Without a doubt, small and medium-sized businesses are one of the most important sectors of any country’s economy. Mexico is not escaping this reality and the development of SMEs is a priority for local governments and especially for the federal government. Aaron Rodriguez, an international business expert, provides some reasons why starting a business in Mexico makes sense.
According to several studies by the expert, there are more than 4 million SMEs in Mexico, representing 99.8% of the companies in the whole of Mexico. Of these, 95.4% are micro companies, 3.6% are small companies and only 0.8% are medium-sized companies.
These SMEs generate 52% of the gross domestic product and contribute an additional 72% to the jobs in the country. However, successful entrepreneurship in Mexico is not an easy task and represents a major challenge for the entrepreneur. The fact is that in Mexico only 67% of SMEs survive the first year. In addition, the life expectancy of an SME in this country is 7.7 years.
“Given the importance of this sector to the Mexican economy, the national government has stimulus programs for entrepreneurship,” says Rodriguez. “In that sense, according to the Organization for Economic Co-operation and Development (OECD), Mexico is the second best country for entrepreneurship.”
On the other hand, according to the National Institute of Entrepreneurship, about 35,000 companies open in Mexico every month. This growth is based on changes in government policy through subsidy programs. The participation of banks and investment funds as well as increasing digitization have also had an impact.
Federal and local governments have programs to encourage the creation of new businesses. According to the National Entrepreneur Institute, it is estimated that the National Entrepreneur Fund will manage about 2,630 million pesos this year.
It is worth noting that the recent reform of the General Law of Commercial Companies allows one to open a company digitally through the Tuempresa.gob.mx page in less than an hour. This results in an estimated savings of 20,000 pesos and six days of paperwork.
Another good reason is digital connectivity. According to Rodriguez, Mexico currently offers great advantages for entrepreneurship. In this sense, digitization will be central to the decision to become an entrepreneur. There are currently an estimated 107 million smartphones in Mexico. Added to this is the legacy of the 5G network, which will influence better connectivity.
“Similarly, there are numerous organizations in Mexico that promote and support entrepreneurship,” affirms Rodriguez. “This includes the digital business building platforms Company Builders. They have specialized teams in finance, marketing and other areas to advise startups.”
Availability of resources for new investments. They currently have more than $20 billion available to fund new or growing businesses, according to the Mexican Private Equity Association.
The communications infrastructure is one of the other reasons Rodriguez shares. It is a fact that Mexico has a road network that allows connecting different regions by land. It is also easy to connect by air and sea as there are airports and ports where international airlines and shipping lines are based.
In fact, the Mexican government has trade agreements with various countries. Among them is the T-MEC or treaty between Mexico, the US and Canada, which gives priority to SMEs. This is especially true in the areas of plastic injection molding, agri-food and metal mechanics.
“Needs in areas like health and education represent a great opportunity for new entrepreneurs,” Rodriguez emphasizes. “In that sense, ventures based on innovating solutions to meet these needed areas are a necessity.”
According to the Global Entrepreneurship Monitor GEM, Mexico has the second best environment for entrepreneurship in Latin America. According to this organization, Mexico ranks 23rd out of 54 countries considered. And finally there is training. According to the World Economic Forum, Mexico ranks 63rd in terms of technology adaptation. In this sense it was one of the countries with the highest growth in this sector.
About Aaron Rodriguez
Aaron Rodriguez is an experienced eCommerce consultant in Latin America. He helps companies across the region optimize all of their e-commerce operations to increase sales and retain customers, and also has extensive experience developing strategic and external alliances to advance departmental and organizational goals. He has traveled extensively throughout Latin America supporting a number of companies and when he is not travelling, he devotes all of his available time to his wife and children.
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