Mexico is preparing to become one of the 10 most important economies in the world in 2025, according to Latin America. Undoubtedly, one of the engines that will accelerate this growth are those people who dare to start a business in Mexico.
The extinct National Institute of the Entrepreneur (INADEM), shared in 2019 that In Mexico, about 35 thousand businesses are opened every month, of which only 10% manage to exceed the 10-year barrier. What is the reason for this failure? Is it easy or difficult to undertake in Mexico? What are the best businesses to start in Mexico in 2021? You will find the answers to these and other questions about entrepreneurship in Mexico in this text.
We only ask you one thing: open your mind, forget about the myths about entrepreneurship and let your creativity flow. 😉
Is it difficult to start a business in Mexico?
The million dollar question has an answer that you will not like so much: it depends. Roughly, Mexico is a country in which there are many facilities for from a privileged geographic location, to a large number of initiatives —both government and private— that support entrepreneurs to grow their businesses.
In fact, that 72% of jobs in our country are generated by SMEs (small and medium enterprises) that have an entrepreneur at the head of a business.
So why do we say “it depends”? well then too there is a high percentage of businesses that fail. The main causes, according to the in Mexico in 2020 are:
- Lack of knowledge in the market
- Bad business management
- problems with partners
Analyzing a little the reasons that lead a business to go bankrupt, we are glad to know that there are three possible solutions that would surely change the landscape completely: education for the entrepreneur, good planning and organization in the business.
Of course, these are not things that can be achieved overnight, but with hard work and the right advice, we are sure that the percentage of SMEs that survive the first two years of life could be increased (currently 25%, ).
Why undertake in Mexico?
Now that you have a little more context about the , let’s take a closer look at some advantages and disadvantages of starting a business in Mexico.
Advantages of undertaking in Mexico
- With your own business, it is possible increase the average level of income.
- In 2021, SMEs had a 100% growth in sales generated by your digital channel.
- Mexico has a privileged geographical locationthanks to its proximity to the United States and the rest of Latin America.
- The procedures to undertake a business in Mexico are relatively simple.
- Mexico occupies the first place in Latin America with the best environment for entrepreneursaccording to .
- The possibility of obtaining financial supportprivate and government, for entrepreneurs.
Disadvantages of entrepreneurship in Mexico
- Ignorance and lack of preparation in financial, legal and market matters of the average entrepreneur.
- Lack of timesince many entrepreneurs are forced to have another job to survive while their business “takes off”.
Facts you should know about entrepreneurship in Mexico
If we do zoom there are many relevant data that should be known to get an idea of what it means to have your own business. 🔎
The Association of Entrepreneurs of Mexico (ASEM) elaborated in which it surveyed 1,102 entrepreneurs – founders of small, medium and large companies – throughout the Mexican Republic; We rescued some data from this study that seemed important to us:
- 61% of entrepreneurs are men and 39% are women.
- 85% of businesses have digital presence.
- The main channels that entrepreneurs use to promote their brands are Facebook, their own website or online store, Instagram and WhatsApp.
- Most companies have a annual turnover less than 2 million of Mexican pesos.
- 57% of businesses.
- 45% of the enterprises sell services, 25% products and 30% products and services.
- The personal and professional growth It is the main motivation that leads a person to start their own business.
- The financing alternatives and the tax structure are considered the main obstacles to undertake.
- For 50% of companies, online sales are higher than sales in physical channels.
- Facebook, WhatsApp and an online store own are the main channels to make sales.
💡 Type: Focusing on this last point, did you know that with Tiendanube you can manage all those channels (and more) from one place? Here we tell you how we can.
The best states to undertake in Mexico
Let’s start this section by making an important clarification: a good idea — with a good one — will work, not just in any state, but in almost any corner of the world.
That said, of course there is always data that you can rely on to support important decisions. If this is your case and you are looking for a sign to guide you to the best places to start a business in Mexico, we share a list with The ten states in which the MSMEs have the best life expectancy (micro, small and medium enterprises), according to the National Institute of Statistics and Geography ():
- Baja California Surabout 70 MSMEs out of 100 survive each year.
- North Baja Californiathe data show that, of every 100 new companies, 69 will survive.
- Queretaro69 out of every 100 new businesses a year survive in this central state.
- CDMXthe capital is placed in fourth position with a 68% probability of maintaining new business in its first year.
- soundabout 68 out of every 100 new businesses last each year.
- Yucatanof every 100 companies that open each year, about 67 survive.
- Jaliscothere are about 67 businesses that survive the first year for every 100.
- Zacatecaslike Jalisco, in Zacatecas 67 out of 100 remain alive.
- Campecheis another state where there is a 67% chance that a new business will remain active after the first year.
- Mexico stateis in the tenth position with an approximate of 66 companies that survive for every 100 new businesses in a year.
E-commerce in Mexico
As we mentioned before, We firmly believe that a profitable and well-planned business does not need to have a particular geographical location.. In fact that information could sound somewhat obsolete for those who decide, because e-commerce allows us to break down geographical barriers and make sales not only throughout the Republic, but throughout the world!
To give you an idea, the most recent AMVO report on online sales in SMEs revealed that for three out of four SMEs, selling online has allowed them to enter new consumers that they considered out of their reach.
Don’t get carried away with all those over the main ones.
How to start a business in Mexico: 7-step guide
If you have already decided to undertake, then the time has come for you to start planning your future business. We share a series of seven basic steps to undertake in Mexico; In addition, at each step you will find a recommended reading that goes a little deeper into each topic.
1. Identify your market niche
A market niche is a portion of a market segment, made up of a small group of consumers who have some characteristics in common. Have a well-defined market niche for your business, It will be very useful to get potential clients more easily and quickly.
To find your niche, we suggest you develop a market analysis to understand both potential customers and the competition. This way you will have all the tools to develop infallible strategies.
2. Make a business plan
The business plan is an essential document for any company, since it contains all the information and data relevant to your operations. It should include everything from the general description and definition of the market (yes, the one from the previous step), to the financial plan and future projections.
3. Register with the Treasury
No matter what the size of your company, the type of products you are going to sell or the channels through which you are going to market your brand, Mexican laws establish that all merchants must pay taxes. For this, it is essential to register with the Ministry of Finance and Public Credit.
we create a special guide for MSMEs and entrepreneurs, in which we guide you step by step in this process. Click on the link below and make sure you read it carefully, there is everything you need to do before starting the digital or face-to-face process.
4. Define (and open) your sales channels
It is not a secret that electronic commerce has had a and in the world. That is why in 2021 there are so many platform options to make sales online.
For Mexican SMEs, there are six main channels to sell online in 2021according to the AMVO:
- Social networks
- Own sales page
- Marketplaces and eRetailers
- Export through websites
- Sale for virtual events
- Through last mile applications
Our recommendation is that start by focusing only on one of them to be able to direct all your attention and efforts to a goal. If you want to know the qualities of each one, the following content will help you clarify all your doubts.
5. Spread your business
The lack of customers It is among the main reasons that lead to failure of enterprises, according to the Radiography of Entrepreneurship in Mexico. That is why, before launching your business, you should have a clear strategy of how you are going to or potential customers.
It sounds like quite a challenge, but it is simpler than it seems! Here we share 12 ideas to attract customers to your business. 👇
6. Seek support for entrepreneurs
After the planning and launch stage, when you begin to see the first results and estimate the future growth of your venture, it is a good time to boost your business.
There are different ways to get investorsfrom the crowdfunding to business accelerators and angel investors. We share a content in which we explain in detail all the options that exist in Mexico to finance a business.
7. Don’t stop learning
Make your knowledge your best weapon! Take courses, workshops, attend talks, find a mentor, do networking… There are hundreds of ways to stay up to date. Abraham Lincoln said it well:
“Knowledge is the best investment you can make”
If your venture is a business…