Before the outbreak of the Mexican Revolution in 1910, wealth had become so concentrated in Mexico that about 500 families controlled 80% of it.
of the nation’s land. This factor helped push the country into a bloody revolution that lasted for over a decade.
A strangely similar statistic exists today in Mexico’s export statistics. It is now estimated that 500 companies account for around 80% of the country’s exports to the world.
This is not a good statistic, as it reveals that the vast majority of Mexican micro, small and medium enterprises are not taking advantage of the global market. These companies are often referred to by the abbreviation “mipymes” in Spanish. (micras, pequeñas y medianas empresas)
I try to help Mexican entrepreneurs
as much as possible
because successful businesses
south of the border help
create jobs, wealth for owners /
investors, reduce poverty
and keep Mexicans desperate
to be forced to migrate.
I recently spoke to a colleague who deals with economic development in
Mexico City, which deplored the various challenges encountered in helping the mipymes. Unsurprisingly, the challenges are similar on both sides of the border, albeit with unique situations in Mexico.
Access to capital and financing is a concern for small businesses in Mexico and the United States. However, there are a myriad of loan financing and guarantee programs in the United States, administered by various agencies such as the Small Business Administration. In Mexico, the programs available are generally at the federal level, tend to be sporadic, and can vary widely by country.
Consulting and education in marketing and logistics for mipymes is a huge challenge in Mexico.
I have worked to connect Mexican mipymes with small American businesses through programs in the state of Chihuahua which are very effective. However, each governor’s administration has its own economic development goals, and often programs are funded, absorbed by larger bureaucratic agencies or
downright discarded. It is very frustrating because a business can be left behind when tangible progress is made.
Venturing into a foreign market like the United States is a whole new ball game for mipymes.
For a few years, I have helped Mexican art festivals in the United States, and Mexican artists who want to export their products to the United States jump at the opportunity to participate. However, they should be advised on labeling requirements and customs procedures. Certain materials, such as animal skins, may be restricted or prohibited from importation into the United States.
More often than not, these small businesses are not aware of the requirements.
Mipymes generally have no idea of the logistics involved in getting their product from their point of origin in Mexico to the end consumer in the United States. Many rely on friends or family in the United States for advice, which often leads to problems. Knowledge of distribution channels, costs at each stage of logistics and critical elements such as insurance is necessary for success. A bad initial experience can deter a small Mexican business from attempting to export their products / services again.
Equally important is knowing how to conduct a transaction financially. Is the business capable of accepting credit cards or bank transfers? Does the company have a website? How to carry out a transaction – 50% deposit on order and the remaining 50% on delivery of the product?
Avoiding problems by doing a due diligence in advance is the best approach. However, if problems do arise, it is imperative that a small business knows what resources are available to help it. Does the company have someone in charge of customer service who speaks English or has access to an interpreter? I have spent a lot of time translating trade agreements between small American and Mexican companies. A lack of understanding of what the other party is communicating is a recipe for disaster.
According to the US Census Bureau, small businesses account for 98% of all exporting companies and 33% of total US exports. It shows how important small businesses are to the nation. Mexico needs to increase the percentage of small businesses that export to the world.
Trade shows, programs and marketing materials will help. Effective and sustainable counseling programs are particularly important in obtaining the products / services to help small businesses market their products in foreign markets and support these exports.
The challenges are very similar in Mexico and the United States. However, Mexico faces a much steeper rise in the placement of its small businesses.