MicroBusinesses Now America’s Leading Business Type
Have you ever looked at a business with 100, 200 or even 400 employees and thought, “Why is that considered a small business?” An independently owned and operated business with up to 500 employees is the generally accepted definition of a “small business.” However, most locally owned businesses operate with five or fewer employees, including the owner. Increasingly recognized as ‘micro-businesses,’ these companies have edged out small businesses in number and overall economic impact.
COVID Boosts the Micro Business Trend
As a result of the pandemic, more people than ever, particularly women and minorities, are starting their own micro-business, with more than two-thirds started as home-based. The advantages became clear as COVID kept millions isolated at home. People discovered it was possible to operate successfully from a home office and that commuting (and the expense) was not as necessary as once believed. Most importantly, once required to work from home, people proved that they could do it. So today, it’s not surprising that more new businesses are sole proprietorships than any other kind: 23.5 million, or about 73% of the total.
The economics and relative simplicity of starting a micro business contribute to their ascendancy. According to fortunly.com, getting a micro business started takes a matter of days, and around 33%get started with less than $5,000. More than 50% rely on the entrepreneur’s personal savings in the initial phase.
The result is more businesses owned by people pursuing work that personally interests them or offering the specialized service they provided as a contracted service to several employers. Some of the most profitable micro businesses operate in home improvement and cleaning services, delivery, digital marketing, and app development.
Naturally, many of these startups are sole proprietorships. Still, many proprietors have been surprised by how quickly they need to add one, two or three employees in addition to the support professionals every business needs, such as legal, accounting and financial services. Microbusinesses have already contributed to the creation of over 26 million jobs, the most of any industry. According to the SBA, if each micro-business owner in America hired just one person, the U.S. would reach full employment.
Bottom line – micro-businesses now make up a staggering 90% of all registered U.S. businesses. That’s a big change in the way people earn their income and manage their resources. It also affects the quality of life, as people operating a successful micro business report being happier and more productive than at their previous job.
Sedona is already a town of micro-businesses that could portend the future look of a diversified regional economy.
However, as any business owner knows, starting your own business is not for the faint of heart.
Micro Businesses face major challenges. A recent study by U.S. Bank shows 82% of small businesses fail due to poor financial management, and the second most common reason for failure is no market for their products or services.
Assisting micro-businesses is part of the chamber’s mission. Our connections with the Small Business Administration (SBA), Yavapai College SBDC and SCORE (Senior Corp of Retired Executives) are in place specifically to help entrepreneurs grow. A study by NYU showed having two founders (one technical and one business developer) increases the chances of success. Such teams raise 30% more funds, have 2.9 times more customer growth, and are 19% less likely to scale too fast. One way to think of the chamber’s support is like having a co-founder by your side who is only interested in making you a success.
Many new microbusiness owners lack a deep understanding of technology, H.R., payroll, finance, marketing and taxes and therefore have difficulty making appropriate and cost-effective decisions. The learning curve is steep and time-consuming. Through the chamber, the SBA and SCORE bring years of training and expert advice to the table, helping you manage your business affairs efficiently and keep your focus on building your customer base, service delivery and revenue streams.
Perhaps the ultimate challenge to micro-business is the same one all businesses face: healthcare. There are no easy or inexpensive solutions to finding high-quality health care in today’s environment, but your chamber partner can guide you to areas where you can find the options that will work best for you.
As micro-businesses redefine the American workforce and the economy, the chamber is ready to support every dream and dreamer who is unafraid to work hard and commit to their goals!
For more information, visit www.SedonaChamber.com.