In the business world, Small and Medium Enterprises (SMEs) or PyMEs in México play a fundamental role, representing 90% of companies globally. In Mexico, SMEs are even more relevant, constituting more than 90% of the country’s businesses and contributing 52% of the Gross Domestic Product (GDP), also generating more than 70% of jobs.
What are SMEs and why are they important?
SMEs are companies that generally have no more than 200 employees and a medium level of turnover. In Mexico, the distinctive characteristics of SMEs include that their capital mainly comes from one or two people, the owner usually takes on the leadership of the business, their operation is local or regional, they are in a process of constant growth, and they receive tax benefits from the State on some occasions.
SMEs are essential for the Mexican economy for several reasons. Firstly, they generate employment significantly, accounting for 72% of jobs in the country. Additionally, they promote economic activity in various regions, contribute to societal development, and promote innovation and competition in the market.
Challenges and opportunities for SMEs in Mexico
Despite their importance, SMEs in Mexico face several challenges that limit their growth and development. One of the main challenges is the difficulty in finding adequate sources of financing that allow them to expand their operations and increase their capital. Additionally, SMEs face higher costs because they are not wholesalers, which can affect their competitiveness in the market.
Another challenge for SMEs in Mexico is the organization of their finances and accounting, as well as the limitation to access new technologies that could improve their operational efficiency. Despite these challenges, SMEs in Mexico also have various opportunities to grow and thrive.
One of the main opportunities for SMEs in Mexico is access to different financing options, such as business angels, venture capital, risk capital funds, government financing, incubators and accelerators, SOFOMES, and bank loans. These financing options can help SMEs boost their growth and increase their competitiveness in the market.
Classification of SMEs
Small and Medium Enterprises (SMEs) are mainly classified into three categories according to their size and level of turnover:
- Microenterprise: These are businesses that have between 1 and 10 employees and their annual turnover is low. They are usually small businesses that can be managed by a single person or a family. Examples of microenterprises include grocery stores, cafes, beauty salons, among others.
- Small business: These are businesses that have between 11 and 50 employees and their annual turnover is medium. Unlike microenterprises, small businesses usually have a more formal structure and can operate in a broader market. Examples of small businesses include medical clinics, restaurants, marketing agencies, among others.
- Medium enterprise: These are businesses that have between 51 and 250 employees and their annual turnover is competitive. Medium enterprises usually have a more complex structure than small businesses and can operate in various economic sectors. Examples of medium enterprises include hospitals, construction companies, schools, among others.
In addition to these categories, SMEs can also be classified according to their sector of activity and other factors. Some subtypes of SMEs include:
- Commercial SMEs: They are dedicated to the purchase and sale of goods.
- Manufacturing SMEs: They produce and market products.
- Service SMEs: They provide services to companies or individuals.
- Agro-industrial SMEs: They are dedicated to the production and marketing of agricultural products.
- Technology SMEs: They develop and market technology and related services.
These classifications may vary depending on the country and current legislation, but in general, they represent the main types of SMEs that exist in most countries.
Benefits and advantages of SMEs in Mexico
Despite the challenges, SMEs in Mexico have several advantages that make them attractive for entrepreneurs and business owners. One of the main advantages of SMEs is their ability to adapt quickly to changes in the market and consumer trends. This allows them to remain competitive and take advantage of new business opportunities.
Another advantage of SMEs in Mexico is their ability to make quick and efficient decisions, as their organizational structure is usually more agile and flexible than that of large companies. This allows them to respond quickly to market needs and take advantage of new growth opportunities.
Additionally, SMEs in Mexico usually have a closer and more familiar organizational culture, creating a positive and motivating work environment for employees. This can increase employee loyalty and commitment, which in turn can improve the productivity and performance of the company.
Small and Medium Enterprises (SMEs) are essential for the Mexican economy, generating employment, driving economic growth, and promoting innovation and competition in the market. Despite the challenges they face, SMEs in Mexico have various opportunities to grow and prosper, and offer a series of benefits and advantages that make them attractive for entrepreneurs and business owners.
“We must be congruent with what we do, what we say, and what we think.”
– Rodrigo Herrera Aspra –
