The difficulties of starting a business in Argentina

In today’s economy, with a world just emerging from a pandemic that has turned everything upside down, entrepreneurs have become indispensable to bail out the coffers of countries plagued by unexpected inflation.

While in many places governments are thinking of ideas to facilitate the proliferation of these adventurers who bet on a dream, in Argentina everything goes against the grain. Being an entrepreneur in our country is an exhausting, suffocating task that reaches the point of being daunting. For this reason, as an entrepreneur, I will comment on three aspects that make it difficult to grow in Argentina.

Getting up every day is wondering what new tax the government is proposing this time around. It is not that we intend to live in a tax haven, but it is a fact that Argentina is one of the countries with the highest tax burden in the region. A study by the Argentine Institute of Fiscal Analysis (Iaraf) indicated that fiscal pressure – national collection measured against gross domestic product (GDP) – reached 23.8% in 2022. While fiscal pressure reaches 50% of the final cost of essential products.

As an entrepreneur, it is very difficult to grow and compete with such a scenario. Yes, even sometimes one has to wonder whether to limit their economic progress at the risk of a “windfall” taking away their funding from next year’s budget, which borders on madness.

And it’s true that comparisons are odious, but just by looking at Uruguay we see that it is not necessary to stupidly invent taxes to have a healthy economy. In the neighboring country, gross income is not paid, there is no tax on bank credits and debits and no withholding is levied. The result? Uruguay is one of the fastest growing countries in the region with 5% it expects to maintain – and even increase – in 2023, multiplying businesses and trade in support of entrepreneurs, which encourages consumption and improves state tax collection. Everyone wins, it’s as simple as that.

In Argentina there is also this great dilemma of “living up to date”, the uncertainty generated by economic fluctuations with changes of ministers, super-ministers and other herbs that make long-term projection an odyssey.

With a “tie it with a string” economic plan, it becomes very difficult to plan for the future. The entrepreneur, instead of focusing on the growth of his product, spends time and energy transforming himself into an oracle to unravel what future awaits him. Should I lower costs or dare to open a branch? Do I hire more staff or do I plan to ‘winter’, ‘summer’ and ‘fall’ as well?

According to a global study, 75% of Argentines worry about how economic variables can affect the stability of their work, making it one of the countries with the highest percentage in Latin America, surpassed only by Chile and Mexico. According to the latest report prepared by the Center for Economic and Business Analysis of the Argentine Catholic University (UCA), uncertainty about their economic future has increased by 65.3% among Argentines.

Many people who, during a pandemic, decided to leave their jobs to enter the world of entrepreneurship in search of the realization of a dream, are now considering getting their old jobs back because they cannot not plan for the future.

It is clear that any project requires investment, even more so after describing the great obstacles that those of us who decide to put a currency in the country must face. But as if that weren’t enough, entrepreneurs also face obstacles when it comes to applying for funding.

In Argentina, it is complex to access financing and without financing or with high interest rates, it is very difficult to think about the future. A recent survey by the Argentine Chamber of Commerce and Services showed that most companies admit financial problems to import.

The difficulty of accessing the foreign exchange market, the utopia of obtaining an import license for the starting businessman and the blissful inflation mean that any entrepreneur must juggle to finance his business.

But I don’t want to end these lines without leaving a door open to hope. The Argentinian businessman managed to survive these inconveniences and become strong despite these evils.

The main advantage we have is that because we are Argentines, we are used to adversity, things don’t work out, there are barriers and everything is difficult but, even with everything against us, there is nothing that we cannot find a way around and solve. We are so used to difficulties that when a new problem appears one day, we don’t sit around and look for a way to solve it. Nothing is impossible, we are Argentinian, we can do everything.

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