiro: Ltc, DORNELAS, J. C. A. (2007) Entrepreneurship in practice: myths and truths of the successful entrepreneur. Rio de Janeiro: Elsevier. GLOBAL ENTREPRENEURSHIP MONITOR (Brazil) (Ed.). Entrepreneurship in Brazil: (2013) Curitiba: IBQP. IBGE BRAZILIAN INSTITUTE OF GEOGRAPHY AND STATISTICS. (2015) São Paulo: Araras. 2015. Available at: <http://cod.ibge.gov.br/43s>. Access: April 30, 2015 BIPT Empresometro Brazilian Corporate Profile. (2015) Available at: <http://www.empresometro.com.br/site/estatisticas>. Access: February 15, 2015. JUCESP (2015) Board of Trade of São Paulo. Available at: <https://www.jucesponline.sp.gov.br/> Access: from January to May 2015. MAXIMIANO, A. C. A. (2011) Administration for entrepreneurs: fundamentals of creation and new business management. 2. ed. Sao Paulo: Pearson Prentice Hall, 2011. SEBRAE (2007) Brazil's Micro and Small Business Support Service. Study of mortality of companies in São Paulo. São Paulo. SERASA EXPERIAN (Brazil). (2015) Opened companies in Brazil. Available at: <http://noticias.serasaexperian.com.br/24715/>. Access: 30 January 2015. Figure 1 - Number of opened companies in the city of Araras, from January 2010 to December 20. 1500 00 1300 1200 1100 1000 900 800 700 792 864 1099 1287 1343 Figure 2 - Number of opened companies monthly in Araras, from January 2010 to December 20. 500 450 400 350 300 250 200 150 100 50 0 161 104 138 134 116 112 97 100 99 96 109 101 133 130 113 107 83 105 106 1 94 85 108 111 89 82 102 93 94 124 87 60 93 97 79 64 74 95 63 69 74 68 96 94 73 52 70 42 40 69 86 52 70 51 56 89 76 68 85 50 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Society for Business Research Promotion 21
Ranking Position Table 1 - Ranking of the 3 most opened branches (companies) in the period Opened Companies % Branch Description 1º 467 8,67% Retail trade of apparel and accessories 2º 230 4,27% Hairdressing Services 3º 158 2,93% Construction Services 230 Figure 3 - Number of closed companies in the city of Araras, from January 2010 to December 20. 225 220 210 200 190 191 202 196 0 0 160 150 163 Figure 4 - Number of closed companies monthly in Araras, from January 2010 to December 20. 100 90 13 22 80 21 24 21 70 23 15 60 15 19 7 24 26 12 27 50 19 40 20 13 26 13 10 30 15 12 11 20 10 16 15 23 11 16 10 19 21 26 12 10 15 12 11 11 5 8 13 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Society for Business Research Promotion 22
Ranking Position Table 2 - Ranking of the 3 most closed branches (companies) in the period Closed Companies % Branch Description 1º 67 6,86% Retail trade of apparel and accessories 2º 48 4,91% Snack bars, teahouses, juices 3º 34 3,48% Retail trade of general goods, especially food products Table 3 - Lifetime of companies closed from Jan 2010 to Dec 20 Lifetime (years) Amount % Up to 1 136 % 1 5 397 41% 6 10 215 22% 11-15 107 11% 16-20 68 7% 21-30 40 4% + 30 1% 1360 1160 Figure 5 - Comparison of opened and closed companies in Araras from 2010 to 20. 1099 1287 1343 960 760 560 792 864 360 160 163 191 202 196 225 TOTAL COMPANIES OPENED TOTAL COMPANIES CLOSED Society for Business Research Promotion 23