Get into the nitty-gritty of what it takes to start and scale a microbusiness. Discover best practices, industry trends, and more.
Apr 06, 2021
6 min read
Apr 06, 2021
6 min read
Small businesses are the heart and soul of our economy. They make up 99.9% of our businesses and are defining factors of state and local operations.
If you've considered starting or are currently running a microbusiness, then read on! We run through the nitty-gritty details to establish a lucrative business. You can also get started with a GoSite free account to get early access to tools made specifically for small business owners.
You may still be wondering...what differentiates a microbusiness from the rest of them?
What Is a Microbusiness?
A micro business is a small business with fewer than ten employees. While they make up a grand majority of United States firms, they only count for about 10.3% of private sector jobs.
Some geographic areas define microbusinesses as companies with one to five employees, but as defined by the Small Business Administration—and widely accepted across the country—businesses typically have between one and nine employees.
Benefits of Owning a Microbusiness
There are more reasons than mere popularity to own a microbusiness.
Low Payroll Expenses
Microbusiness owners spend less on payroll due to their significantly smaller staff size. Most of these businesses are a one-person show, with occasional temporary staff or freelance help. Fortunately, this reduces overall fixed business costs and makes it easier to save and spend in other areas suited for growth.
Your schedule, business model, and day-to-day operations are all more flexible as a microbusiness owner. You want to change directions because of a shift in industry trends? Go for it! You’ll find it’s easier to make the switch without a dozen employees under your direction.
Similarly, having fewer employees grants more flexibility when it comes to everyday operations such as creating schedules, modifying business hours, building rapport, and communicating with customers.
In many cases, you need nothing more than a car and a phone to run a microbusiness. In that case, why pay for office space?
Room To Grow
Microbusinesses are great because they can be whatever you want them to be. For some owners, their business functions as a step-up from an existing side hustle or hobby project as a way to generate true income as opposed to “fun money.”
For others, their business is merely a stepping stone to bigger and better business opportunities, as one looks to diversify and scale.
Either way, owning a microbusiness is a great place to start. They can take off in any direction.
Downsides to Microbusinesses
As with anything, there are also some negative aspects to consider. When it comes to owning a business with less than ten employees, be sure to think about potential disadvantages.
As stated previously, microbusinesses make up a vast majority of companies in the United States. That means there are likely other small business owners competing for the same customers, financial resources, or even ideas.
Entrepreneurship of any kind is risky. Microbusinesses are especially uncertain because they tend to have a faster rate of failure. In fact, the profitability of small businesses is more questionable within the first three years of operating.
A microbusiness owner may find it more difficult to seek funding from investors or lenders because of this assumed high-risk level.
Most microbusinesses will be filed as sole proprietorships, limited liability corporations, or partnerships. If you’re considering starting a small business of any kind, consider filing as an LLC because of the tax benefits and limited amount of financial liability associated with owning a smaller company.
Beyond that, simply take the following steps to get your business off the ground:
1. Decide on Your Product or Service
It all starts with an idea. Finalize what you’d like to sell and establish your key value propositions. In other words, what makes you different from your competition?
2. Create Your Brand
It’s important to develop your brand early on in the process. You’ll want to decide on your company’s name, mission, vision, logo, slogan, etc.
While these things aren’t set in stone—and can be altered down the line—it’s helpful to have this knowledge towards the beginning to guide you as you begin to grow.
3. Write Down Your Plan and Conduct Research
These are two very important pieces of the puzzle. First, be sure to write out your business plan. This includes all of the information from step two and additional insight such as your:
Go to market strategy.
Second, it’s all about the research. There’s no such thing as too much due diligence, so let the internet be your best friend as you scope out competitors, average pricing models, market opportunities, and more.
4. Look for Funding Opportunities
Many small businesses participate in bootstrapping when it comes to launching their small business. If using your own assets isn’t an option, you needn’t worry. There are many other ways to raise capital, including:
Additionally, you’ll need to use your Employer Identification Number (EIN) to receive federal and state business IDs. These are necessary to have when it comes to performing backend financial work (e.g. taxes and opening a bank account).
Best Industries To Own a Microbusiness In
Some industries are made to be small. In fact, these service-based industries were born to thrive as microbusinesses:
If you’re looking to start your own microbusiness, don’t overlook these fields!
Whether you already own one or are considering starting a business of your own, we hope you’ll benefit from the business news, tips, and insight on the GoSite blog.
We can’t wait to help get you going, and figure you need a way to start logging customers and making transactions. So enjoy a CRM system and an easy-to-use payment tool at no cost when you sign up for a free account with GoSite.