The probability that a Uruguayan micro or small business can sustain itself over time is very low.
Micro, small and medium-sized enterprises (SMEs) generate 65% of the workforce Uruguayan private sectoralthough the real probability that these can stay afloat over time is very low in the country.
The president of the National Development Agency (ANDE), Carmen Sanchezexplained that SMEs represent a “large business network”, which is generally “not very specialized” and “poorly trained”, where 2 out of 3 Uruguayans work.
In dialogue with Carve radio, the leader explained that there are still few possibilities for an MSME to sustain itself over time and grow in the future. Uruguayand that they have an average life expectancy of 3 years. In other words, 1 in 5 companies did not exist 3 years ago, or will not exist. The president of ANDE explained that only 1 company in 1,000 will manage to grow to become large.
“There are more than 200,000 micro and small companies, and nearly 300,000 in total. It is a very large universe, but we still have a lot of work to do,” said Sánchez, who highlighted the access to financemainly for initial capital, as one of the main obstacles when starting a business. “There are no banks or financial institutions that will lend to a person who wants to start a business,” he lamented.
The internal market limits the possibility of company growth
At the same time, the sector must face the challenge of selling in the domestic marketwhich can limit the expansion possibilities of companies. On the other hand, there are additional problems in terms of digitalisation, since smaller companies do not usually incorporate technology into their management.
ANDE has around 24 SME centres operating in the country, and throughout the current year it served 27,000 companies and entrepreneurs (during the pandemic the figure rose to 49,000). After three years of operation, 56% of informal companies became “white”, 3 out of 4 implemented improvements in their management and 50% increased their sales.
Source: Ambito
