1.1 Million Businesses in Mexico Fear They'll Close Within 3-12 Months

The micro-, small- and medium-sized businesses that have managed to survive fear they may not be able to stay open much longer.
1.1 Million Businesses in Mexico Fear They'll Close Within 3-12 Months
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Entrepreneur Staff
4 min read
This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

The National Institute of Statistics and Geography (INEGI) reported that in the last 17 months they have registered the closure of more than one million micro, small and medium-sized enterprises (MiPymes) . The health crisis considerably reduced the income of these establishments, leading many to bankruptcy.

According to data from the 2019 Economic Census , of the 4.9 million registered MSMEs, only 3.9 million (79.19%) have survived. However, one million 10 thousand 857 (20.81%) had to close permanently.

Between May 2019 and September 2020, there was a 8.06% decrease in economic units. Small and medium-sized businesses were more affected with 21.17% of closures, in contrast to 20.8% of micro-businesses.

 

 

By economic activity, non-financial private service establishments registered the highest proportion of casualties: 24.92% . It is followed by trade (18.98%) and manufacturing (15%).

In the same period , 619,443 establishments were opened , representing 12.75% of the country's business population. Of these, 13.75% correspond to the commerce sector, 12.85% to non-financial private services, and 8.78 were manufacturing. 1.23 million people work in these new businesses, the institute said.

 

This is how COVID-19 affected Mexican MSMEs

The second edition of the Survey on the Economic Impact Generated by COVID-19 (ECOVID-IE) , revealed that of 1,873,564 companies in the country, 86.6% had some effect due to the pandemic .

During the presentation of the survey, the president of INEGI, Julio Santaella, explained that although this is important, a decrease of almost seven percentage points was observed with respect to the first edition, when 93.2% of the companies reported having had some impact , "Which is good news because there is a lesser degree of affectation."

 

 

The survey found that 23.1% of the companies applied temporary closures or technical stoppages , a figure lower than the percentage registered in the first edition carried out in April, when the proportion was 59.6%.

What harmed businesses the most was the decrease in income reported by 79.2% of companies. In the first edition, the proportion was 85.1%. In second place, the demand was low (51.2%), while in the first edition it was 67.6%. The third place is occupied by the shortage of inputs and / or products, where a decrease of almost 9 percentage points is observed from one edition to another.

 

What do companies need to survive the pandemic?

INEGI consulted company executives about what measures are required in the situation caused by COVID-19. 61.3% indicated that fiscal support is needed , 40.6% mentioned the deferral of payments to credits or services , 34.4% said that cash transfers and 30% indicated that access to new credits is needed.

 

 

The analysis also revealed how long companies will be able to continue operating with the same level of income. A high percentage of large companies stated that they will be able to survive for 12 months or more, while for most MSMEs the survival expectation is 3 to less than 12 months.

Companies have had to adapt to the new dynamics posed by the pandemic. Almost 50% consider that they must integrate online sales permanently, as well as offer new products and services , take shifts , work at home (home office) and diversify supply chains.

This 2020, the coronavirus crisis in Mexico has caused more than 107 thousand deaths and more than 1 million 133 thousand confirmed cases, as well as a 9.6% contraction of GDP in the first nine months of the year.

See also: The pandemic closes 7 companies every hour, according to Endeavor

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