Main challenges faced by entrepreneurs in Mexico 

by | Mar 8, 2023

Challenges for Mexican entrepreneurs 

Starting your own business is not an easy task, by itself implies a significant investment of time and money, however for Mexican entrepreneurs it seems that fulfilling their dream is a little more difficult because Mexico has challenges for Mexican entrepreneurs who decide to open their own business. 

Some statistics indicate that in Mexico only 25% of new businesses survive the first few years, certainly seems a daunting scenario for any entrepreneur. However, knowing the challenges is the first step to get out of this fateful statistic, so today we are going to explain what these challenges are for Mexican entrepreneurs, because if you are thinking of starting a business, knowing these challenges and facing them on time will give you a clear advantage over your competitors and will help you to be part of that percentage that manages to survive more than two years. 

What is the outlook for Mexican entrepreneurship? 

Mexico seems to be a fertile land for entrepreneurship; in fact, during the pandemic, startups emerged that today are valued at more than 1 billion dollars. However, not all startups have the same luck; in fact, out of every 8,000 new businesses that open, only 2,000 manage to survive. Undoubtedly, the explanation for these complicated statistics is not simple and does not depend on a single problem. 

Undoubtedly, the most important factor is the difficult access to financing to start a business; in fact, statistics show that only 3% of the businesses have formal investments, the rest started with their own or family capital, this is due to the fact that access to formal financing continues to be complicated. 

Another key issue is government policies, since in Mexico they generally do not favor the world of entrepreneurship. In addition, bureaucratic procedures and the fiscal cost of starting a business continue to be a problem, which can postpone the start-up of an enterprise or even stop it completely. 

The challenges of starting a business in Mexico are many.   


Undoubtedly, the most important challenge for any entrepreneurial venture is to obtain the financing to start the venture. In Mexico, access to traditional financing, such as bank loans, is often complicated and in many cases inaccessible or insufficient.  

Although there is still a long way to go in terms of access to financing for entrepreneurs, there are some options that can help you if you are looking for ways to finance your business. From the government, you can approach the Ministry of Economy or the National Entrepreneur Institute, where you will find calls for SME financing.  

If you are looking for private financing, there are also several options that you can access, for example incubators, crowdfunding, funders or even the support of angel investors, all these means of financing can be more accessible and with better conditions than traditional bank loans. 

The first thing you need to understand is that before accessing any financing you must be clear about how much you need to start your business. Having clear and detailed accounts will help you better understand what is needed, but more importantly, you will be able to present a clear plan to potential investors. 

Learning curve  

Another challenge recognized by entrepreneurs is the lack of knowledge of the procedures for starting a new business. From an academic point of view, many entrepreneurs recognize that they do not have the necessary education to start a business. Many recognize this problem even after graduating from administrative or economics degrees that are supposed to provide them with the tools and knowledge to start a business. 

Some entrepreneurs when trying to materialize their dream realize that having a good idea is not enough to start a business and do not know such essential steps as registering a trademark, creating a business plan or making a value proposition. 

Undoubtedly, this learning curve can be the cause of many entrepreneurs giving up or making mistakes that can result in poor business performance or failure. The long-term solution is to start including knowledge about entrepreneurship from a practical perspective in the curricula of different careers.   

If you have the dream of entrepreneurship, but you also think you don’t know what you need to transform an idea into a business, don’t worry, you don’t have to do an MBA. Today you can approach business incubators, where if your idea is good enough they can give you advice to start your business. Also, we suggest you attend congresses, conferences and entrepreneurship fairs where you will surely find help in the topics where you have doubts.    

High tax and labor costs 

Another major problem for small and large companies in Mexico is the high tax and labor costs, which according to some experts can reach more than 25 thousand pesos. This high cost together with the lack of trust in institutions are the reasons why many SMEs work informally.  

Currently, this challenge seems to have a plausible solution in the Simplified Joint Stock Companies (SAS), which seek to eliminate informality. These new figures, which are also operating in other Latin American countries such as Chile and Colombia, aim to simplify the incorporation process of small and medium-sized companies, but the most important thing is that the SAS are governed by a new corporate regime that is characterized by being constituted by one or more individuals. 

Their main advantages are that they do not need to comply with certain formalities such as the public deed, they are also constituted through an electronic system and can be transformed at any other time into another type of company. 

Lack of knowledge of the market 

According to the Association of Entrepreneurs of Mexico, 34% of the failure of SMEs in Mexico is due to lack of knowledge of the market. The solution to this challenge can be implemented from several fronts, to begin with, it is essential to make a business plan and a value proposition, because to write them it is necessary to know the needs of the market and an analysis of your competition. 

Another way to approach this challenge is from a marketing perspective. Today’s marketing is more customer-focused, which means focusing your attention on your customers’ needs. 

Adopting this marketing position will help you adapt better than your competitors to the market. 

Poor adaptability to the digital world 

Today, one of the great challenges for SMEs is to adapt to a world that increasingly demands a digital presence. Businesses that do not have a presence on the Internet, either through social networks or their own website, are less and less visible to the public they plan to impact. 

For many entrepreneurs creating a strategy to have a digital presence is something secondary and therefore they leave it for later. However, putting it off or doing it incorrectly can be a mistake that can be very costly in the long run. Planning a digital presence is a necessity in today’s world for any SME, or it will be condemned to anonymity. 


In general, one of the biggest problems in Mexico today is security and for SMEs and entrepreneurs this is one of their main concerns. Although it is something that is often out of our hands, there are some tips you can follow to improve this situation. 

One of the tips you can follow is to train your staff, to prevent a robbery from reaching greater consequences. Also, you can reinforce the security of your business either physically or virtually, this can make the difference for customers who prioritize security. Finally, taking out insurance for your business is still essential to avoid larger losses. 


Without a doubt, entrepreneurship is not an easy task and in Mexico the challenges for entrepreneurs are even greater, however in this post we want to highlight that the best way to face them is through planning and prevention and to solve them information is your best ally. Tell us, what do you think is the biggest challenge for Mexican entrepreneurs? 

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