Understanding Small and Medium Enterprises (SMEs)
Small businesses, such as fashion shops, food stores, or e-commerce platforms, are deeply ingrained in our culture. These micro, small, and medium-sized enterprises (MSEs) constitute more than 90% of all businesses worldwide, serving as the backbone and driving force of global economies.
The Significance of SME Day
Since 2017, the United Nations (UN) has designated June 27 as Small and Medium Enterprises (SME) Day to acknowledge their crucial role and the challenges they face. The day aims to recognize the perseverance of small entrepreneurs who strive daily against all odds to keep their businesses thriving, while shedding light on the hurdles they encounter—such as limited access to financing, insufficient technology use, and scarce public policy support.
SMEs in Mexico
In Mexico, SMEs are equally vital, accounting for 95% of businesses as microenterprises, 4% as small enterprises, and 0.8% as medium-sized businesses. They generate 52% of the country’s income and employ 27 million people, according to Mexico’s National Institute of Statistics and Geography.
- Employee size segmentation:
- Microenterprises: 1 to 10 employees
- Small enterprises: 11 to 50 employees
- Medium-sized businesses: 51 to 250 employees
The Mexican states with the highest number of SMEs are: Mexico State (13%), followed by the Capital District (8.9%), Jalisco (6.9%), Puebla (6.2%), and Veracruz (5.8%).
Most entrepreneurs start a business to seek greater economic income, often using personal savings or loans from family members, as reported by the Mexican Entrepreneurs Association.
SME Mortality and Challenges
According to INEGI, 52% of businesses close within the first two years, and the average lifespan of these enterprises is 8.4 years. The initial years are critical for their survival, as businesses that surpass five years see a doubling of their lifespan.
The EDN (Entrepreneurial Demography Study) highlights that business mortality is highest in the private non-financial sector (30%), followed by commerce (30%) and manufacturing.
Women in SMEs
Despite the growing number of women-led businesses, only 34% of enterprises are founded by women—representing 1.6 million out of a total 5.5 million businesses.
- Segmentation by business size:
- Microenterprises: 76%
- Small enterprises: 18%
- Medium-sized businesses: 5%
- Access to credit: Only 13 out of every 100 women-led businesses secure credit.
