What Is a Micro Business & How to Start One?
Micro businesses are hugely popular these days and they’re pretty easy to start!
Onto today’s topic: micro businesses. What exactly is a micro business or “micro enterprise” and how do you start one? Contrary to what you might hope, a micro business is not a tiny storefront run by caterpillars. It’s a business that employs less than 10 people and makes less than $250,000 in annual sales. Statistically though, micro businesses are usually operated by one person, the owner.
Think of all those life coaches on Instagram. The Etsy shop owners, independent freelancers...these are all examples of micro businesses.
Here’s What We’ll Cover:
Micro Business vs. Small Business
The definition of a “micro business” can vary, especially from state to state. However, there are some commonalities on what defines a business to be “micro”. These commonalities include: employs less than 10 people (so maximum 9), produces less than $250,000 in annual sales, was started up with less than $50,000.
Similarly to micro businesses, the definition of a small business can vary depending on what state you are in. According to the U.S. Small Business Administration, a small business employs less than 1500 people and makes less than 38.5 million in annual sales. In some industries that number goes all the way down to 6 million. Still not a bad year, but a big difference when it comes to business type!
When it comes to taxes, both small businesses and micro businesses can function the same, depending on how they are registered. As the owner of a micro business, you have two options. You can register your business as a separate entity, or be the sole proprietor and include your micro business as part of your personal tax form.
Registering your micro business as a separate entity (LLC or corporation) will give you a few benefits. These benefits include: a break on your taxes and “personal liability protection”. Having personal liability protection means that if things go south, the bank cannot go after your personal assets (home, car, savings account) but may take over your business account and property. A micro business doesn’t bring in enough revenue for registration to make sense. This is why the majority of micro business owners choose to be the sole proprietor.
How to Start a Micro Business
Now onto the good stuff. How do you actually start one of these things? Here’s the breakdown:
Step 1 - Write out your mission statement: Before you do anything, you’ll need to figure out what sort of micro business you want to launch! All good businesses start with a solid mission statement, so grab a piece of paper and write down your goals. Really think about what will make your business stand out from the rest. Whatever you would include on your “about us” page would be a good start.
Step 2 - Take stock of what you need to get started: Now it’s time to get into the nitty-gritty. Where will you source your supplies from? What are your business expenses? Who is your target audience and what will they expect from you? Will you offer your product/service locally? Or internationally? Write all of this down and do your research. It’s always a good idea to talk to a fellow business owner in your space, to get a read on what to watch out for when you begin to put your micro business plan into action.
Step 3 - Consider asking for a micro - loan: Keep your eyes open for programs and grants geared towards micro businesses. Some of these programs also offer workshops, coaching and other resources to help with business funding.
Step 4 - Come up with a marketing plan: There’s no point in having a micro business unless people actually know about it! Most micro businesses rely heavily on social media and email marketing as it’s low-cost, effective and easy for one person to execute. Figure out which platforms will best suit your brand and start getting the word out.
You don’t need to have gone to business school in order to launch your own micro business. All you need is a bit of money and the drive to get it started. To reiterate, here are the four steps to help get you started:
- Write out your mission statement
- Take stock of what you need
- Consider asking for a loan
- Come up with a marketing strategies
It looks like when it comes to businesses, size really doesn’t matter!
Read more about micro businesses on our resource hub.