Financing and marketing can be more of an issue for micro businesses vs. small businesses, but they operate with less capital and enjoy a closer relationship with customers than small businesses typically do.
If you’ve started a business, you probably identify as a small business owner, but are you actually a micro business owner? Solopreneurs, freelancers, side hustlers, and business owners in any industry employing fewer than 9 people would qualify as the latter.
If that’s the case for you, it’s important that you understand what a micro business is, the difference between a micro business vs. small business, and the challenges and opportunities unique to this subset of small businesses. That way, you can better understand how to operate your business effectively, and how to navigate those inevitable challenges.
What is a micro business?
Despite their small size, micro businesses have considerable clout in our economy. According to U.S. Small Business Administration Mid-Atlantic Acting Regional Administrator Steve Bulger, “Micro businesses are the foundation of the creation of our nation, and continue to be an important part of our economy and the strength of our communities. Many of our founding fathers and early Americans could be considered micro business owners, and as more Americans become self-employed, micro businesses have grown to be a significant sector of our small business economy.”
A micro business is a type of small business that operates on a very small scale. That scale is typically measured according to the business’s number of employees, total worth, and occasionally how much money was required to start the business. These factors are also used in the SBA’s definition of a small business, but of course the numbers are smaller in this case.
“By definition, micro businesses are a subcategory of small business, with sales and assets valued at less than $250,000 per year and less than five employees, including the owner,” Bulger says.
Those numbers can vary slightly. But according to other studies on micro business, as well as the micro business owners and SMB experts we spoke to, we’ve found that micro businesses generally meet the following standards:
Have fewer than 10 employees, including the owner (though some definitions of “micro business” cap the number of employees at six)
Less than $250,000 in annual sales
Required less than $50,000 to start
More generally, micro businesses require less capital to operate and their business activity is lower than larger small businesses.
Often, micro businesses are run by a single owner with no employees, aka solopreneurs. These tiny operations often begin, and/or remain, as the owner’s side hustle—think housekeepers, consultants, creatives, event planners, professional service providers, freelancers in any field, and people working in the gig economy, like Uber drivers, Etsy store owners, and Airbnb hosts. A micro business “may also carve its own space within an industry by focusing on a specific sector of the market,” says Thomas J. Williams, a tax accountant and founder of Deducting The Right Way. “For example, a member of the food and restaurant industry who sells muffins from a street cart rather than opening a full-fledged bakery” would be defined as a micro business owner.
Some micro businesses are simply early-stage small businesses (or, eventually, large enterprises) that will grow over time, while others will remain micro businesses over the lifespan of the company. That all depends on the business owner’s intention and opportunity for growth.
Despite their smaller scales and requirements, micro businesses are just as viable as small or midsize businesses, and they certainly require the same amount of planning, dedication, and work to operate as larger-scale enterprises. “Together, we contribute just as many jobs as large corporations, and we are often involved in our communities at equivalent levels,” says Nance L. Schick, a small business attorney and micro business owner. “Yet our financing, training, education, workforce, and other needs vary dramatically. Many of us are home-based business owners who generate significant incomes; we are not just hobbyists.”
Attracting potential customers
Micro businesses operate on smaller scales than small businesses on every level, including the scope of their customer base—and their ability to reach potential customers in the first place. That might put them at a competitive disadvantage to small businesses that have the funds, network, and resources to access fuller-scaled marketing campaigns. Simon Braier, the customer strategy and insights director at Vistaprint, confirms this challenge:
“In a Vistaprint survey of micro business owners, we discovered that marketing is one of the areas they struggle with the most. Many micro business owners start out to spend more time doing what they love, rather than due to a passion for marketing. They also wear many different hats and work within the constraints of a tight budget (approximately $1,500 annually), which makes this area even more challenging.”
Despite these limitations, Braier says, “We’ve seen that even with limited resources, micro business owners can stand out on a shoestring budget. In fact, their small size and unique qualities can be turned into a strength in their marketing toolkit.”
The solution: Stick to a low-cost, low-lift marketing plan
Thanks to the rise (and effectiveness) of social media marketing and other forms of digital advertising, business owners don’t actually need enterprise-level marketing budgets to get the word out about their businesses. The democratization of online marketing means that most digital marketing tools are easy and intuitive to implement, too, which makes them ideal even for the technophobes among us. Of course, it’s important for micro business owners to put in some face time with their potential customers, too.
We’d recommend that micro business owners implement at least the following marketing strategies, none of which require supersized budgets or bandwidth to achieve:
Micro business owners—like business owners helming enterprises of any size—should create a business website as soon as they launch.
There are lots of website-building platforms to choose from, but Squarespace and Wix are two of the more popular options for their easy-to-use templates, professional designs, and affordable price points. Importantly, too, these platforms enable you to buy your website domain name.
Both Squarespace and Wix’s templates are also built-in with SEO features, which will help you rank higher on search engines—and which, in turn, makes your business more easily visible to potential customers seeking products or services like yours. We’d also recommend taking a look at our guide to SEO strategy for more tips on how best to create your digital content so it reaches the most possible digital consumers.
2. Social media marketing
Next, create dedicated business accounts across all major social media platforms. Regardless of your business or industry, maintaining a presence on both Facebook and Instagram is basically required these days. But depending on where your target market hangs out online, plus your personal bandwidth and preferences, you might also consider creating accounts on Twitter, Pinterest, YouTube, TikTok, and other popular social media sites.
Our comprehensive social media marketing for small business can help you navigate this crucial and highly effective marketing tactic. But the most important tips to keep in mind as you’re building your social media channels are to create high-quality content, post regularly, and respond (kindly!) to as many of your customers’ comments and questions as possible. Highly engaged users tend to be the most successful. If you have room in your budget, you can also consider buying sponsored posts and taking advantage of other paid marketing tactics.
Don’t be discouraged if your digital fanbase starts out small—Braier believes that a micro business owner’s relatively small social media following can actually work in their favor, as it allows for more (virtual) face time with more people.
“A restaurant or shop owner can replicate the higher personalized level of service they provide face-to-face on social media, by monitoring and responding to comments in a customer-centric way. These businesses can also differentiate themselves by showcasing the quality products and services they provide that are hard to come by at larger competitors. For an arts-and-crafts manufacturer, that could consist of videos showing the meticulous process they go through when creating their products.”
As a micro business owner, you’re likely going to find your customers through your personal connections and your local community, so don’t overlook the importance of networking and in-person marketing incentives. That can certainly entail old-school networking tactics, like serving your family and friends and letting word-of-mouth work its magic. Partnering up with local businesses and charities or setting up shop at crafts fairs or farmers markets are great options, too. And don’t forget to have business cards and other physical marketing materials on hand.
“Believe it or not, business cards—as well as palm cards, flyers, and other printed marketing material—are still an excellent marketing method. They distribute easily, are relatively inexpensive, and printing on demand can make your materials as flexible as your online presence,” Bulger says.
But networking can be digitized, as well: Send an email announcing your business to your address book, update your LinkedIn page to include information about your business, and post about your business on your personal social media accounts to redirect your followers to your business’s accounts.
Also, don’t forget to create a Gmail for business account, or an account on the email server of your choice. Having a professional email account looks more professional, and separating your business and personal emails makes more sense organizationally.