Feb 20 • 07:00 UTC 🇲🇽 Mexico El Financiero (ES)

Why do so many businesses in Mexico decide not to grow?

Despite Mexico's high entrepreneurial spirit, numerous businesses choose not to expand due to a challenging operational environment.

Mexico is known for its high level of entrepreneurship; however, it struggles with low growth rates. This issue does not stem from a lack of talent, ideas, or willingness to expand, but rather from an operational environment that is not conducive to scaling. In many instances, this environment discourages intentions to grow, formalize business operations, or professionalize practices.

There are stark statistics highlighting the situation: there are over five million economic units in Mexico, with 99.9% classified as micro, small, or medium enterprises (Mipymes). These businesses account for around 52% of the Gross Domestic Product (GDP) and generate approximately 72% of formal employment in the country, demonstrating their crucial role in the economy. Unfortunately, instead of receiving support, they operate in an ecosystem that constrains their growth potential.

Moreover, the core issue goes beyond mere informality, which is often cited as a simplistic explanation. It lies within an overarching system characterized by distrust—distrust towards entrepreneurs, invoicing practices, and growth ambitions. This prevalent mindset not only stifles individual initiative but also inhibits the broader economic growth that could result from nurturing these pivotal small and medium-sized enterprises.

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