Entrepreneurship in Guatemala: High potential, but at risk due to insecurity and extortion

Alegalis - The Global Entrepreneurship Monitor 2024-2025 places Guatemala fifth in the world in potential entrepreneurship and sixth in early-stage entrepreneurship, reflecting strong business dynamism. However, the same report warns of a significant deterioration in entrepreneurship conditions due to insecurity, mainly extortion and scams, as well as poor infrastructure and the difficulty in formalizing businesses. This caused the early-stage entrepreneurship rate to fall from 32.4% in 2023 to 23.7% in 2024, or around 800,000 fewer businesses in one year, with a direct impact on employment and the economy. Entrepreneurs, who are 1.4 times more likely to be victims of crime, face an average cost of Q16,000 annually—almost half of the typical initial investment—which limits their ability to grow. However, the study recommends the adoption of preventive measures, security protocols, and the reporting of crimes as key mechanisms to mitigate the effects of this adverse environment.

News: According to the Global Entrepreneurship Monitor, for the years 2024 and 2025, Guatemala has ranked fifth out of 51 countries in terms of potential entrepreneurship parameters, and is in sixth place in terms of early entrepreneurship. The aforementioned is an indicator that Guatemala has a strong entrepreneurial dynamic and has a population that is always looking to innovate, create, and generate profits through new businesses.

Notwithstanding the foregoing, within the aforementioned study, it is mentioned that in Guatemala some of the conditions for entrepreneurship have deteriorated significantly in recent years. The reason for this is due primarily to structural and national factors. The most notable factor, which ranks as one of the main obstacles to entrepreneurship, is insecurity. Currently, phenomena such as extortion and fraud are highly prevalent. This, combined with poor infrastructure and some obstacles to formalizing businesses, has had a direct negative impact on the sustainability and confidence of new ventures.

The aforementioned phenomena have caused the early entrepreneurship rate, which measures newly created businesses—that is, those that have been in operation for less than 42 months—to suffer a sharp decline, falling from 32.4% in 2023 to 23.7% in 2024, a drop of 8.7 percentage points. This translates into the disappearance of approximately 800,000 businesses in a single year, which has a negative impact on both the entrepreneurs and their respective families. It also has a direct impact on the country’s economic growth and, of course, on the possibility of generating new jobs.

The cost of starting a business in an environment of insecurity, such as the current one, can be quite severe. The aforementioned study indicates that entrepreneurs are 1.4 times more likely to be victims of fraud or extortion than those who do not start a business. The above indicates that people’s vulnerability increases, and this continues to grow as their businesses become visible, which exposes them to becoming victims of the aforementioned crimes, as well as theft or fraud.

These crimes entail an average cost of around 16,000 quetzales per year, a figure that can even represent half of the average initial investment to start a business in Guatemala, which is 33,625 quetzales. This is an expense that should be allocated to expanding operations or generating jobs, which ends up weakening projects and limiting the possibilities of creating up to 400,000 additional jobs per year.

The following are the criminal offenses that most affect entrepreneurs: 

• Robbery and assault: 45.7% of cases in 2024.
• Extortion: 14.8% in 2024, with a sharp increase compared to previous years.
• Fraud: 16.6% in 2024, also increasing.
• Vandalism and assaults: Declining, but still significant.

As reflected in the above, extortion is the most prominent crime due to its high cost to entrepreneurs and the increase in the reporting rate, which rose from 102.8 per 100,000 inhabitants in 2023 to 140 in 2024.

However, it is important that entrepreneurs not be held back by this challenging outlook. The key is to adapt to these conditions. Likewise, there are some recommendations that can be implemented to mitigate the cost that these phenomena impose on the country’s entrepreneurial sector. First, it is recommended to implement prevention and security protocols, which involve, especially, maintaining discretion regarding business income and profits, training staff to respond to extortion or theft attempts, and implementing security equipment, such as cameras and alarm systems for businesses of all kinds. Another recommendation, and second, is to speak with specialists who can recommend action plans when experiencing extortion. In the vast majority of cases, it is recommended not to give in to extortion and avoid paying as a first reaction, as this strengthens the criminal cycle. It is also important to report the incident through official telephone numbers, document each threat, and channel it to the appropriate authorities.

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