Using personas to develop better money habits for micro-entrepreneurs and small businesses

The following is a guest post written by Flourish Fi, an organization whose mission is to empower all people to build positive money habits and achieve financial security.

When we talk about changing behavior and developing better money habits for micro-entrepreneurs and small businesses in Brazil, we are talking about making key changes in people’s lives. To achieve our goal of guiding entrepreneurs to financial well-being in a simplified way, we combine behavioral science, gamification, and data intelligence with driving behavior change. (Learn more about our approach in our previous blog post.)

The Brazilian micro-entrepreneurs that will be impacted by our work through our partnership with Strive Community are primarily necessity entrepreneurs, which means that they became entrepreneurs due to a lack of other options, such as formal employment. They do not have a formal business background and are learning how to deal with finances at the same time as guaranteeing money for their survival.

Understanding the Brazilian environment

The pandemic brought a boom in entrepreneurship in Brazil. During 2021, Sebrae registered almost 4 million new micro-businesses in the country, an almost 20% increase from the previous year.

According to Sebrae, 54% of Brazilian small business owners earn from 2 to 5 times the minimum wage per month, around R$3.000 to R$7.500 (approximately US$600 to US$1500). However, while statistics may suggest a shared experience among small business owners in Brazil, it is essential to recognize that these businesses may have distinct motivations, needs, and behaviors.

Understanding Brazilian micro-entrepreneurs

To ensure that we are designing a product that will effectively impact micro-entrepreneurs, we need to develop an understanding of the distinctions among them.

We followed a multi-step user research process. First, we conducted a review of preexisting data through secondary research that allowed us to build an initial understanding and hypotheses regarding the pains, needs, and behaviors of micro-entrepreneurs. We then executed in-depth interviews. We spoke with small business owners and micro-entrepreneurs in every region in Brazil. They ranged in age from 27 to 55 years old, with differing levels of experience and formalization of their businesses.

From our secondary research, we identified the main challenges for these small business owners and organized them under the following categories.

1. Management of time and work routine: Creating workflows and managing time are challenges for micro-entrepreneurs, including the impact of their family life. Family problems affect the business, and they can find it difficult to separate personal life from business routines.
2. Management of business finances and differentiation from personal finances: Micro-entrepreneurs feel challenged by their level of financial education, with difficulties understanding revenue, expenses, and business profits. It can be hard to develop discipline in the use of financial controls. They also find it difficult to separate personal finances from business finances.
3. Scaling their business and client relationships: Micro-entrepreneurs cite a lack of specific skills in social media and the ability to promote their business widely as top challenges. They experience difficulty building relationships with their customers. Further, they do not understand their own value, which impedes their ability to properly value the goods and services that they provide, among other scaling possibilities for their business.

We drilled deeper during our in-depth interviews to better understand the main pain points that micro-entrepreneurs experience. We found that their pains typically fit into three main categories: financial management, business management, and digital marketing.

1. Financial management: Most micro- and small entrepreneurs don’t separate their personal and business accounts. Their main priorities are paying bills, making sales, and managing business bureaucracy. Some of them lack knowledge on cash flow, working capital, and banking fees. Even those that have the knowledge don’t prioritize their financial management, feeling “everything is working fine.”
2. Business management: A lack of self-confidence is apparent for many entrepreneurs — they don’t feel like they are entrepreneurs, and the “business part” of the job isn’t their favorite. They enjoy producing/executing and do a lot by themselves. Even if they have access to assistance, they struggle to delegate tasks. They are multitaskers who are taking care of the business, the house, and other jobs at the same time.
3. Digital marketing: Micro- and small enterprises struggle with brand design. They feel that they do not understand how to work “with internet,” making it difficult to navigate paid advertising. They also struggle with managing social media pages, even though they understand they need to “be where people are.”

Local Personas

From the information we gathered, we developed four distinct personas to represent the micro-entrepreneurs in Brazil. These personas are fictional characters created to represent specific user groups based on research data. Through the use of these personas, it is possible to more effectively conceptualize the target audience’s behaviors and preferences, allowing an effective design of user experiences that meets their needs.

“When based on user research, personas support user-centered design throughout a project’s life cycle by making characteristics of key user segments more salient,” Nielson Norman Group

Courtesy of Flourish Fi

These personas are not intended to document every aspect of the fictional person. Instead, they are focused on the characteristics that will be impacted by the product. They are:

• Adriana (the hardworking beginner) is a cosmetics reseller for a big brand. She works alone and has a medium level of financial knowledge.
• Letícia (the traditional worker) is an entrepreneur with her own business and does contract work for others. She is a manicurist and teaches her trade to others. Letícia has some financial knowledge.
• Jéssica (the focused one who is growing) is in food services. She created her own shop through delivery apps and has one employee and one freelancer working for her. Jéssica has a greater understanding of marketing and is good with finances.
• Francisca (the tireless scholar) owns a dog daycare with her partner and is always looking to keep up-to-date with new technologies. Francisca is organized and has built up her financial knowledge.

Using gamification archetypes to categorize our personas

Our product incorporates gamification to engage users in the behaviors that we seek to motivate. Similar to personas, archetypes are a useful tool in defining a typical character that represents a specific group of users. There are four types that our four personas represent, respectively: The Socialite, The Explorer, The Killer, and The Achiever.

1. The Socialite: This archetype is motivated by social status and connections. They may be interested in high-end financial products and services that can demonstrate their wealth and success. They may also value social connections with others who share similar financial interests. (Adriana)
2. The Explorer: This archetype is motivated by discovering new financial opportunities and trying out new strategies. They enjoy researching and experimenting with different investment options. They are often risk-tolerant and may be more willing to try new financial products or services. (Letícia)
3. The Killer: This archetype is motivated by competition and winning. They enjoy challenging themselves and others to achieve financial goals, such as earning a higher return on investment or reducing their debt faster than others. They may be more likely to take risks to achieve financial success. (Jéssica)
4. The Achiever: This archetype is motivated by achieving specific financial goals, such as saving for a down payment on a house, paying off student loans, or achieving a certain level of net worth. They are often highly motivated and may be willing to make sacrifices in other areas of their life to achieve their financial goals. (Francisca)

As we think about the journey that users will experience, it is useful to understand how our personas also align with the typical archetypes that exist in gamification design. Internally, this enriches our vision of our end users. By mapping the archetypes with the personas, we consider how these personas would respond to different gamification elements. In our product design, it helps us envision how the personas will be motivated by the variety of elements that we can choose to incorporate and how this relates to the particular behavior we may be looking to change. It also informs considerations regarding language and framing, enabling us to marry the mechanism to motivate with the most effective messaging.

Designing a product that guides micro- and small enterprises to financial well-being

The research that we executed represents part of the discovery period in our product development cycle. Based on our learnings in the discovery period, along with a study of the financial institutions ecosystem that represents our potential partners, we understand that our main focus for partnerships should be fintechs that provide credit products or financial tools. For end users (the micro- and small enterprises), we understand the importance of having a quick onboarding experience and providing guidance to understand the behaviors to adopt.

We are excited to start piloting with a partner and applying what we learned and developed during the last few months to be an important part of the financial well-being of micro-entrepreneurs and small businesses in Brazil.