2.3.2 Changing regulatory bottlenecks open up new business opportunities.

Policies impact entrepreneurship. Regulatory bottlenecks and delays slow down start-up processes and make new business creation unappealing and unfeasible. Excessive fees may block lower income populations from business creation. In addition, lack of diverse financing options can impact entrepreneurs at all stages of their business development.

In Chile, regulatory policies have for years weighed down new business creation. Over 1.5 million enterprises are small- and medium-sized enterprises (SMEs) but they represent a small proportion of the country’s total sales. In addition, most medium-sized enterprises (MEs) fail in the first year (54 percent). Policy-makers found that low levels of education and technology use, high costs and excessive procedures to create business, low levels of financial access, and a limited entrepreneurial culture were all constraints that limited the success of enterprises, especially SMEs, in Chile. Policy objectives were designed to address those limitations, including changing policy that created regulatory bottlenecks for SMEs.

Practical Tips: Accion Emprendedor on Promoting Enterprise Development in Low-income Communities

The Chilean non-governmental organization, Accion Emprendedor, creates enterprise centers in low-income areas that provide training, technology transference, technical assistance, and public-private partnerships. They advise the following:

  • Use qualified volunteers to conduct trainings
  • Invest in people and methodologies rather than in buildings
  • Use peer learning
  • Provide operational services—SMEs are used to doing everything, but they should focus on what they excel at
  • Remember that opportunity entrepreneurs are those who create value, jobs, and have a sense of permanency

In addition, the organization changed policy to improve regulatory capacity. This included creating a bill of law to reduce the costs and procedures necessary to register a legal business. The bill decreased the number of days needed to create a business from 22 to 7 and decreased costs for starting a business from US$647 to US$482. A second bill is still in Congress to create a new Internet-based system for business creation. The goal is to eliminate business creation costs, reduce the time to register and await notification (to one day), and digitize the registration process while maintaining legal security. From its experience, the organization advises the following:

  • Be aware of its impact on stakeholders. Notary publics, for example, can be resistant to policy change if it significantly impact their business.
  • Note if any new bottlenecks will be created: The proposal is technologically complex. Any breakdown in implementation will impact the whole process.

For more information on Acción Emprendedora, see http://www.accionemprendedora.cl/web/index.php.