Many people get intimidated when talking about starting a business. The truth is, it doesn't always mean launching a company with numerous employees, a corporate office, and a huge investment. Sometimes it all begins with a dream and the determination to make it work. That's what a micro business is all about.
Needing only skill, hard work, and the tools you need to get customers, this type of venture is more than what you think. Let's discuss more about what is a micro business, how it is unique, and what you need to start.
A micro business, or some may call it as microenterprise, is defined by the US Small Business Administration (SBA) as an independently owned company with only less than 10 employees. Usually, it started as a side hustle, a passion project, or a hobby generating an additional source of income. If you look around you, they come as freelancers, a home-based store, or a mobile food cart. They are often operated by just one person - the owner who runs everything from production to advertising, and the actual selling. These businesses operate on a low budget, use only a minimal space, and serve a specific niche in the market. Due to these factors, they are vulnerable to a lot of challenges related to financing, marketing, and business scaling along the way.
Over 80% of small businesses in the US are non-employer firms which shows clear evidence that micro businesses cover a significant part of the economy. Despite the small size, the industry has contributed significantly to the US employment and has provided different services to various sectors. This is a testament of the strong entrepreneurship skills of American citizens.
There's a clear difference between a small business and a micro-business even though they are both part of the small business ecosystem. Oftentimes these terms are interchanged and confusing to some but a small business can have up to 500 employees according to the SBA. On the other hand, a micro business only has 9 employees or less; some may even only have one or two. They are typically smaller and focus on a specific niche rather than providing a broad range of products and services.
The scale, complexity, and funding needs are generally smaller. In most cases, they only rely on small loans and personal savings since the size of a business can affect eligibility for financing options. On the contrary, small businesses might look for bigger funding and more investors.
Micro businesses are all around us but we are not aware or we just don't realize that we encounter them everyday. To give you an idea, these are considered the most common micro business types:
You may not find them in big offices or spaces and costly promotions but they offer products and personalized services that are fruits of their genuine passion. Look around you and start supporting startup businesses today!
Just like other ventures, micro business owners will have their taste of ups and downs and are not guaranteed success. Most of the time, these entrepreneurs handle everything from marketing, customer service, and production all on their own. With a lot on their plate, it is expected to meet some challenges along the way. Being aware of these challenges is necessary in understanding what is a micro business.
Starting on their own or with limited manpower can lead to time constraints and fewer resources to utilize. As some startup entrepreneurs start a side hustle while having a full time job and other responsibilities, they find it difficult to balance their time. Many of them approach family and close friends for additional resources and possible investments.
This type of business doesn't guarantee a stable flow of income. Clients may come and go and trends change over time. Also, marketing your business to attract more customers may require an additional investment.
Due to limited time, resources, and unstable income flow, it may be difficult to scale up operations to innovate or add more products and solutions to meet the demand. But if your business has shown remarkable growth and steady cash flow, it may be the perfect time to scale up.
Despite the possible challenges that you may encounter when starting a micro business, there are also many benefits and advantages that you can enjoy. These are the main reasons why many entrepreneurs are encouraged to take a risk in growing their startup businesses.
Many individuals with a limited budget are thrilled to start their own small business due to the low startup cost it may require. No need for a big office space or heavy marketing - just you and your determination to make it happen. With this concept, it is possible to grow and start a business at the comfort of your home with your family and acquaintances as your first clients.
In this type of business, you are the boss, you can set flexible hours, and you can choose to work from anywhere. This flexibility and control can give you the freedom to work at your own pace, providing more room for productivity to grow your business.
Serving a specific market can lead to attracting and retaining loyal customers without costly marketing efforts. The key is to improve and innovate what you offer in a sustainable way so that people will keep on patronizing your business. Word of mouth referrals can significantly impact and broaden your client base.
If you are really passionate about launching your micro business, the process is a bit straightforward especially when you want to keep things simple and within your means.
If you are passionate about something or you just want to establish a new stream of income, starting a business might be the answer. There may be a lot of challenges you need to face along the process but the rewards you'll get from the whole experience is worth it. After all, it's not about becoming successful overnight - it's about building something meaningful on your own terms.
Before diving in, make sure to plan ahead, do a thorough research, and understand what is a micro business. A successful entrepreneur begins with just their passion and simple ideas. With the right approach and hard work, it all ends with a fulfilled dream.
Ronald Osborne is an Australian entrepreneur and experienced business coach. With over ten years of business and mentoring experience, an MBA specializing in Finance, along with launching/partnering with over 10 of his own companies around the globe, he has been able to achieve his version of success. Ronald has been able to help large telecommunication companies, law firms, trade businesses, and everyday business owners improve their business and take it to the next level.
