Tips on Starting a Small Business
Whether you’ve considered working for yourself for a while or just caught wind of the entrepreneurial spirit, there’s no time like the present to get started. One way to dip your toe into entrepreneurship is through a micro business & micro-market. Microbusinesses contribute great value to this country’s economy and can be a good way to put money in your pocket and on your terms. If you’re a budding entrepreneur looking for the next step to kickstart your business, this post will help you get going.
How To Distinguish Between A Small or Micro Business?
All micro businesses are a form of small business, but not all small businesses are micro-businesses. In order for a small business to be considered a micro-business, it must meet three specific criteria.
The first is relating to company size. A micro business consists of less than ten employees total. This means that either the employees are taking on multiple roles or that they also outsource a portion of their work.
The second factor deals with the number of annual sales. A micro business must make less than $250,000 in gross revenue yearly. The sales growth of your company will determine your status as a micro business.
The last characteristic is the start-up requirement. Microbusinesses should require less than $50,000 to get going. In business, this is a relatively low startup amount that allows you a certain level of flexibility that a small or even medium-sized business might not have.
Main Advantages & Disadvantages of a Micro Business
Advantages of a Micro Business:
1. Reduced Costs:
With a smaller team and fewer overhead expenses, it can be more cost-effective to maintain a micro business.
2. Plays Off Strengths:
With a smaller team to manage, a micro-business allows every member to utilize their own individual talents and areas of expertise to make sure everything runs smoothly. This is especially attractive for digital entrepreneurs who want ownership of what they do.
3. Straightforward Management:
Apart from the skill specialization and lower costs, running your own micro-business requires a lot less hassle when it comes to rules and procedures. You manage yourself and a handful of loyal employees and don’t need to worry about office politics.
4. Room to be Flexible:
Rather than requiring every single action to be approved by higher-ups, being able to move more swiftly between the decision and implementation process allows for the overall workflow and productivity to run a lot more smoothly.
Disadvantages of a Micro Business:
1. Less Hiring Freedom:
Bigger businesses have everything from hiring managers to larger budgets to more easily attract the ideal employee. Finding loyal workers may be tough, but it will be worth your while.
2. Less Access to Capital:
Less access to money meant for investing could stifle the business’ ability to do any number of things from offering greater employee benefits to more funding for research and development.
3. Higher Risk and Responsibility:
The smaller the company, the more responsibility each employee will have to take on. The greater the amount of work any one person has to execute on their own, the more room for error.
3 Tips To Jumpstart Your Micro Business
1. Set up a Business Plan
Creating a business plan is probably the most important thing you could ever do for the success of your business early on.
Here is a list of some of the key areas to include in your business plan:
- Executive summary
- Business model/structure
- A summary of the products or services your business offers
- How your business operates and its organizational structure
- How do you plan on marketing your business and selling your products/services
- Financial projections
- Any additional information relevant to your business
2. Prioritize Financial Organization
You can never be too careful when it comes to tracking the cash flow of your company’s finances. In this situation, incorporating an online bookkeeping system or hiring an accountant is advisable. This is especially true once you start making more than $600 a month in revenue. Keeping track of your finances might seem a bit complicated at first, but is well worth the effort if it saves you from having to pay hefty fees down the road.
3. Keep Your Work Safe
Last but not least, is the value of keeping your work safe. In this day and age, intellectual property is a valuable commodity, and it is highly recommended that you invest in the protection of your business from day one. One of the most effective ways of doing this is by purchasing business insurance. When it comes to obtaining small business insurance, it’s important to note that this is meant to protect yourself and your business assets from any risks or potential lawsuits.
Whether you already own a small or micro business or are in the process of opening one, taking these steps into consideration will greatly benefit your ability to make smart business decisions and impact your success as a whole. For ideas to spark your next micro business and additional steps to launch, check out the infographic below from The Zebra.