What is a micro business?
A micro business operates on a very small scale with fewer than 10 employees. As an entrepreneur, you may have toyed with the idea of starting your own business. If you’re new to business ownership, starting a micro business might be the right move for you.
Tiny but mighty, micro businesses can be a great way to kickstart your entrepreneurial career; you can even set up shop from the comfort of your home. They can be a great way to turn your hobby into a business.
A micro-business, unlike a side hustle, is a fully functioning business which operates on a smaller scale. This can be a great option for those who have other jobs or want to grow their business slowly. So, let’s dive into all things micro business and explore what’s involved in starting your own.
Does that pique your interest? If so, Learn more about what exactly a micro business is, the pros and cons of starting a micro business, and the crucial steps for starting one.
Micro business vs small business: What’s the difference?
All micro businesses are small businesses. The key difference is the number of employees you have, your start-up costs, and your annual earnings. When compared to a small business, a micro business consists of fewer employees and generally generates less revenue.
Other guidelines, like requiring less than $50,000 in startup costs or not having access to traditional capital loans, would put you under the micro business.
Are you a micro business or a small business?
Generally speaking, if you are self-employed, a sole trader, and/or have just a few employees, you are very likely running a micro business.
Is a micro business right for you?
If you are considering starting a micro business, it’s worth noting that there are certain advantages and disadvantages that come with micro business ownership. You can benefit from being aware of these pros and cons before you commit to starting your own micro business. To help you decide if starting a micro business is the right move for you, here is a pros and cons list for starting your own micro business below.
The Pros of starting a micro business
1. Flexibility
A larger business may require several levels of approvals before a decision can be made – even if it’s only a small change. However, micro businesses have the advantage of freedom to make decisions fast and implement change fast. When combined, this can lead to quicker turnaround times when big decisions are on the table, such as pivoting the business. changing direction.
2. Simpler operation
With fewer employees, there will be fewer departments to oversee and fewer processes to maintain. This could mean more streamlined workflow and communication throughout your business.
3. Skill specialisation
As a micro business, you will likely focus on less services and product offerings than large corporations, which can enable you to be an expert in the services and products that you do offer.
4. Lower costs
Micro business owners maintain lower business costs since there are fewer salaries to pay and less operating expenses due to the simplicity of the business. And if you operate as a remote or home-based micro business, you’ll also save on property rental costs for a working space or office space.
The cons of a micro business
1. More responsibility on your employees
In a micro business you only have very few employees, which means each employee will hold more responsibility and ownership for their day-to-day tasks. That means you’ll have to hire high quality, talented employees that you can trust.
2. Higher risk
Although you can start a micro business as a side hustle, there will still be a level of risk associated with starting your new business. Micro businesses can often be denied funding because of their inability to turn a profit in their early years.
3. Limited resources
Smaller companies tend to have less financial or promotional resources to put into marketing activities and sales promotions to attract new customers to their business. This can be a big challenge as successful businesses need a loyal customer base to thrive.
4. Hiring disadvantages
Limited resources could also make it challenging to get your name out there to attract top-notch employees that you can depend upon.
Five critical steps for successfully starting a micro business
It’s never too late to start a business; in fact, a compelling argument can be made that the later you start your business, the better off it may turn out. If you are ready to get going with your shiny new microbusiness.
1. Identify the right business for you
If a new business venture idea doesn’t stumble upon you, lean into what you know or what you’re passionate about. Is there a special skill set you have or a creative hobby that brings you joy? Jotting down the answers to these questions is a great place to start. It’s also a good idea to do research before diving into a new business to learn if it’s really the right fit for your experience and interests and if there’s a viable consumer base that you can target.
2. Create a business plan
There’s way more to a business than just coming up with a business name. Once you’ve solidified your micro business idea, it is time to develop a business plan for how you will run your new micro business. Your business plan may include the following:
- an executive summary;
- your business model;
- market analysis;
- product offerings/services;
- operations or organisational structure;
- marketing and sales strategy;
- Financial plan; and
- an appendix.
Your business plan may also include a clear outline of your vision and business goals. You can use this for reference as you develop your business and introduce your business to investors (if you intend to seek them).
3. Get your funds in order
Having a thoroughly researched and prepared financial plan will assist you when pitching to outside investors and lenders. Understanding exactly how much money you need to get started and be successful is also important before diving into a new business venture, as a lack of sufficient capital is one of the most common reasons why small businesses fail.
4. Research and test your product
After you’ve come up with a product or prototype, test your product to see how consumers respond to it. You can get your product in front of a study group, local vendors and business owners, or even your friends and family. Then conduct a survey to gather feedback or constructive criticism on your product before its official launch.
You could even start with a soft launch, or soft opening, for a sample of consumers to preview your product before it’s released to the wider general public. This can be a great way to gather valuable data and insights ahead of your official launch date.
5. Protect your business with business insurance*
Launching and growing a business – even a micro business – is no walk in the p ark. There will be challenges to face and obstacles to overcome as you build your business. You wouldn’t want to go to all of that effort only to see your business come undone, would you? Well, this is where business insurance can have your back. Business insurance can save your microbusiness from worst-case scenarios in the event of an insured event.
Experience business insurance the BizCover way
There are many, many fantastic microbusiness ideas out there – some of which may not even exist yet. If you can think of it and can build a business plan around it, and there’s demand for it, there’s no reason why your microbusiness idea can’t be successful.
Whether yours is a starter business or a low risk business, or perhaps you are onto your second or third business; no matter how ‘micro’ your micro business may be, it’s not too micro to benefit from reducing its exposure to risk via business insurance.
Explore your business insurance options with BizCover and discover just how fast, easy, and hassle-free business insurance can be when you choose BizCover. Compare competitive business insurance quotes online or call us on 1300 920 868 and enjoy a better business insurance experience today.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2023 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769.
