FACTORS THAT IMPEDE THE DURABILITY OF MICRO-ENTERPRISES LOCATED IN THE URBAN AREA OF FLAVIO ALFARO CANTON

FACTORES QUE IMPIDEN LA PERDURABILIDAD DE LAS MICROEMPRESAS

Abstract

This field research analysed the factors that affect the longevity of microenterprises in Flavio Alfaro. In order to develop this research study, there were reviewed some prior studies on entrepreneurial activity in Ecuador as well as on the major causes of new small business failure as per some experts in this area. Accordingly, it was used some cadastral data from Internal Rent Service (SRI, for its initials in Spanish) corresponding to 151 microenterprises in December 2019; through the documentary method it was carried out a two-week field research in the local market of Flavio Alfaro in February 2020, upon conducting a survey of 130 microentrepreneurs corresponding to 100 in active state and 30 in suspended state. Furthermore, an observation sheet was used to record data from 10 microenterprises in active state, and a structured interview was conducted with the owners of three microenterprises in suspended state. The findings from the cadaster show that out of 151 microenterprises, 75.5% are commercial ones; 23.84% are service ones; and 0.66% are manufacturing ones. The findings of the survey reveal that there are some difficulties that persist and prevent microenterprises from overcoming the three-year longevity barrier in Flavio Alfaro, and along with the results from the observation sheets and interviews, it is seen that these major difficulties are insufficient income, inadequate financial management and high cost leases. It is then concluded that these financial difficulties prevent microenterprises from meeting their financial obligations, as they affect profit calculations.