What is a micro business? + 6 tips for getting started

A micro business is a type of business that operates on a very small scale with fewer than 10 employees.

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Susan Meyer

Senior Editorial Manager

  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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If you have an entrepreneurial spirit, you may have toyed with the idea of starting your own business. If you’re new to business ownership, starting a micro business might be the right move for you. Small but mighty micro businesses are important to the U.S. economy and can be a great way to kickstart your entrepreneurial career — you can even set up shop from your home

Did this pique your interest? If so, read on or skip to our infographic to discover what exactly a micro business is, the pros and cons, and crucial steps for starting one.

What is the difference between a micro business and a small business?


All micro businesses are small businesses; however, the difference has to do with the number of employees you have, your startup costs and your annual earnings. Compared to a small business, a micro business consists of fewer employees (less than 10) and earns less than $250,000 annually. 

Other guidelines, like requiring less than $50,000 in startup costs or not having access to traditional capital loans, would put you under the micro business umbrella as well. Generally, if you are self-employed, a sole trader, and/or have just a few employees, you run a micro business.

Is a micro business the right career move for you? 

If you are considering starting a micro business, there are advantages and disadvantages to be aware of concerning this particular business structure. To help you make the best career choice for you, we’ve listed the pros and cons to a micro business below. 

The pros of a micro business: 

  • Flexibility: A larger business may require several levels of approval or strategy to make even a small change. Micro businesses have the advantage of more freedom, plus quicker turnarounds when making big decisions or changing direction. 
  • Simple operation: With fewer employees, there will be fewer departments to oversee and processes to maintain. This could mean more streamlined workflow and communication throughout the business. 
  • Skill specialization: As a micro business, you will likely focus on less services and product offerings than large corporations, which allows you to be an expert with your deliverables. 
  • Lower costs: Micro business owners maintain lower business costs since there are fewer salaries to pay out, less operating expenses due to the simplicity of the business, and if you operate as a remote or home-based business, you’ll have no cost for a working space.

The cons of a micro business: 

  • More responsibility on employees: In a micro business with few employees, each employee will hold more responsibility and ownership for their day-to-day tasks. That means you’ll have to hire top-notch employees that you can trust. 
  • High risk: Although you can begin a micro business as a side hustle, there’s still a level of risk associated with starting a new business. Micro businesses are often denied funding because of their inability to turn profit within the first three years. 
  • Limited resources: Smaller companies tend to have less financial or promotional resources, like marketing/sales and ways to attract customers. This can be a challenge as successful businesses need a loyal customer base to thrive. 
  • Hiring disadvantages: Limited resources could also make it a challenge to get your name out there to attract top-notch employees that you can trust.  

6 steps for starting a micro business 

It’s never too late to start a business — in fact, studies show that the later you start your business, the better! Entrepreneurs who are over 50 years old are twice as likely as those under 25 to launch a high-growth startup.  

1. Identify the right business for you

If a new business venture idea doesn’t stumble upon you, lean into what you know or what you’re passionate about. Is there a special skill set you have or a creative hobby that brings you joy? Jotting down the answers to these questions is a great place to start. It’s also a good idea to do research before diving into a new business to learn if it’s really the right fit for your experience and interests and if there’s a viable consumer base that you can target. 

2. Create a business plan



There’s way more to a business than just coming up with a business name. Once you’ve solidified your micro business idea, it will be time to develop a business plan or playbook on how you want to run your business. Your business plan will need to include the following: 

  • Executive summary
  • Business model
  • Market analysis 
  • Product offerings/services 
  • Operations or organizational structure
  • Marketing and sales strategy 
  • Financial plan 
  • Appendix 

Your business plan should include a clear outline of your vision and goals. You can use this for reference as you develop your business and introduce your idea to investors. 

3. Get your funds in order

Having a thoroughly researched and prepared financial plan will assist you when pitching to outside investors and lenders. Understanding exactly how much money you need to get started and be successful is also important before diving into a new business venture, as lack of sufficient capital is the second most common reason why small businesses fail. 

4. Research and test your product 

After you’ve come up with a product or prototype, test your product to see how consumers respond. You can get your product in front of a study group, local vendors and business owners, or even your friends and family. Then conduct a survey to gather feedback or constructive criticism on your product before its official launch. 

You could even begin with a soft launch, or soft opening, for a sample of consumers to preview your product before it’s released to the general public. This is a great way to gather valuable data and insights ahead of the official launch date. 

5. Protect your work


As a business owner, there are a couple ways to protect your business and yourself. First is to obtain an LLC or trademark to protect your business name and brand identity so that others cannot copy your business. 

Additionally, small business insurance can help protect business assets and prevent a financial loss in the event of an accident like injury, property damage, or even a lawsuit. The most common type of small business coverage is general liability insurance and is often required by your state. 

If you run a business out of your home, consider home business insurance, which will protect business activity taking place in a primary dwelling or, in some cases, “other structures,” like a free-standing garage or unattached unit on your property. 

6. Attract customers

Due to its smaller size and need for promotion, a micro business will require a strong marketing strategy. Research your target market and customers and identify how to provide the most value to them. You can then leverage social media or a website to launch campaigns, paid advertising, or digital marketing to get your website and products on the map. 

It’s not hard to see why entrepreneurship is attractive — there are many perks that come with being your own boss like creative freedom, flexible hours, and reporting to yourself. That said, starting a business can be both a challenge and a risk. Whether you’re starting a micro business as a side hustle or as a full-time career, it’s important to do the research up front and learn how to not only be successful in your industry, but how to protect yourself and your business assets from unexpected curveballs.