Hurdles Of Operating A Micro Business

November 22, 2022

It is a common expression that small businesses and SMEs are the backbone of any economy. To further elaborate, it might be said that micro businesses make up a large majority of the small business and SME marketplace. These businesses might be described as an owner-operated business with perhaps no more than five or ten employees. They generally start with very little capital and might be limited in ability to borrow funds from traditional lenders (depending on the business and country). Micro businesses serve a tremendous purpose, however, in not only bolstering the economies of the world and benefiting individual communities but provide income and livelihoods for owner families and the individual employees.

Before deciding to start a micro business, ownership comes with many of the following challenges:

Oversight and Supervision – The micro-owner with no employees or very few employees has no choice but to oversee the entire business operation. This means supervising employees since there is essentially no one else in management to ensure that all the various tasks and functions of the business are handled properly. Although micro-owners are always pressed for time because they have so much to do and no one to delegate some of the work to, they must still oversee operations and supervise any employees. It is only through diligent oversight that owners will know what employees are actually doing and how customers are treated. The lack of personal follow-up and supervision can lead to a break down in operations and eventually disgruntled customers.

Operational Knowledge – Operational knowledge in a micro business is more than simply knowing how to sell a product or provide a service. While most micro-owners know the technicalities of their individual businesses, they lack a wide diversity of knowledge (the "A to Z" fundamentals) of operating an efficient business. 

Without proper training, mentoring, or learning skills on their own through some form of ongoing education (reading, webinars, business courses, etc.), business growth can be stymied. Taking a micro business to the next level of success can be very difficult to achieve without a diversity of overall business knowledge. This business training and knowledge should become a priority for micro-owners.

Finances – Finances in a micro business are twofold...making a profit and record keeping. For many micro-owners just having cash in a bank account equates to profit and success although a stack of bills might remain unpaid. Making a profit, of course, is more than making sales. It is the owner understanding the direct costs involved in whatever product or service is offered for sale in addition to general operational and administrative expenses. Without knowing all costs of a business, then a correct selling price cannot be determined.

While a micro business will most likely not have the same type of sophisticated accounting system as a larger business, the micro business must still keep financial books and records to determine profit or loss, the need for additional capital, or when necessary changes must be made. Even the simplest record keeping system is a must and certainly better than no record keeping at all.

Training – Employees must be trained in any size business. Without proper training, employees do not know how to do their individual jobs or if their jobs are being done correctly or incorrectly. Since there is no one else in a micro business to train employees (regardless of how simple a job might be), the responsibility falls upon the owner who must spend adequate time training any employee. Although there might be constant employee turnover in a micro business due to lower salaries and benefits offered, an owner cannot take the attitude of “why train employees if they are only going to stay for a short period of time anyway.” Training improves products or services and ultimate customer satisfaction.

The Ultimate Challenge

While micro businesses due to their very nature will not operate the same as larger SMEs, business principles that prove successful for larger enterprises can still be implemented in micro businesses. Although budgets and objectives will be different and success defined in a different way, micro businesses still have a goal to grow and be profitable. The challenges of operating a micro business must be confronted and overcome with knowledge and persistence.

 It is a common expression that small businesses and SMEs are the backbone of any economy. To further elaborate, it might be said that micro businesses make up a large majority of the small business and SME marketplace. These businesses might be described as an owner-operated business with perhaps no more than five or ten employees. They generally start with very little capital and might be limited in ability to borrow funds from traditional lenders (depending on the business and country). Micro businesses serve a tremendous purpose, however, in not only bolstering the economies of the world and benefiting individual communities but provide income and livelihoods for owner families and the individual employees.

Before deciding to start a micro business, ownership comes with many of the following challenges:

Oversight and Supervision – The micro-owner with no employees or very few employees has no choice but to oversee the entire business operation. This means supervising employees since there is essentially no one else in management to ensure that all the various tasks and functions of the business are handled properly. Although micro-owners are always pressed for time because they have so much to do and no one to delegate some of the work to, they must still oversee operations and supervise any employees. It is only through diligent oversight that owners will know what employees are actually doing and how customers are treated. The lack of personal follow-up and supervision can lead to a break down in operations and eventually disgruntled customers.

Operational Knowledge – Operational knowledge in a micro business is more than simply knowing how to sell a product or provide a service. While most micro-owners know the technicalities of their individual businesses, they lack a wide diversity of knowledge (the "A to Z" fundamentals) of operating an efficient business. 

Without proper training, mentoring, or learning skills on their own through some form of ongoing education (reading, webinars, business courses, etc.), business growth can be stymied. Taking a micro business to the next level of success can be very difficult to achieve without a diversity of overall business knowledge. This business training and knowledge should become a priority for micro-owners.

Finances – Finances in a micro business are twofold...making a profit and record keeping. For many micro-owners just having cash in a bank account equates to profit and success although a stack of bills might remain unpaid. Making a profit, of course, is more than making sales. It is the owner understanding the direct costs involved in whatever product or service is offered for sale in addition to general operational and administrative expenses. Without knowing all costs of a business, then a correct selling price cannot be determined.

While a micro business will most likely not have the same type of sophisticated accounting system as a larger business, the micro business must still keep financial books and records to determine profit or loss, the need for additional capital, or when necessary changes must be made. Even the simplest record keeping system is a must and certainly better than no record keeping at all.

Training – Employees must be trained in any size business. Without proper training, employees do not know how to do their individual jobs or if their jobs are being done correctly or incorrectly. Since there is no one else in a micro business to train employees (regardless of how simple a job might be), the responsibility falls upon the owner who must spend adequate time training any employee. Although there might be constant employee turnover in a micro business due to lower salaries and benefits offered, an owner cannot take the attitude of “why train employees if they are only going to stay for a short period of time anyway.” Training improves products or services and ultimate customer satisfaction.

The Ultimate Challenge

While micro businesses due to their very nature will not operate the same as larger SMEs, business principles that prove successful for larger enterprises can still be implemented in micro businesses. Although budgets and objectives will be different and success defined in a different way, micro businesses still have a goal to grow and be profitable. The challenges of operating a micro business must be confronted and overcome with knowledge and persistence.