Have you heard of a microbusiness? Even if you haven’t heard the term, you probably could list at least five microbusinesses off the top of your head. A microbusiness is a small business with fewer than 10 employees—think your local coffee shop, boutique, or food truck.
This article introduces you to the wonderful world of microbusinesses, provides a step-by-step overview of how to start one, and more. Read on for the scoop.
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What is a microbusiness?
A microbusiness is a small business with one to nine employees, according to the Small Business Administration (SBA). There are 3.8 million microbusiness employers, making up nearly 75% of private-sector employers.
Whereas a small business has fewer than 500 employees, a microbusiness has fewer than 10 and operates on a small scale.
Examples of microbusinesses include:
- Freelancers
- Food truck operations
- Small farmers
- Plumbers
- Landscapers
Microbusinesses tend to choose a sole proprietorship or single-member LLC business structure. This type of small business typically has low funding. You probably will need to wear a lot of hats (e.g., be the marketer, payroll administrator, etc.) if you start a microbusiness.
Microbusiness ideas
Thinking about starting a microbusiness but not sure where to start? The opportunities are endless. Like any small business, you can go into whatever industry you want.
Here are a few microbusiness ideas to spark inspiration:
- Sell jewelry and other hand-crafted goods
- Grow and sell vegetables at local farmers’ markets
- Offer bookkeeping services
- Start a freelance writing business
- Offer graphic design services
- Offer landscaping services
Whatever you decide, keep your overhead low, don’t overhire, and pursue a business idea that you’re passionate about.
How to start a microbusiness
Use the following basic steps to make your microbusiness idea a reality.
How to start a microbusiness:
- Decide what your microbusiness will be.
First, define what product(s) or service(s) you’ll offer. Examples of microbusinesses include food trucks, landscaping companies, and freelance writers.
- Conduct market research.
Conduct market research to learn about your target audience and competitors. Market research can help determine customer pain points, pricing, and competitive advantages.
- Create a business plan.
Your business plan is your company’s roadmap to where you want to go. Include sections like a company description, products and services, marketing strategy, funding, financial projections, and an executive summary.
- Choose a business structure.
How do you plan to structure your microbusiness? Sole proprietorships and single-member LLCs are common microbusiness structures.
- Register your microbusiness.
Make it legal by picking a business name, getting an Employer Identification Number (EIN), registering with your state, and obtaining business licenses and permits.
- Open a business bank account.
Separate your microbusiness’s money from your personal money by opening a business bank account.
- Market your microbusiness.
Get the word out by creating a small business website, setting up social media profiles, partnering with local businesses, and registering in business directories (e.g., Google Business Profile).
SBA funding option for microbusinesses: Microloans
You might be interested in applying for microloans from the SBA if you start a microbusiness. A microloan is a popular lending option for smaller businesses and startups.
Microbusinesses are smaller-size loans of up to $50,000. The average microloan is about $13,000. They generally have an interest rate between 8% – 13%.
You can use microloan funds for:
- Working capital
- Inventory
- Supplies
- Furniture
- Fixtures
- Machinery
- Equipment
You can apply for a microloan by working with a local SBA-approved intermediary.
Microbusiness FAQs
A microbusiness employs fewer than 10 people, according to the SBA.
A small business has fewer than 500 employees, whereas a microbusiness has fewer than 10 employees.
Rideshare drivers, freelancers, local boutiques, service providers, vacation rentals, and food truck owners are examples of microbusinesses.
Yes! The SBA’s microloan program provides loans of up to $50,000 to help small businesses start and expand.
Like all small businesses, microbusinesses have other financing opportunities as well, like business credit cards and investors.
There are several benefits of starting a microbusiness, such as minimal capital to get started, low overhead, and greater flexibility.
