Advantages and Disadvantages of Micro Business
With shifting business trends, Small Businesses or Micro businesses seem to run the US economy mostly successfully. Construction, retail, Wholesale, and Real Estate, and even healthcare sectors are considered Micro Businesses. The private sector has boomed drastically during the pandemic and is expected to remain dominant as the global economy bounces back. Employment, exposure to the local market, and several other factors count as benefits of Microbusinesses. What could be the Microbusiness risks and the downsides? The Advantages and Disadvantages of Micro Business assess further.
What is a Micro Business?
If you are a seller on Etsy, own a supply chain on amazon, or own a home-based shop, all are examples of Microbusiness. A microbusiness, aka small business, or micro-enterprise, operates with generally 1-5 employees requiring a small startup capital.
Freelancers, independent contractors, drop shippers, amazon affiliates, and other small-scale organizations are considered micro-entrepreneurs. A micro business, also known as a micro-company or micro-enterprise, is the newest trend in the entrepreneurial world.
Because it is so new, the term is vaguely defined as a small business that operates with 1-5 employees and requires less than $50,000 to start the company. Independent contractors, freelancers, solo consultants, and small organizations are all considered micro-enterprises.
According to the Small Business Administration’s (SBA) Office of Advocacy, there are 30.2 million small businesses in the United States. They comprise 99.9 per cent of all U.S. businesses. Nearly 58.9 million employees in the United States work at a small business.
What are the advantages of Microbusiness?
Running a small business benefits the owners in different ways, from being your own boss to leading your company as you envision it. Some key advantages of micro business are as follows.
1. Freedom and Satisfaction
Freedom and satisfaction are rare to experience when you work behind a desk and take orders from your seniors in a 9 to 5 job. One of the major advantages of a micro business is the personal satisfaction of turning your thoughts into action.
You are free to leverage the available resources and utilize the best of talent in the best possible way to make your business a thriving venture. You might not enjoy such freedom while working for others, especially while knowing your skills are unmatched by your managers.
2. Decision making is one of the advantages of Micro Business
If you own your small business, you can lead the business in any direction you want. Being the boss of your company means doing whatever it takes to bring good to your business.
You can work with the people you want and assign them the positions they deserve in the company. Moreover, being the in-charge means you can conduct the business your way, deciding who to work with. While this isn’t for everyone, but such advantages of running a small business are considerable.
3. Financial gain
Micro-entrepreneurship lets you achieve higher financial gains than any other job if your strategy is hitting the button. Owning a small business means you have a big chance to be financially independent.
Many entrepreneurs of this age find inspiration from millionaires like Mark Zuckerberg, Steve Jobs, Bill Gates, and Elon Musk. You get to decide your salary and perks as you are in charge of how much you can earn.
4. Hands-on Experience
Apart from satisfaction, working from 9 to 5 can’t give you the experience of running a business. As a micro-entrepreneur, you will get to learn at your own pace and faster.
Freelancers and contractors such as consultants grow with a set of specific skills and keep maximizing their markets. Practice is the only key in an unpredictable market where nothing goes as planned. But the right execution at the right time always pays back. That's how you grow experience which is one of the shiny advantages of micro business.
5. Job Security
Profit or not, nobody is going to fire you or penalize you for mistakes. With mistakes, you get to learn more. A small business can start with a small capital; there may be some financial setbacks in the worst-case scenario. As far as the job is concerned, there’s nobody can take to it from you.
You can accomplish business goals at your own pace, where the only reason you lose your job is if your business doesn’t succeed. Pretty much depends on your hard work.
What are the Disadvantages of Micro Business?
With every type of business, there come certain risks. There are far more disadvantages of Micro Business if you don’t play the cards right. There are tons of problems that come your way while you choose to be on the streak of micro-entrepreneurship.
1. Limited Resources
Since a microbusiness is started using a small of capital with just 4 or 5 members, it often lacks access to resources. The resources are necessary for a business to begin, particularly a lack of manpower.
In a competitive market, you need both planning to attract a consumer base. This may be one of the common disadvantages of small businesses as Corporate Companies and LLCs have a better hold in the market having more access to resources.
2. Working Extra Hours is among common disadvantages of Microbusiness
Sacrificing your personal time on your business is one of the major disadvantages of running a small business. Generally, you would have to work 50-59 hours a week.
While you have the advantage to decide your work hours, there is no fixed time to schedule your own business. You may have to stretch working hours initially, focusing on establishing your business.
Small businesses often have a limited number of members, from partners to employees. Oftentimes, you may have to deal with stuff you are not good at. Expect making coffee or doing the cleaning job on your own.
Since you are the boss, it’s your responsibility to fix the office space and make the faulty computers work. From encouraging the employees to dealing with finances, it’s all up to you. Keep in mind that Multitasking can also be the biggest disadvantages of micro business when there’s no one around with extra skills.
4. Choice Making
The decision is the most important part of every business. Being an advantage of a small business can also disappoint you at times. Every decision you make directly affects the success of the business and employees.
From choosing the suitable fit for the job to deciding the flow of funds, it has to be you who has to step forth. Investing in the wrong process can lead your business venture into shambles.
Let’s face it; Microbusiness is not for everyone. Multitasking, decision-making, and doing things you haven’t done takes a lot of legwork and planning. The biggest concern of starting a small business is investment.
Fulfilling all the essential responsibilities and taking care of your family is like a double-edged sword. Not everyone is good at handling immense work pressure. Microbusiness does need a lot of commitment.
Conclusion on Pros and Cons Microbusiness
Even though Microbusiness risks are many, there are still million so micro-companies thriving beyond imagination. An Optimistic approach and enough money in hand are the first things you need to have along with planning. With the advancing technology, there are lots of opportunities to explore in the microbusiness sector.