Get the guide: How to Start a Micro Business
Do good things really come in small packages? If micro businesses are anything to judge by, then the answer is "no — they come in tiny ones." With a micro business, you can sidestep many of the headaches that come with small business ownership while still pursuing your entrepreneurial goals and running your own business.
So if you're ready to join the micro side, stick around to find out how to create a micro business plan.
What Is a Micro Business?
By now, you've probably guessed that a micro business is even smaller than a small business. But what is a micro business exactly?
In truth, it depends on who you ask. Some of the various definitions include:
- Businesses started with less than $50,000. While this makes sense at first glance, consider that Hewlett-Packard was founded with just $538 in 1939 or about $10,000 in today's money. The tech giant now employs over 50,000 people and earns tens of billions of dollars per year, and you'd be hard-pressed to find anyone who considers it a micro business. So, this definition has too much room for error.
- Businesses that earn less than $250,000 per year. Again, this definition seems sound at first. But when you remember that heavily investor-funded companies like Uber sometimes exist for many years before finally turning a profit, its practical use becomes much murkier.
- Business with less than 10 employees. OK, now we're getting somewhere. Even on Forbes' annual Small Giants roundup, a list of 25 outstanding small businesses, it's difficult to find companies with less than 20 employees, let alone 10. As such, this is one of the most solid definitions so far, and it also happens to be the one used by the U.S. Small Business Administration (SBA).
So which definition is the best one? There is no single agreed-upon answer, but for the sake of simplicity, we'll use the same one as the SBA and say that a micro business is any with less than 10 employees. If the business was started with less than $50,000 and/or earns less than $250,000 per year, that just contributes to its micro business status.
What are examples of micro businesses? In short, the sky's the limit. That's because any and every business with less than 10 employees can be considered a micro business, including:
- A brick-and-mortar retail shop with one owner and three sales associates
- A tax consultation company owned by two people who occasionally meet with clients
- A freelance writing business consisting of one person who works exclusively from home
- A real estate company with one owner and five employees who all work out of the same office
Those are just a few of many possible examples, but suffice it to say that there are myriad micro businesses across every industry and niche.
Get the guide: How to Start a Micro Business
Micro Businesses by the Numbers
You've probably heard that small businesses are the backbone of the economy, and that's certainly accurate. But if we're getting really specific, the truth is that micro businesses form the foundation of the U.S.'s wealth.
As the SBA explained, they're the most common type of employer firm. And in 2016, the country's 3.8 million micro business employers made up nearly 75 percent of all private-sector employers:
And remember, those statistics don't even account for micro businesses that don't have any employees, i.e., those consisting only of one person. The U.S. Census Bureau pointed out that in that same year, only about 24 percent of the country's establishments had paid employees, meaning that 75 percent don't have any employees at all.
In other words, the majority of the U.S.'s businesses are micro businesses whose only employee is their owner. So if you're more interested in starting a micro business than you are in starting a small business destined for growth, you're far from being the only one.
How to Create a Micro Business Plan
So you want to start your own micro business, you're brimming with entrepreneurial energy and you're ready to go. Now, it's time to start planning. But what is a micro business plan?
In many regards, a micro business plan is very similar to a small business plan in that it:
- Provides a roadmap for starting and managing your business
- Plans for up to five years in the future
- Details what your business will do, how it will earn money and who it will sell to
Where micro business plans differ from other business plans, however, is in their scope. For example, all of these elements can be included in standard business plans but may be unnecessary in micro business plans:
- Overview of management structure/corporate hierarchy: Since most micro businesses only employ their owner, there's no need to dedicate a section to detailing the business's leaders and key staff members. And even if a micro business does have employees, it will have so few that this section can remain short and sweet.
- Funding requests: Larger businesses may need to include funding requests or investor information in their business plan. But with a micro business, your startup costs can likely be covered by your own funds (seriously — there are many businesses you can start for under $1,000).
- Growth goals and scalability: For businesses whose ultimate goal is to achieve as much growth as possible, it's important to detail how much they want to grow, when they want to achieve that growth and how their business will scale. But for micro businesses that are more focused on self-sufficiency than scalability, this isn't typically a concern.
But the question still remains, how do you write a mini business plan of your own? While there is no one right way to create a business plan, your micro business plan could look something like this:
- Business overview: A brief description of what your business will do, as well as your broader vision and goal.
- Market summary: A breakdown of your target audience, the value you're offering to them, your main competitors and your competitive edge.
- Marketing strategy: An outline of the marketing channels you'll use to find and connect with customers (this can include social media, content marketing, email marketing and the like), as well as the strategies you'll use to make the most of those channels (such as by posting one new blog post per week and one new Facebook post per day).
- Expected costs: An estimation of your business's costs, including those that you'll only have to pay once (such as state fees for filing an LLC) and those that you'll have to pay on a regular basis (such as software subscriptions).
- Expected revenue: An estimation of how much money your business will earn from each sale and how frequently you expect sales to occur. Also note how many sales you'll need to make (and how often) in order to generate a profit.
- Key objectives: A summary of your next steps and when you want them to be completed. For instance, form an LLC within one month, make five sales within three months and break-even within six months.
In the end, what's most important is that your micro business plan helps you form a clearer idea of what you want your business to do and how you plan to do it. You don't need a 10-page essay in order to succeed — just as with micro businesses themselves, bigger isn't necessarily better.
Creating a business plan is just one piece of the puzzle, though. If you want a guide that walks you through every step of starting a micro business on your own, Incfile's DIY Business Course can help.