Managing Your Business
What Is a Micro Business? Tips to Get Started
What Is a Micro Business? Tips to Get Started
Whether you’re a stay-at-home mom, a college student, or have a regular 9-5 job, starting your own business is completely achievable. If you’re not ready to leave the stable lifestyle you have right now or you’re not prone to risk, you might consider starting a micro business.
What is a Micro Business?
A micro business, also known as a micro-company or micro-enterprise, is the newest trend in the entrepreneurial world. Because it is so new, the term is vaguely defined as a small business that operates with 1-5 employees and requires less than $50,000 to start the company. Independent contractors, freelancers, and small organizations are all considered micro-enterprises.
Some examples of this type of business: Etsy owners, Amazon suppliers, solo consultants, freelance graphic designers, and home-based businesses.
What to Consider Before Starting a Micro Business
If you are considering starting a micro business, there are advantages and disadvantages to be aware of concerning this particular business structure:
Advantages of a Micro Business
Flexible to Change
Pivoting to match changing business climates is easier with micro businesses than an established corporation. Imagine a larger-scale company that needs to make adjustments to adapt—there are several levels of approval, decision-making, and strategy to make a single change. Micro businesses have the benefit of quicker turnaround times for decisions and strategies because of the small-scale nature of the business.
Industry and Skill Specialization
Freelancers and contractors such as consultants tend to specialize in a few skill sets to maximize their markets. By practicing their trades in a micro business, owners can see different angles and perspective of their job and build their experience.
Low Overhead Expenses
Micro business owners experience lower costs since they have fewer salaries to pay out, less operating expenses due to the simplicity of the business, and, for online/remote micro businesses, zero rent expenses.
Independence for the Non-Committed
The freedom to choose your future is what every entrepreneur wants, and in having a micro business, you get just that. Not only do micro business owners enjoy the freedom to choose their career paths, but their employees also share similar, independent lifestyles.
Disadvantages of a Micro Business
More Trust and Responsibility
Although this might sound like an advantage for business owners, it’s almost a forced requirement for micro business owners. Every employee in the company (as small as it is) has a large role that affects the success of the company in its entirety. With autonomy comes responsibility, something not every employee is capable of. Ensure success and prevent any issues by hiring the right people for the job.
Micro businesses exist so that you don’t need to leave your stable job and/or family to cater to a large business. However, risk is still a factor in entrepreneurship, including funding and the possibility for business failure. Micro businesses are often denied funding because of their high-risk nature and their inability to turn a profit within three years.
Limited Access to Resources
Micro-companies sometimes lack access to resources necessary for a business to begin, particularly a lack of manpower. For example, growing a customer base is much more difficult in a highly competitive market compared to corporate companies that have employees and resources in their marketing departments, or even larger LLCs that have a marketing team.
How to Start a Micro Business
These are only a few advantages and disadvantages of a micro business, but you wouldn’t really know the trials and tribulations until you actually start the company. Here are a few steps you can take to move closer to your micro business goals:
Step 1: Establish a mission and vision statement.
Mission and vision statements express the clear intent, values, guarantees, and purpose of your business—essentially, the foundation of the company. Without a clear mission and vision statement, the more meticulous plans of your company will not have a strong base to grow from. Strong mission and vision statements are also attractive to customers and investors because people invest in companies with strong company values.
Step 2: Make detailed operation plans for your business.
There are many moving parts of a company, but simply setting goals and milestones with dates will organize each operation. In today’s technology, you can use a tool like a business model canvas or one-pager to solve any potential issues that may arise. A few questions to ask yourself are:
- Who are my key partners and suppliers?
- Where does my micro business operate?
- What resources do I need, and how much do they cost?
- What is my business structure?
- Who are my target customers, and how will I fulfill their needs?
- What is my cost structure/revenue stream?
Step 3: Assess your financials.
Although broadly addressed in the previous step, create a projected balance sheet, income statement, and cash flow statement in an itemized list. Having a thoroughly researched and prepared financial plan will assist with pitching to outside investors and lenders.
Step 4: Organize a marketing plan.
A micro business requires a strong marketing strategy, especially if your team is small or if you’re on your own. You should understand your customer and how to reach them and provide the most value through enough research. With this information, you’ll be able to launch online marketing campaigns such as social media advertisement, email marketing, Google ads, and content marketing/SEO.
Step 5: Research and test your product.
Prototyping and pretotyping are strategies to understand how to make your business better from the customers’ perspectives. Examples of research for smaller companies include:
- A templated, pre-launched or preview website
- Offers to build an email list
- Cold-calling vendors and potential customers
When people say “no” to test your product or service, this is a good opportunity to request feedback on how to improve the customer experience.
Final Step: File your LLC and Start!
Once you fully understand the financials, operations, and design of your business, the final step is to officially file your business with the government (if you haven’t already) and begin operating!
Helpful tip: You can file your LLC during any of these steps, but consider filing through a business filing service to avoid missing any important steps or required pieces of information.
Swyft Filings is here to make your entrepreneurial dreams a reality. Let us handle the paperwork—file your LLC today!