We explain what a microbusiness is and what its main characteristics are. Also, the advantages and disadvantages it has.
What is Microenterprise?
The concept of microenterprise is a term used to differentiate a company by the monthly or annual income it has in addition to the size. It is contained within the category of SMEs.
The microenterprise is usually created for various reasons, including the need for income to survive or to find an economic outlet for various skills. Also because they want to develop from the base, that is, they aspire to be a medium and/or large company.
The microentrepreneur is a person capable of raising one or several small microenterprises is not only the owner, but also has direct participation in its development, that is, he is another worker. There are even microentrepreneurs who do not have employees.
See also: Entrepreneur
Characteristics of the microenterprise
A small business has certain characteristics that make it fall into this category:
- It has a maximum of 6 employees, only in some cases this figure is exceeded to a total of 10.
- The owner is counted among the workers (although there are exceptions).
- It has limited turnover, meaning it does not easily allow for growth.
- They do not significantly affect the economy, whether of your city or nationally.
- They are created relatively easily, depending on the country, since they can start from selling food at home.
Advantages of small businesses
- The main thing is that it becomes a source of income, being a livelihood.
- Being small, it can be easily modified in case the first one does not work.
- Depending on the country, there are grants or contests that you can apply for and thus receive help from the government. Or, within the banks, various types of financing have been created so that those who have projects to undertake can access them.
- Its structure can be easily modified.
- They are job generators, although not on a large scale, but they do provide the possibility for someone to have a salary.
- Decisions are made quickly, since it is usually the owner who has the reins of the business or a small group that reaches agreements quickly.
Disadvantages of small businesses
- They have problems getting credits.
- Their technology or equipment is usually scarce, limited and little evolved, which is why it requires greater effort from its workers.
- Workers may lack training and specialization.
- Its production tends to be limited, in some cases for immediate consumption that responds to the needs of the immediate context.
- The company's workers do not usually have many hierarchical structures and are far from the corporate models that characterize large companies.
Types of microbusinesses
- Survival. They are created out of economic necessity and do not have a base capital with which operating costs are managed, but rather immediate and limited production. For example, street vendor.
- Expansion. They have a little more income than the previous one. However, this remaining money is not enough to further develop the SME.
- Transformation. It is more superior than the previous ones in terms of turnover, since the income allows capital to be formed and therefore has greater possibilities of growing.
