The economy discourages the creation of businesses

Ecuadornews:

The economic instability that the country is living has not only affected the loss of quality jobs, but also the desire to create and sustain new businesses. At least that is how the statistics of the Global Entrepreneurship Monitor (GEM) coincide, which for 2017 places the TEA (Early Entrepreneurial Activity) of the country at 29.6%, versus the 31.6% of the previous year.

The study was presented yesterday by the business school of the Espol (Spain), which in the country is responsible for landing the study of the GEM. “What has diminished are the new businesses that have had a decline by approximately two percentage points. A similar drop is observed in the nascent businesses, “said Virginia Lasio, director of GEM Ecuador, who attributed this to the poor economic environment facing the country and that mostly affects the weaker businesses. And that is what is worrying, he explains, because the impact falls on a majority.

Although Ecuador still has the highest rate of entrepreneurship at the regional level, the result is still discouraging because, after a decade, the generation of business continues to prevail in the country based on a need and not an opportunity. This, he explains, leads many people to create basic businesses and in sectors where there is high competition, characteristics that make them vulnerable to any adversity. “Most are businesses that have not been born to last over time, they are born as a temporary solution, to complement the family economy,” he says.

According to the GEM, in the country 60% of the enterprises are oriented to serve the domestic market. They are grocery stores and retail businesses that, generally, do not include an innovation and technology component (in Ecuador, only 0.93% of the TEA’s businesses are involved in this sector, versus Colombia and Peru that have the 3% or Argentina (the highest), 8%).

Aldo Arellano, an economist who has been accompanying the work of over 300 entrepreneurs for three years, through his Coworking Greenhouse, explains that this reality is a product of the level of academic education that these people have, in most cases, they have a low index of technological knowledge that also leads them to make wrong decisions when setting up or expanding a business.

In this sector

Stage

In 2017, around 3 million adults started a business (nascent enterprise) or owned one with less than 42 months old (new entrepreneurship), which represents 29.6% of the population between 18 and 64 years.

Basic ideas

However, of the businesses created, 69% are oriented towards consumers or serving the domestic market. These are businesses that, in general, focus on trade and that, for the most part, do not include innovative ideas and do not use technology.

The mistakes

A common fault that is committed is not validating enough the market you want to enter; believe that entrepreneurship is a work that is fashionable and not have a vision and determination to follow; Trust that the profits should come in the short term. (I)

Source: https://www.expreso.ec/economia/economia-local-negocios-emprendimiento-XC2316303