By: Daniel Marcos, CEO of Growth Institute
In Mexico we do not have a problem of startups but of scaleups , that is, starting and maintaining a small company is relatively simple, but growing it in structure and competitiveness to turn it into a scaleup is very complex. This is why 99.8% of the business environment is made up of SMEs , while only 0.1% are companies in growth stages.
Such a panorama impacts the competitiveness of the country and has repercussions on direct investment, where the more than 4.2 million that make up the business environment remain their entire life span as small players, with little market traction and are vulnerable to an economic crisis ( just as we experienced it this past year).
The average life span for these 4.2 million companies is 7.5 years, a time that is not even the minimum for a startup to take off (large technology companies such as Google or Apple grew rapidly after 20 years of existence). That is why very few of these 4.2 million companies will succeed in becoming scaleups .
Scaleups are companies with development potential, they have a proven business model, they have a solid internal structure, they are competitive in their sector, they are relevant players in their market, they provide jobs and a considerable contribution to the economy. The challenge for these companies lies in managing the drama and complexity that can arise from day-to-day operations, as well as having sufficient capital inflows to inject growth (“growth absorbs cash,” the first law of business gravity).
Unfortunately, the focus we have on the part of incubators, educational institutions and even governments is exclusively focused on SMEs : in Mexico there are approximately 204 public institutions and 124 private institutions with incubators and programs focused on nascent companies.
By focusing exclusively on traditional businesses with little traction and exponential growth capacity, financial and even educational support to companies with disruptive potential is set aside; which has an impact on economic growth, technology development and the country’s competitiveness.
We have become so widespread in entrepreneurship that we tend to believe that opening a business is synonymous with innovation and growth, when many small businesses emerge as an alternative to self-employment. This is why we have many business projects in nascent stages and we have few consolidated, developing companies with a long-term vision.
After leading 2 growing companies and seeing this lack in the business world, in 2011 I created the Growth Institute, a business education institution whose goal is to help leaders of growing companies scale without drama. , advise them so that they can make better decisions and get the full potential of their company. This approach has enabled us to help more than 10,000 companies and 50,000 executives around the world scale their impact and reduce their drama.
We need to educate the leaders of growing companies and accompany them to generate innovative companies with the capacity to scale that manage to grow in our market and have the capacity to serve new ones. If we do not change the absolute focus of SMEs towards generating scaleups , we will never have productive companies that really contribute to economic growth.
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