What are SMEs? Although it may seem like an innocuous question that should have a single answer, the reality is that this concept hides multiple definitions, contexts, and other aspects that cannot be developed in a single line.
Furthermore, in recent years, the term has been transformed so much, and has undergone so many re-evaluations, that it would be better to ask whether there are companies, especially in the Latin American region, that are NOT SMEs, and whether the term, which apparently tries to classify and give order to a category of companies, does not produce more biases and prejudices than true data.
As we at CIAL like you to have the most up-to-date information, we will dedicate this article to one of the most recurrent business concepts in economic and financial conversations, and which over the years has become an almost hollow word that is invariably used, devaluing its real meaning. In addition, you will learn real data and statistics about MSMEs in countries such as Mexico and Argentina, and a brief overview of the challenges faced daily by the leaders and founders of this type of company.
SMEs or MSMEs?
The difference between SMEs and MSMEs is not merely semantic, but responds to a need america cell phone number list for more detailed differentiation. SMEs is an acronym that refers to Small and Medium Enterprises, while MSMEs also includes Microenterprises, offering a more complete view of the business spectrum in regions such as Latin America.
The addition of the term “Micro” is not trivial. Microenterprises make up the majority of the business fabric in the region, and their inclusion in the category allows for a deeper and more precise analysis of the challenges and opportunities facing these companies. Without this how to measure sustainability? distinction, there is a risk of underestimating the importance and fragility of microenterprises, which are often the basis of employment and the local economy.
Reality of MSMEs in Latin America
MSMEs are essential to the Latin American economy. In Mexico, for example, they are distributed as follows: 95.4% are microenterprises, 3.6% are small enterprises, and 0.8% are medium-sized enterprises. This overview reveals the great predominance of microenterprises within the Mexican business fabric.
There are nearly 4.1 million MSMEs in Mexico, and they represent 78% of national employment egypt data and 42% of the Gross Domestic Product (GDP). However, their survival is a constant challenge: 80% of Mexican MSMEs close their doors within the first 5 years, and 90% within a decade.
At the regional level, the situation reflects similar patterns. In Latin America, 99% of companies are MSMEs. These drive 60% of formal employment and contribute 25% of regional GDP. However, sustainability remains a considerable challenge: only 45% of MSMEs in the region survive the first two years. In Colombia, only 63% of MSMEs manage to survive the first year of life, and in Argentina, 75% cease to exist after three years of activity.
Challenges of leading an MSME
Leading an SME in Latin America involves facing a series of challenges that can be overwhelming:
1. Poor strategic planning: Many MSMEs lack a long-term vision and solid strategic plans. This results in a lack of direction and clear objectives, which can affect their growth and sustainability.
2. No formalization of processes: The absence of standardized and formalized processes leads to inefficient management and operational errors that can be costly. SMEs need to establish clear procedures to improve their daily operations.
3. Lack of financing: Access to financing remains one of the biggest obstacles for MSMEs. Without sufficient capital, these companies struggle to invest in growth, innovation and technology, which limits their ability to compete and expand.
4. Lack of access to technology: Lack of access to modern technologies and digital tools puts MSMEs at a disadvantage compared to larger, technologically advanced competitors. Adopting new technologies is essential to improve efficiency and competitiveness.
The future of SMEs
The future of MSMEs in Latin America depends on their ability to overcome these challenges and adapt to a constantly changing economic environment. Data analytics-based solutions and data-driven prospecting platforms are emerging as key allies for these companies. Through business intelligence and the use of data, MSMEs can make more informed decisions, identify market opportunities and optimize their operations.