The business landscape in Latin America and the Caribbean is dominated by micro, small, and medium-sized enterprises (MSMEs). While most firms start micro and stay micro, others get bigger. This upward movement, or business mobility, propels job creation, economic growth, and prosperity.

 
What Drives Some Businesses to Grow While Others Plateau?  

To help answer this question, we partnered with Confecámaras, the national network of municipal chambers of commerce in Colombia, to create the National Observatory of Business Mobility in 2023. The goal is to collect data about MSMEs to better understand which factors are associated with firm growth and use these insights to improve public and private business support programs.  

Our recent study shows that of the 306,607 companies created in 2019, only about a third, 32%, were still active in 2024. Of these, just 6.8% managed to climb the size ladder. This select group of companies tends to share some key characteristics.  

Small and medium-sized businesses were more likely to grow than their micro counterparts. Companies legally established as corporations (sociedades) were far more likely to achieve upward mobility than those created by individuals. The construction, extractive, and agriculture sectors had the greatest share of growing firms, as did the departments of Antioquia, Atlantico, and the capital city, Bogota.  

In addition to highlighting these common structural features, which echo those identified in our first study in 2023, our new analysis surveyed 2,100 companies to dig deeper into how internal firm factors, such as organizational structures and management styles, can influence business mobility.

1. Higher Initial Capital

  
Unsurprisingly, having more capital at launch increases the likelihood of business mobility. More capital allows companies to invest in productive assets, hire qualified personnel, and operate at a larger scale from the start.

In practical terms, firms that start with at least 100 million Colombian pesos (COP) (approximately $26,000) in initial capital are about 9 percentage points more likely, on average, to grow than companies starting with less than half that amount. 

The probability of growth rises even further for firms that start with more than 1 billion COP (approximately $266,000), increasing by around 16 percentage points. Conversely, limited access to adequate financing is a major barrier to business mobility, especially for smaller firms. 

Overall, the evidence shows that launching with at least 100 million COP in initial capital significantly improves a firm’s chances of growing.

2. Founder’s Previous Entrepreneurial Experience and Business Skills  

Entrepreneurs who have previously founded or managed other businesses tend to have higher rates of business mobility. Their knowledge and experience help them navigate challenges and make more effective decisions. Moreover, solid business skills play an important role in the growth of microenterprises. 

3. A Clear, Documented Strategy and Growth Mindset 

 
One of the most actionable findings is that having a clear, documented strategy increases the probability of growth by 5 percentage points. Strategic planning helps align internal efforts, set objectives, and structure decision-making, which are crucial for sustained growth. Similarly, businesses that expected to increase their workforce in the first five years were 9 percentage points more likely to move up than those without this growth mindset. 

4. Access to Credit Supports Growth, Particularly for Smaller Firms  

Firms indicating that access to credit was one of the most important barriers they confronted were 8 percentage points less likely to grow. This was especially true for smaller companies. 

5. Strong Networks and Capacity Building 

Businesses that belong to associations and industrial clusters, participate in supplier development programs with large companies, and invest in training focused on managerial and technical skills are more likely to grow.

6. Management Styles Combining Structure with Adaptability                   

The study identified five management styles to characterize Colombian companies. Those that grew tended to have a hybrid management style that combined structure and discipline with continuous improvement processes, allowing them to adapt and capitalize on growth opportunities.

A complex interplay of structural, strategic, and personal or managerial factors shape business mobility in Colombia. Helping more MSMEs not only survive but grow calls for targeted public and private approaches and a clearer understanding of the main barriers they face.

Through the Observatory, we’ll continue building on these insights and delving deeper into the role of managerial capabilities and other factors to help design more effective policies and services to accelerate business mobility.