Meaning of Microenterprise (What it is, Concept and Definition)

What is Microenterprise:

The microenterprise is a small economic activity determined by the laws of each country. The size is defined by the number of employees and/or determined by sales volumes.

Microenterprises, in general, have between 1 and 10 workers at most and can be dedicated to any sector, whether in the industrial sector, commercial sector or service sector.

In the Latin American region, State incentives have helped the proliferation of microenterprises or also called small and medium-sized enterprises (SMEs) such as engine of economic growth and generator of jobs in a country. Microenterprises are, in developing countries, the business units with the highest growth and are generally associated with family microbusiness.​

The majority of microenterprises are born out of the needs of the owner himself, who assumes the risks of the market, generating self-employment or wage labor to survive. To encourage this type of practices, people who assume these risks are also called entrepreneurs or microentrepreneurs.

Microenterprises bring advantages as:

the generation of employment, whether formal or informal, the revitalization of the economy, the inclusion of family work, contribution to the national GDP (Gross Domestic Product).

The disadvantages of microenterprises generally lie in:

limited professionalizationinformal administrationdisordered growthlimited access to financingtechnological lagmarket risks

Some examples of microbusinesses are: bakeries, beauty salons, butcher shops, grocery stores, stationery stores, street food and commerce, etc.

The differences between microenterprises in Latin American countries are subtle since they are determined by the laws of the country. Some of its most relevant characteristics by country are:

Microbusinesses in Argentina

Microenterprises in Argentina are defined according to sales volume and according to the sector. Microenterprises in the agricultural, services or construction sector have a limit of up to $456 – $480; Those in the industry and mining sector have a limit of up to $1,250 and the commercial sector has a sales limit of $1,850.

Microbusinesses in Colombia

According to Law 590 of 2000 and Law 905 of 2004, microenterprises in Colombia are determined by the number of workers: up to 10 workers and their assets that cannot exceed 500 current legal monthly minimum wages (approx. $204,000,000) .

Microbusinesses in Mexico

Microbusinesses in Mexico are determined by the number of workers of up to 10 workers.

According to the latest economic census of the National Institute of Statistics and Geography of Mexico, Mexican microbusinesses contribute 15% of the national GDP, generate 40.6% of jobs and 96 out of every 100 Mexican companies are microbusinesses.

Microbusinesses in Peru

Microenterprises in Peru are defined by the number of workers of up to 10 workers and an annual gross sales level limit of up to 150 UIT (Tax Tax Unit).

According to the results of the National Household Surveys in Peru between 2002 and 2006, two out of every three jobs in Peru are independent jobs and/or part of a family microbusiness.