In 2023, more companies were founded, but the effect of the ease of incorporation was diluted, according to experts

The behavior of establishing businesses has increased with respect to the opportunities for their creation, however, an important aspect must be taken into account, the sustainability of businesses, where the economic environment plays a fundamental role and is linked to security, which has been affected in recent weeks.

In 2023, 20,633 companies were founded, while in 2022 there were 19,668, and if you look further, in 2021 that figure was 16,524; 10,962 in 2020; in 2019, 10,019; in 2018, 8,943; and in 2017, 8,252, according to the Supervisory Board for Commercial Companies, Securities and Insurance, which includes companies that were established in person and electronically in both modalities, traditional and simplified joint stock company (SAS). , the latter has been enabled since May 2020.

In 2022, the establishment of companies was almost predominant

According to the report of the Main Office for Commercial Companies, in 2023, the month in which the most commercial companies were founded is March, a total of 1,951, which are divided into 18 branches, of which wholesale and retail trade is the most represented with 464, followed by professional, scientific and technical activities (284), and construction (242).

Establishment of companies in 2023:

Conversely, in 2023, the entity indicated that 3,901 traditional companies were in a state of dissolution and cancellation. Likewise, on the SAS side, 2464 were disbanded and cancelled. Between the two, they add up to 6,365. Meanwhile, 12,278 companies were closed in 2022, 27,534 in 2021 and 2,069 in 2020, according to Marco López, supervisor of companies, in an interview with this newspaper in March 2023.

Marco López, supervisor of companies: The biggest blow was recorded in 2021, when more companies were closed than those that were opened

To interpret the data, the economic analyst Hanns Soledispa goes back to May 2020, since that year there is an allowance for establishing a company, which in practice is the legalization of a company. “Ecuador is full of entrepreneurs, micro-entrepreneurs, informal traders, but since May 2020 the creation of SAS has been approved, which is a mechanism to create a company in a very few days, in some cases even in a few hours, which does not require the hiring of a lawyer nor is it necessary big capital,” he explained.

In this sense, he said, when procedures are simplified, formalization becomes easier, and this has happened in recent years.

According to the data of the Supervisory Board of Commercial Companies, in 2023, 3,702 SAS were physically established, while 14,127 were established virtually, which reflects growth compared to the previous three years, which record the following data:

Soledispa pointed out that much of the growth in business start-ups is due to SAS, however, there is a general slowdown. “While it is true that company creation continues to grow thanks to the facilitation provided by the SAS establishment mechanisms, every time the influence or boom What it meant at that time with this modality is a little deflation because there are not those incentives of the economy with an environment that helps the entrepreneur to make that decision to formalize his business or open a new one, this phenomenon in statistics is known as slowing down “he explained.

Economic analyst Jorge Calderón has a similar criterion. He indicated that in fact, according to the data, there is a slowdown in company start-ups, for which he reviewed figures from 2017. He said that excluding 2020, which is a rather atypical year due to pandemic-related issues, 2021 saw a recovery of 50 %, with which in a way “lost ground has been recovered, reaching relative normality”, since the restrictions due to COVID-19 have been eased and as a result there is an economic recovery that goes hand in hand in line with the growth of the economy, “in a certain way effect.”

The next year, 2022, according to Calderón, tends to stabilize, which is very close to that of 2019, however, the creation of companies “abruptly” falls in 2023. As for the closure of companies, Calderón indicated that there is a significant increase in 2023, influenced by the economic situation, political instability, states of emergency, insecurity, etc.

Soledispa, for his part, indicated that, despite the fact that there are incentives for the establishment of companies so that creation can be doubled or tripled, what really needs to be thought about is sustainability. “We can create many companies, but then the sustainability that that company will remain active on the market is the other side of the coin,” he emphasized.

And for this operation to happen, Soledispa pointed out, two factors depend. The first is the business vision and way of working of the entrepreneur, while the second is the economic environment that gives security and confidence to the consumer, that there is tax and labor stability, that is, a number of factors that largely depend on public policies.

In this context, he added that the environment for businessmen and entrepreneurs can be improved, “a little can be ensured of sustainability and we can no longer talk about companies closing down, but that the balance sheet will increasingly be much more positive”. sustainable over time that the new companies that are created are very far from the companies that close for any reason.”

Calderón also talks about the situation of insecurity. “It is largely about small, entrepreneurial companies that are quite affected by this situation and which shows that there is no sustainability in the growth of the economy that would guarantee that companies are founded, that they “last for the rest of their lives”. time, among other aspects, that employment is created,” he said.

Security is one of the topics that must be worked on, since the result of the lack of security, according to Soledisp, has two consequences. On the one hand, businesses that close “because they simply don’t want to deal with extortion and crime”, which is a negative effect, since the closing of businesses is “very bad news for the country’s economy and for society” because it means “less sales, as well as less employment and production.”

And on the other hand, there are entrepreneurs and businessmen who have paused with the idea of ​​investing or doing it formally and are waiting for the “situation to calm down, for the situation in the country to improve a little before they start. their job.”