Vaccines and reduced sales cause the closure of businesses in cities like Guayaquil, stores and restaurants are the most numerous businesses

The Lack of employment is one of the motivations for entrepreneurship in business in Ecuador. Just on the same block from the Mucho Lote 1 commercial area, in the north of Guayaquil (the city in the country that is home to the largest number of people who have jobs or are looking for one), there are two pharmacies, a chicken roaster, a store and a bazaar.

Jackeline, 57 years old, set up a store or pantry in her house located in the Unión de Bananeros del Guasmo cooperative, in the south of the city, four years ago, in 2018.

His main motivation was to earn income after returning from Spain. “I arrived nine years ago and began to invest in businesses that gave me a stable income. After trying different businesses where I lost money, such as the purchase of trikes, I decided to set up a store”, he says.

It all started little by little with the sale of certain products such as soft drinks and sweets. Then he acquired two freezers and cabinets, so he expanded the business. “After two years we were selling almost everything. The only thing we didn’t offer was fruits and vegetables, because you need to get up early to go to the Montebello market and I didn’t want to do that because it would wear me out a lot,” he says.

The idea was to have the store and work from home. She herself attended the pantry together with her husband. Her grandson also helped on some occasions. “I didn’t hire anyone. I was the one who was attending the most, I spoke with the suppliers, I fixed the showcases, kept the accounts of the store. She was the todologist, ”she says.

The problems started last year and business closed last September. “Although the sector has always been dangerous, there was no such thing as vaccines (extortion of businesses). In my neighborhood there were three more stores.”

Jackeline narrates that first some men on motorcycles arrived at one of these businesses to ask for the vaccine. “That store was bigger than mine and they asked him for $200 a month. Then they came to the other one, which was smaller than mine, and they asked for $100. Since they refused to pay, they began to scare people by showing weapons and they say that even with shots in the air, they told me that, I didn’t see it ”.

Given the lack of security, he affirms that he decided to close the business. “It was a matter of time before they go to my store. I sold the freezers and I have the showcases stored”.

She is currently a housewife, but affirms that she would be willing to open again if the vaccines are no longer available.

The Ministry of the Interior indicates that Citizens must report these cases to lines 1800 DELITO (335486), option 1, or 1800 EXTORTION. Only During the past year, more than 4,500 complaints about this crime were registered., of which 1,105 were resolved, according to official figures. The entity ensures that the confidentiality of the complainants will be maintained.

The Grocery stores or pantries (retail sales) are the most common and numerous business in Guayaquil. In 2022 there were 1,815 with an active qualification ratethat is, only those who have the respective permits to operate are included, according to figures from the City Hall.

In second place are restaurants (1,429), general and specialty medicine offices (1,418), followed by pharmacies (1,131) and bazaars (823).

Jackeline’s store is not included in that statistic since her business never had permits, like others that operate in the neighborhoods, especially in the most populous ones. “My store was informal, but that didn’t stop me from buying from suppliers. All the products came to me in my name, not in the name of the business, since there were no permits or it was legally structured ”, he admits.

In his case, the brake was the vaccines, but Roberto, who had a restaurant in rented premises in the Alborada citadel, in the north of Guayaquil, indicates another reason that led to the closure last January.

He claims that on the best days, since December 2021 when the restaurant opened, he managed to sell up to 300 lunches a day, but that number dropped to less than half. “Those were bad days and there were months when I only had enough to cover the rent for the premises and pay the cook and her assistant, I would go out there without earning, that’s why I decided to sell the business.”

In addition to low sales, competition is added. Just in the sector where he was, there were three more restaurants that serve the people who worked in the shopping centers in the area. “I only had it for a little over a year and decided to open up. I put it with my savings and the compensation I received from my last formal job”, says Roberto.

The location of the business and the competition that exists in the area where it will be installed These are factors that must be taken into account when starting a venture, says Andrés Proaño, a professor at the Business School of the San Francisco de Quito University (USFQ).

“This all comes from doing a little competitor market analysis,” he says. However, Proaño adds that one of the most important prior steps, especially when it is a first venture or entering a new market, is focus on the problem and the need of customers.

“There is a difference between entrepreneurship out of necessity and that of opportunity. The first are the majority of those that arise in Ecuador, they undertake because they do not have a job or there is a lot of income instability or those who own them are poorly paid. The problem with these is that they have a low level of innovation and differ very little from what already exists on the market”.

This group includes those who remain in the informal sector with insufficient sales volume. “They are a means of subsistence and have lower growth rates than an opportunity venture,” she says.

They also have a high mortality rate, that is, they do not remain over time due to insufficient income, which also prevents the business from being formalized and generating low-quality jobs in the economy.

Studies indicate that there is up to 70% informality in the businesses of the commercial sector of the economies of the Latin American region.

“At the macroeconomic level, they are businesses that contribute little to the national economy and do not generate formal jobs either,” adds Proaño.

They are businesses that are more vulnerable to the impact of external blows such as the latest COVID-19 pandemic, adds the specialist. “They are less likely to move on.”

Opportunity entrepreneurship, on the other hand, It is based on the recognition of needs in the market not yet satisfied or satisfied in a deficient way. This entrepreneurial activity is characterized by developing a new solution, bringing innovation to society.

These imply a market analysis before offering the product or servicesays Proaño. “A research is carried out focused on the needs of the client. Here methodologies that come from the world of technology such as design thinking and lean startup (system used to go from project to company focusing on customer needs)”.

The first piece of advice for entrepreneurs is to fall in love with the problem, says Proaño.

“You have to do a lot of qualitative study, that is, they are not surveys or statistical data, but rather generate research spaces directly with your potential client. A series of gigantic opportunities will be found there because there are many markets that are not well served, even in these numerous places such as restaurants, beauty salons, auto parts sales. You can always innovate and improve, but normally those who are already involved in the business do not see it. Even large companies are left without seeing certain trends.”

Almost half of the people with employment in Guayaquil work in the service sector

45.2% of people with employment in Guayaquil work independently, that is, a total of 560,729 workers, in December 2022, according to the latest figures available from the National Institute of Statistics and Censuses (INEC). Most of this group owns businesses or engages in street vending.

This group has an average income of $425.5 per month in Guayaquil.

49.1% of the employed inhabitants in the city (609,110) work in the private sector, which includes formal businesses and those in the manufacturing industry, which earn a monthly average of $534.1.

The remaining 5.7% work in the public sector (70,711 employees) with an average salary of $1,142.7.

A total of 1,240,551 people over 15 years of age had a job in Guayaquil. 49.1% of them work in the services sector, 26.5% in the commercial sector, 14.3% in manufacturing, 9% in construction and 1.2% in agriculture and mining.

A total of 1’240,551 people over 15 years of age had a job in Guayaquil.

He 49.1% of them work in the service sector26.5% in commercial, 14.3% in manufacturing, 9% in construction and 1.2% in agriculture and mining.

The Economically Active Population (EAP) of the city, which includes people who have a job or are looking for it, is completed with the 42,648 registered unemployed in the fourth quarter of 2022. (YO)