Is your business a microbusiness?

Microbusiness/MicroEnterpreise

A microbusiness/microenterprise is a type of small business, usually operated by one person, often unregistered, having five or fewer employees (in some cases no employees) and needing a very limited amount of seed capital. The definitions of a micro-business differ depednding on geographical region as the following criteria is commonly used to determine the validity of a  microbusiness:

1. Number of employees
2. Balance sheet total amount
3. Turnover amount

Microbusinesses add overall value to a country’s economy by:

• Creating jobs: A microbusiness creates opportunities for sub-contractors, freelancers and part-time staff
• Enhancing income: The additional revenue generated by a microbusiness is be a welcome boost to any owner
• Strengthening purchasing power: The ability for a microbusiness owner to buy in bulk or on behalf of their clients gives them more leverage as a potential recurring consumer
• Lowering costs: A microbusiness would usually have very low fixed costs, no labor costs and can quickly adapt to changing consumer trends due to their size.
• Adding business convenience: The setup of a microbusiness within any community which provides a much needed product/service is a welcomed convenience.

Initial challenges facing a new microbusiness

Any startup microbusiness typically has little to no access to the commercial banking sector, they often rely on “micro-loans” or microcredit in order to be financed. Small finance institutions often finance these small loans, particularly in the developing countries. Micro-loans are a way for organizations and entrepreneurs to make small loans to those in poverty often in third world countries. The term “micro-loans” is more commonly referred to as Microcredit. As it is commonplace for a microbusiness to have no employees other than the self-employed owners, they require a very limited amount of startup capital which they usually obtain from the smaller non-commercial financial institutions or through personal loans or governmental funding. It is normal for a microbusiness to focus their services on microentrepreneurs who are on low to moderate income. By definition, most of these entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce their ability to access traditional credit and other services.

How a microbusiness is used in disability recovery

Microbusiness can also be very beneficial and helpful when utilized as a therapeutic tool for helping people who for many reasons cannot efficiently participate in typically rigid work environments, i.e. 9 to 5 / 40 hours per week. A microbusiness gives a person who has a disability the flexibility to attend appointments or treatments when scheduled therefore avoiding potential conflicts arising within normal working environments. A microbusiness would give people with a disability, business networking options within the community that differ greatly from the medical or treatment mode that they may have become restricted to. Disabled business owners often report an increased feeling of self-worth or an emotional equity that becomes an enhancement to their current treatment. There are many government backed schemes which provide financial support with funding a microbusiness being one of those work goals for disabled or unemployed people. In general, most businesses who participate in any government-backed schemes are initially a microbusiness themselves, as they have limited capital and begin with only one person involved in the business.

Operating a microbusiness in developing countries

In developing or third-world countries, microbusinesses make up the majority of the small business sector. This is a direct result of the relative lack of formal sector jobs available for the poor. These microbusiness owners have little or no other option but to operate and manage their microbusiness as a necessity for them and their family. It’s easy to understand why microbusinesses in developing countries tend to be the most frequent form/size of business. These microbusiness owners would gladly take a formal job at reasonable pay if those jobs existed and were available.

A microbusines can be beneficial in many different ways to minipreneurs but since they are so very small with limited resources, they do face many challenges. The microbusiness owner will essentially be a single point of failure for that microbusiness so it is essential a build a support network and a wealth of support resources which can be referenced.

If you are a potential or existing microbusiness owner and need help and advice with management and development of your microbusiness then contact eCubation today for a FREE consultation!