How To Thrive As A Micro Business in 2021 & Beyond
Owning and managing a micro business can be one of the most fulfilling paths you could choose to take. You might build your own business in pursuit of flexibility, autonomy or your true passion (or all of the above).
Whatever the motivation, there are countless benefits of choosing this path, despite its own unique set of challenges.
Starting a business can be a huge learning curve. You have to wear many hats when you don’t have a big team or budget. It can also throw up many mindset issues that you may not have had to deal with before, from imposter syndrome to scarcity mindset.
There are practical obstacles too. Such as getting your products or services in front of your chosen market or accessing financial support.
This year, small businesses and sole traders have been faced with even more problems than normal, due to the Covid-19 pandemic.
Yet, it is still possible to thrive as a micro business. In this post, I explore what micro owner-directors need to do to build a successful business and ways we can all support these essential businesses in our communities.
What is a micro business?
In the UK, a micro business (or micro enterprise) is defined as a business with 9 or fewer employees. For the purposes of this post, this includes sole traders.
This subset of businesses spans across most sectors, from retail to agriculture, manufacture, healthcare and the arts. It includes creative freelancers, crafters and makers, consultants, therapists, family businesses and ‘solopreneurs’.
If you don’t run a micro business yourself, chances are you know someone who does!
Many companies, even big ones, will have started off as micro entities and grown over the years, both in turnover and number of employees. However, many individuals going into the business start-up world will have no intention of being the next Amazon or Apple – or anywhere close. They simply want to follow their dream, contribute to their community, solve a problem or support their family.
Why are micro businesses important?
Did you know, there are over 5 and a half million micro businesses in the UK? That’s 96% of all UK-based private businesses.1 They account for 33% overall employment and 22% of UK turnover.
Together, they are anything but micro.
They are, in truth, the lifeblood of our economy and culture. They bring real value and benefits to people, communities, places and the planet.
Perhaps the key reason we need our micro businesses is that they provide alternatives and competition to large companies, giving us all a choice of suppliers that ensures money goes directly to local economies.
Without the diversity small businesses provide, we would likely see significant economic instability. Whereas, the more diverse an economy, the better it can withstand fluctuations and changes.
Imagine if all we had were supermarkets, high street chains and online giants like Amazon. Wouldn’t that be incredibly dull and uninspiring – not to mention furthering the opportunity for some to continue to avoid tax, ignore human rights and fuel climate change.
By their very nature, small businesses are generally more sustainable. They have to be, out of necessity. When there is little money to spare, reducing waste becomes imperative to survival. And reducing waste is at the very heart of sustainable development.
Micros tend to have small carbon footprints (depending on their operations) and short, if any, supply chains. The shorter and simpler a supply chain, the easier it is to ensure that materials are ethically and sustainably sourced.
Despite all this, our micro businesses are often seen as a novelty – even expendable – and can face extra challenges compared to their larger counterparts.
What challenges are micro businesses currently facing?
Small organisations and sole traders face many of the same challenges as large companies. However, it can be far more difficult for micro enterprises to overcome these obstacles, as they don’t have the same level of resources or the security that comes with scale.
Micro businesses are more at risk from changes in their specific markets and the wider economy, such as increased competition, a rise in the price of raw materials or reduced consumer confidence.
They can struggle to fill vacancies, leaving many with no choice but to use temporary contractors. This costs significantly more and can prevent them from growing.
Owners of micro businesses are often overstretched (wearing many hats). They can end up having to focus on managing short term needs, instead of long term strategy.
It can also be more difficult for them to meet regulations set by government or accreditation bodies, deal with red tape and access finance. In the initial start-up phase it can – for sole traders and partnerships in particular – be hard enough to open a business current account, let alone be approved for a business loan.
Perhaps one of the most common – and harmful – problems faced by micro businesses is that of cash flow. Regardless of how much profit your business makes, if there is no cash, your business cannot function.
A large proportion of cash flow problems stems from late payments from clients. 78% of UK SMEs (small-medium enterprises) that are owed money are being forced to wait at least one month beyond their agreement terms before being paid. 40% claim that large companies are the worst offenders.2
On top of all this, recent years have brought the added issue of Brexit and the uncertainty in the market during the drawn out negotiations. Again, small businesses are more susceptible to the impacts of this uncertainty.
The fall out of leaving the EU is certainly going to affect some sectors more than others. However, according to a YouGov survey, 39% of small business owners think that exiting the EU will leave their business worse off, while just 10% believe they’ll be better off.3
Then, there is the Covid-19 pandemic. The full impact of lockdown and restrictions placed on many businesses in the UK is yet to be fully realised. However, already we have lost 234,000 small businesses (from micro to medium) and this figure was reported before the second lockdown.4 It is now likely to be much higher.
The UK government has come under fire for providing insufficient or no Covid-19 financial support to many, including the newly self-employed, new businesses, those earning less than 50% of their income from self-employment, those on PAYE freelance short-term contracts and small limited company owner-directors.
The Excluded UK campaign is working to lobby the government on this issue. and connect businesses and individuals who have not been eligible for any Covid-19 financial assistance. If you are one of the excluded or you want to help those who have been, have a look at the site to see how you can get involved.
How you, as a micro business owner, can thrive in 2021 and beyond
It’s not all doom and gloom. There are still great opportunities for micro business start-up and growth. Communities have never needed you more.
Despite the difficult year small businesses have had, 85% of small business owners intend to remain self-employed and 10% are planning to start a new business.5
Micros may face more challenges than large companies but they also have some advantages.
It is easier to build relationships with individuals that will turn them into loyal customers. They can also be a company’s best marketing tool. A staggering 85% of small businesses are discovered by new customers thanks to word of mouth recommendations.6
With lower overheads (in most cases), micro businesses can pass these savings onto their customers and undercut large competitors. They can survive – and thrive – on smaller profit margins.
As they are much leaner, they can be more responsive and act faster than large organisations with more complicated internal structures and layers of decision-making.
Without a lengthy chain of command, micros can respond more quickly to customer needs, questions and complaints because the person in charge will know sooner. This allows them to make immediate changes when necessary and can inform long-term business strategy.
The resilience of small businesses in the UK during the Covid-19 crisis has come to the fore. Many have had to adopt a new strategy in order to survive – from improving communication with customers, to moving their business online or even pivoting to a new market.
How we can all support micro businesses
Buying goods and services from micros doesn’t only benefit those individual businesses. It also means that your money goes directly into local economies and benefits communities.
You’re also more likely to be able to shop ethically and sustainably. This isn’t guaranteed, of course. However, due to the smaller scale on which such businesses operate, it is often easier to find out how and where something was made, and what impact it has had on the environment and the people who worked to produce it.
Choose micro first. Instead of going straight to a retail giant like Amazon for your Christmas shopping (or any shopping), first look to see if you can find what you’re looking for from a small independent. It only takes a few minutes to search the internet or ask for recommendations on social media.
Shopping with small businesses isn’t the only thing we can do to support them. Here are a few other ways we can give them a helping hand:
- Give them good ratings and reviews on website such as Trustpilot, Google local listings, Facebook and Tripadvisor
- Share the love on social media
- comment on and share their posts and stories (saving their posts also helps boost their reach)
- post about your experience of their products or services on your own page or in relevant groups
- recommend them when someone asks for recommendations
- Learn more about the people behind them and why they do what they do (read the stories of Simply Great Britain members)
- Offer financial support – if you have the financial means to invest in small businesses, you can do so through organisations such as Funding Circle or you could approach a particular business you’d like to help and invest directly (do get financial and legal advice first)
- Offer business support – perhaps you have some expertise you can share with micro business owners to help them succeed – this is what we do here in the Simply club
- Shine a spotlight – if you have a platform and audience, such as a podcast, magazine or a large social media following, use it to champion our micro businesses and help to normalise choosing micro
As we head into 2021, we have the opportunity to ‘build back better’. To build a brighter, more sustainable future.
Surely, our micro businesses should be at the heart of it.