Your Microbusiness Is No Ordinary “Small Business”

Steve Strauss, USA Today Small Business Columnist and Author

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Like many of you, I bet, I grew up in a small business household. 

My dad and his partner started with a single, small carpet store in Los Angeles. Most people would say that he launched a small business. But in reality, he created a microbusiness, a very small business with just a handful of employees. 

Before long, it grew into a true small business—and eventually became the biggest chain of carpet stores in California at that time. At one point, they had more than 25 stores.

And that became a problem—a big problem.

Dad started his business because he loved being an entrepreneur. That is, the juice came from coming up with fresh ideas and implementing them; from trying out and executing new marketing tactics (elephant rides at the parking lot sale, anyone?); from having a plan and seeing it through. 

All (or most) of that evaporated once dad’s microbusiness transmogrified into a Frankenstein monster of a much bigger business. Suddenly, he was no longer an entrepreneur, but a manager. Managing people, budgets, taxes, leases, headaches, and more was no fun. Not surprisingly, my dad eventually sold his share of the business to his partner and started over again with one giant carpet warehouse. 

The moral of the story is clear: A small business and a microbusiness are different animals. And while historically the microbusiness has been at a disadvantage, the good news is these days there are a variety of tools and apps that have greatly evened the playing field.

All microbusinesses are small businesses, but not all small businesses are microbusinesses.

According to the Small Business Administration, a “small business” has fewer than 500 employees. I don’t know about you, but that doesn’t sound very small to me. 

It turns out that most businesses in this country are microbusinesses, a term that includes solopreneurs, the self-employed, side hustlers, and freelancers. Officially, the SBA says a microbusiness can have up to nine employees, but most have five or fewer, and often no employees other than the owner. 

That said, we are living in a golden era for the microbusiness. Yes, there are unique challenges, but there are also some great opportunities.

The Microbusiness Challenge

The needs and challenges of a microbusiness are a tad different from those of a business with 500 or even 300 employees. In my experience, microbusinesses have three basic challenges that differ from other small businesses.

1. Getting financing: Microbusinesses that have employees or need to purchase inventory are likely to need financing for payroll, employment taxes and payments to suppliers. In these instances, a business may reach a point where incorporation becomes an advantage when seeking business lines of credit or other financing. 

This in turn creates a challenge insofar as financing goes because the business and the entrepreneur are one and the same and, as such, any loan must necessarily be a personal loan.

The solution, however, is fairly simple. This sort of microbusiness must draw a bright line between the owner and business. 

This is done in two ways – legally and financially. 

First, create a separate legal entity, either an LLC or a corporation (usually an S corp.) Fortunately, there are several excellent DIY legal sites to help you do this. Second, establish separate business finances. The owner needs to get a tax ID number from the IRS and then create a bank account and establish business credit in the name of the new corporation using that separate tax ID number. 

Once that separation occurs, getting financing in the name of the microbusiness is far more likely. And again, there are many online lenders ready to assist.

2. Getting help: Once upon a time, a microbusiness owner was in it alone. No more.

One chapter in my new book, Your Small Business Boom, is titled “The Millionaire Solopreneur.” This chapter examines how a one-person business can scale beyond what was possible.

The solution is what I call the hub-and-spoke model. The owner, or the “hub,” must stop trying to do it all and instead get help from others, the “spokes.” Those spokes can be filled by freelancers and sub-contractors. By leveraging sites like UpWork and Fiverr, microbusiness owners can create a team of freelancers to help grow the business.

3. Connecting with customers: Most microbusinesses have smaller budgets, fewer resources, and less manpower than regular small businesses. This can make it more difficult to find and connect with customers, especially corporate clients with bigger budgets. 

Fortunately, with today’s technology, no microbusiness need look—or act—“micro.” With these tools, powerful, easy-to-use, and super-effective marketing is just a tap away. For example, companies like Squarespace help microbusinesses create sleek websites and impress via social media. Apps like Pinger’s Index enable microbusinesses to send automated text responses to missed calls, remind customers of appointments, and ask for reviews and referrals.

These tech tools make running a microbusiness easier than ever, and certainly easier than it was back in dad’s day. 

Indeed, today, powerful, easy-to-use, and super-effective customer communication is just a tap away. Even better: You don’t need to manage a huge staff to use it.  

There really has never been a better time to be a microbusiness owner. So go for it.

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Steve Strauss

Steve Strauss is often called “the country’s leading small business expert.” A best-selling author and USA TODAY’s small business columnist, Steve is a thought leader, global speaker, spokesperson, content creator, and author of 18 books.

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