The contrast of entrepreneurs in Peru: popular and branded

“I want to start a business, make ends meet, help my family, treat myself and that’s it. I’m exhausted at work, they only make me look at files, they pay me little and on top of that I have an abusive boss.” “My father came to the capital when he was a child and without any education, so he set up a grocery store all by himself and that’s how we supported ourselves. Now, as his daughter, I want to have my own store, but it’s a cosmetics store; my father has already taught me how to do business.” “I’m out of work and I have a 2-year-old child. I know how to make cakes and sweets, I’m going to set up my virtual store because I can’t just sit there doing nothing.”

How many of us have not observed or heard thousands of similar stories? In our own families, friends, neighbors and a long etcetera. The truth is that, in Peru, the agency’s capacity to generate income is the highest in the region according to a recent report, presented in this same newspaper, which indicates that our country is – for the second consecutive year – the epicenter of the entrepreneurships Latin Americans.

Being an entrepreneur is what, for a few years now, could be considered the politically correct way to face adverse situations such as a lack of job opportunities, generating another source of income because your salary is not enough, or simply feeling good about yourself for being able to “do something.” In short, there is no other way in a context like Peru.

Recent literature and narratives on the subject show us that the leaders of national entrepreneurship are those who have faced the most adverse situations and come out on top. They are the population that, in addition to enduring the country’s complex structural crisis – such as corruption, poor public services, political instability and institutional weakening – has also dealt with more common situations such as poverty, discrimination or violence.

Here we have concrete examples: from the textile workshops in Gamarrathe furniture manufacturers of the Villa El Salvador industrial park, the merchants of the Humantanga market in Puente Piedra, the cell phone repairmen in the Montevideo Shopping Center in downtown Lima, even the Kpopers teenagers and young people of Alameda 28 de Julio and social networks. I call this sector the “popular entrepreneurs.”

This is where local references such as “the potato king”, “from street vendor to entrepreneur”, “the queen of salchipapas” or “the king of jeans” emerge. Some of them are lucky enough to be sustainable, become micro or small businesses and continue a successful entrepreneurial path. But most do not succeed.

A successful business can evolve into a microenterprise, and many of them start out as such. However, 8 out of 10 micro and small businesses (MSEs) that are created in Peru only last two years. According to the Mypes Unidas del Perú association, in the last decade, approximately 1.4 million companies have closed due to various reasons, including political and economic crises. Many of these MSEs have stopped operating formally and have moved into the informal sector.

But there are also what I call “branded ventures.” In contrast to popular ventures, this group includes those linked to startups and social welfare proposals. In this type of project, young men with higher university education participate the most, and 3 out of 4 have another job. Therefore, entrepreneurship is more of a complementary activity that will not affect their daily income, compared to the reality of the other group described in the paragraphs above.

According to the text “The Entrepreneurial Subject”, it is pointed out that most public policies (such as Startup Peru) and private funds (such as Movistar’s Wayra) focus on this type of ventures and all of them have the characteristic of being formalized either as micro, small or medium-sized companies. In addition to other characteristics that arise from the very origin of the entrepreneurs. I will not go into this last aspect because it is not difficult to realize.

Here you don’t find the “SJL broaster wing queen”, here you find the “genius behind a certain app”, “the innovative content creator”, “the strategist of an online store” and other rather commercial names. Here, taking risks is more of an adventure in the process than a matter of subsistence and daily need.

There are nuances and contrasts between our national entrepreneurs, it is real and generating equitable conditions for both spaces to develop will not change if the main incentives are not changed or generated to promote the strengthening of 99.5% of MSMEs, for example. These are those that generate 70% of employment in the country and contribute 40% to the GDP according to the INEI.

In simpler terms, if the “potato king” creates 100 sustainable jobs, but is not formal, it is the State that is called upon to turn formality into an attractive tool for that person and thousands like him. Starting by unblocking bureaucracy, tackling corruption at all levels of government (especially at the municipal level), bringing public services closer through itinerant visits and one-stop shops, and promoting concrete incentives.

“Formality is of no use to me, they just take my money” is the feeling of many small business owners and entrepreneurs. Tax incentives could also work for them, as they do for large companies. Wouldn’t it be attractive to be able to return the value of 1UIT to every entrepreneur who has decided to formalize and has started paying taxes during their first year of operation? I think so.

In a scenario where entrepreneurship is both an economic necessity – where a large part of our entrepreneurs have this profile – as well as a search for personal fulfillment, it is necessary to support both popular and brand entrepreneurs. While the former face much more significant challenges of subsistence and precariousness, the latter explore new technological and market frontiers. Who could oppose that? Only a short-sighted person.

The key is to create an environment where each entrepreneurregardless of their origin or sector, can prosper. Recognizing and supporting this diversity will not only encourage greater investment and job creation, but will also respond to the desire of young people to want to do business in their country (54.3% are young people between 18 and 34 years old). Therefore, a response is needed from the collective and not from the individual.