SMEs in Mexico represent a fundamental pillar of its economy. This sector is the largest in the Mexican business environment. It can generate jobs, promote innovation, and contribute to the socio-economic development of the regions where they are located.

Next, we will explain what SMEs are, their importance to the country’s economy, and their main characteristics. So, if you want to learn more about the world of SMEs in Mexico, keep reading and discover everything you need about this critical sector of our economy.

What is the definition of SMEs in Mexico?

Pymes means «Small and Medium Enterprises.» This type of business is characterized by having a limited number of employees and an annual turnover determined by law, specifically the Law for the Development of Competitiveness of Micro, Small, and Medium Enterprises.

In Mexico, the official definition of an SME is based on the number of workers and their annual turnover, establishing that businesses that have between 11 and 250 workers and a yearly turnover that does not exceed 250 million pesos are considered SMEs.

These businesses are fundamental to the country’s economy since they generate employment, drive innovation, and foster competition in different economic sectors. In addition, SMEs are also crucial for the progress of the regions since many of them are located in rural areas or small cities, where their presence is vital for the local economy.

SMEs can develop in any economic sector, from manufacturing to service companies; They can also be owned by a single person or a group of partners. In general, SMEs are characterized by having a more straightforward and less bureaucratic organizational structure than corporate organizations, which allows them to be more flexible.

SMEs in Mexico: Their characteristics

SMEs in Mexico have a series of characteristics that differentiate them from large companies. Here we present the main ones:

• Reduced size. They are small compared to large organizations, allowing them to be more flexible and adapt quickly to market changes.
• Simple organization system. They show a much simpler scheme in their organization than large companies, which allows them to make decisions more quickly and efficiently.
• Less financial resources. Being small, it is logical that they need the financial resources that corporate consortiums and business chains manage, which limits their investment and expansion capacity.
• Greater dependence on the domestic market. Small and medium-sized businesses depend more on the domestic market, making them more vulnerable to economic fluctuations and government policies.
• Employment generation. They are essential employment generators since they represent most companies registered in the country.

SMEs and their importance for the Mexican economy

Mexican SMEs have a significant weight in the economic sector of our country; In the first place, SMEs are a great pole that generates employment since they represent the majority of companies registered in Mexico.

According to data from INEGI, the entity in charge of official statistics in Mexico, there will be more than 4.2 million of this type of business registered by 2021, which generated more than 70% of employment in the private sector and more than half of the GDP of Mexico.

In addition, this type of business is significant in promoting innovation and competition in different economic sectors. Due to their more straightforward organizational structure and greater flexibility, SMEs can develop new products and services more quickly and adapt more easily to market demands.

Do you need help with your small business?

SMEs in Mexico are an entire business sector for the country’s economy; Their ability to generate employment, drive innovation and contribute to regional development makes them an essential engine for social and economic growth. Therefore, the sector must be taken care of and included in the Mexican macroeconomic plans.

At PCP Consultores, we are experts in accounting for SMEs so they can grow in an environment conducive to their success. So, if you are looking for a trustworthy company to keep your small business accounting, do not hesitate to contact us. We are here to help you!