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Is Your Small Business a Microbusiness? If So, You May Be In Luck!

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Is Your Small Business a Microbusiness? If So, You May Be In Luck!

Published: March 5, 2009

Nine out of every ten firms in the United States is a microbusiness - who knew?!

And, microbusinesses are one of the fastest growing and best positioned business groups to ride the current economic storm. Read Dawn Rivers Baker’s excellent article on 5 Key Microbusiness Trends for 2009 for more on this.

What is a Microbusiness?

Microbusiness is definitely the sector to watch in 2009. But what is a microbusiness?
Finding a solid definition is somewhat of a free for all. Below is the nearest we have to an official definition, as well as an unofficial definition:

  1. Official Definition - Advocate groups typically define microbusinesses as an organization with less than five employees, small enough to require little capital ($35,000 or less) to get started.
  2. Unofficial Definition - Microbusiness owners are the '...people who refer to themselves as soloists, independents, consultants, craftsmen, artists, musicians, freelancers, free agents, and self-employed people. The majority of these companies are one-person enterprises ...operate out of their homes; and many ...have part-time help from a family member or friends.' (Courtesy of Lloyd Lemons in his Microbusiness Defined article).

Combine these two definitions and you have a business group that is better structured than its larger corporate brethren to endure economic crises, as Dawn Rivers Baker states, 'thanks to a lean operating style and creative business model(s).'

When you also take into consideration socio economic factors such as increased unemployment and a growing trend toward outsourcing to consultants and freelancers, the attraction and opportunity for microbusiness growth becomes clear.

Planning for the Growth of Your Microbusiness

If you’ve ever considered becoming a home-based business owner, or dreamed of opening up your own 'mom and pop' business - you will likely fall into the category of microbusiness owner. As such, you are still a business owner and will benefit from planning and managing your venture much in the same was as any business owner.

Here are a few key operational, regulatory, and business development items you should consider as part of your microbusiness start-up or expansion plan for 2009:

Are you Properly Licensed / Permitted? - It’s a misconception that freelancers, consultants or home-based businesses don’t need the appropriate licenses. In fact, every business needs one or more federal, state or local licenses or permits to operate. Licenses can range from a basic operating license to very specific permits. The government has created a very handy tool - Permit Me - that lets business owners easily identify the licenses and permits required for their business.

Register your Business Name (Doing Business As) - Again, this is an often overlooked area among microbusinesses. If you choose to name your business along the lines of something like 'Accent Accounting Services', you cannot operate that business under that name until it is officially registered with your local government. Until then the legal name of your business is essentially your given name. Find out how to register your business name here.

Do you need Financing? - There are several financing programs available to microbusiness owners from the Small Business Administration (SBA), including the Basic 7(a) Loan Program and the Microloan Program.

To help you save time and identify the right financing for your business, a good starting point is this easy-to-use Loans and Grants Tool on Business.gov. Simply match your business profile and needs to questions on the tool and, based on your answers, the system will identify SBA-backed financing programs and other funding that you may be eligible to apply for.

How are you going to Market Your Microbusiness? - Marketing is often regarded as an unnecessary overhead by many microbusinesses, preferring to rely on the rolodex or word of mouth practices. It is actually those who shout loudest now who’ll reap the rewards when the economic tide turns.

Focus is the key when it comes to marketing on a tight or non-existent budget. Web 2.0 and social media marketing tools such as LinkedIn, Facebook, Twitter and Google Ad Words make it very easy for microbusinesses to build a public brand for little or no money. Focus on one or two and commit to putting an hour every day or every-other day to sustaining your profile on these sites.

Get more marketing tips for small and microbusinesses here.

Finding Opportunities - Many of the sectors that continue to experience steady growth include those focused on environmental sustainability and renewable energy, healthcare, IT, and federal government contracting. The latter is a complex area to enter, but sub-contracting opportunities may represent an opportunity for the microbusiness owner. Read more in my post: Five Tips for Finding Federal Contracting Opportunities.

Another great way to sniff out opportunities is to join LinkedIn industry and special interest groups. Become a virtual member of these communities and you’ll be surprised how many potential 'buyers' you might come across (but be sure you have a clear pitch or value proposition on hand before you start 'selling your wares'.

Don’t Go it Alone
- Another advantage of the Web to microbusinesses is that it can connect you with others in the comfort of your own home office. Whether you prefer to follow blogs, Twitter or industry publications for business advice, find a community of like-minded professionals and learn from each other. Business.gov just launched a new online community specifically for small businesses to learn, share and discuss practical solutions to everyday business problems. Check it out here.

Tax Planning - Last, but by no means least, tax planning should be a key component of your business plan. Lowering your tax burden is a long term strategy that goes to the heart of your business structure, investments, and work methods. To help you stay abreast of your tax requirements as a microbusiness visit Business.gov’s Small Business Tax Center and read this post on 5 Ways to Ease Your Tax Burden.

Useful Websites

  • Business.gov - For more information on microbusiness planning, growth, regulatory, and operational best practices, visit the government’s official Web site for small businesses.
  • DuctTape Marketing - Marketing resources, articles and more for small and microbusinesses.
  • The MicroEnterprise Journal Blog - Advice and information about running a microbusiness.

Additional Resources

About the Author:

Comments:

I own a micro business and have found a great resource to be http://thesologuide.com/. It contains great articles for 'solopreneurs' or entrepreneurs who are the only employee of their company. PaulOwner/DesignerMinnow Web DesignMessage Edited by NicoleD on 09-30-2009 11:36 AM
Well, This is the first time I've heard the term 'Microbusiness', But I guess it's an appropriate term to describe Small Small businesses. sort of a cute term to lol. I Think all businesses start as micro and sometimes develop into bigger projects. Omer ARPG Games and RPG OST Site OwnerVG Alliance LLC (New Jersey)Message Edited by NicoleD on 09-30-2009 11:36 AM
Thanks for sharing this information. I found it very informative as I have been researching a lot lately on practical matters such as you talk about...
very valuable information, i think microbusiness will bring more profit to the owner. I have found so many microbusiness Development Programs and they will assists entrepreneurs start businesses. Thank You.
Well..there are many individuals who are in their mid 50's looking to start a business. These individual's success rate appears to be much higher due to having years of experience not only in their choosen business venture, but in life as a whole. Immobilien Message Edited by ZanetaB on 10-14-2009 02:16 PM
I've been studying this post, the links therein, and other related resources for a few hours now. I'm glad you've put this information here, and it is helpful - to a point. However, all this studying makes me start to feel that I need a Business Lawyer. And, I gotta be honest, all these rules, regulations, caveats, requirements, etc.,... makes me want to start a site called 'Things That Make Me Wanna Be A Libertarian.' I mean, when you really start to dig into these regulations and requirements, tax stipulations, etc., one starts to see just a undefined, vague or downright obscure they really are. Some examples: 1. The difference b/t and Independent Contractor and an Employee The IRS states, 'The IRS is probably the most important agency to satisfy when it comes to classifying a worker as an IC. Under the IRS's test, workers are considered employees if the company they work for has the right to direct and control the way they work -- including the details of when, where, and how the job is accomplished. In contrast, the IRS will consider workers independent contractors if the company they work for does not manage how they work, except to accept or reject their final results.' So ... ummm ... what if you manage when they work, but not how or where? Too vague. 2. Is a Sole Proprietorship different than a Single Member LLC? Yes ... and, no? Yes, with respect to law, but no with respect to taxes?? hunh? 3. Trade name vs.Official Legal Name In my city (Bedminster, NJ) there are no local licenses or permits required for an Internet cnsultancy as I own. However, the County Clerk's office states 'all new businesses established in Somerset County (my county) are required to register a trade name.'(and, btw, you gotta pay us $50 for that). Ok. This is confusing on more than one level. First, a trade name is defined elsewhere as a fictitious name, or a 'name by which the business trades commercially.' Uhh .. wouldn't that really be virtually ANY name a business has?? I mean, the whole point of a for-profit business is to 'trade commercially', right? Second, if my LLC is XYZ Corp, and I do business and trade commercially as XYZ Corp, then XYZ corp isn't technically a fictitious - or trade name - or is it? Or is it BOTH the trade name AND the officially registered LLC name? And if so, do I have to BOTH register the LLC at the state and federal level AND register the LLC at the local/county level, too? And even so, why are the Fed, State AND County govts all hitting me up for at least $50!!!?? I could go on, but I'll stop. Before I get too cynical of all the government's wonderful efforts to 'make sure I'm well informed of the rules of play.'' Ugh!
I never knew that my Accounting Services Business with Financial Templates was a 'microbusiness'! I guess everything gets a fancy name sooner or later. Well, I'm very happy with it and have high hopes for its growth. What I ended up doing was leaving it as a sole proprietorship. I did form a corporation following the advice of a tax accountant who gave the same advice to everyone, but then, thankfully, I went to a second tax person who himself, after 30 years in the business as a tax preparer with a couple of employees is also a sole proprietor and after talking to him about my particular situation I quickly dissolved my just formed corporation and went back to the simplest (and for me the most economical and appropriate) legal structure. So, that's what I would advise everyone - get a second opinion!
Well..there are many individuals who are in their mid 50's looking to start a business. These individual's success rate appears to be much higher due to having years of experience not only in their choosen business venture, but in life as a whole. Immobilien Message Edited by ZanetaB on 10-14-2009 02:16 PM
I've been studying this post, the links therein, and other related resources for a few hours now. I'm glad you've put this information here, and it is helpful - to a point. However, all this studying makes me start to feel that I need a Business Lawyer. And, I gotta be honest, all these rules, regulations, caveats, requirements, etc.,... makes me want to start a site called 'Things That Make Me Wanna Be A Libertarian.' I mean, when you really start to dig into these regulations and requirements, tax stipulations, etc., one starts to see just a undefined, vague or downright obscure they really are. Some examples: 1. The difference b/t and Independent Contractor and an Employee The IRS states, 'The IRS is probably the most important agency to satisfy when it comes to classifying a worker as an IC. Under the IRS's test, workers are considered employees if the company they work for has the right to direct and control the way they work -- including the details of when, where, and how the job is accomplished. In contrast, the IRS will consider workers independent contractors if the company they work for does not manage how they work, except to accept or reject their final results.' So ... ummm ... what if you manage when they work, but not how or where? Too vague. 2. Is a Sole Proprietorship different than a Single Member LLC? Yes ... and, no? Yes, with respect to law, but no with respect to taxes?? hunh? 3. Trade name vs.Official Legal Name In my city (Bedminster, NJ) there are no local licenses or permits required for an Internet cnsultancy as I own. However, the County Clerk's office states 'all new businesses established in Somerset County (my county) are required to register a trade name.'(and, btw, you gotta pay us $50 for that). Ok. This is confusing on more than one level. First, a trade name is defined elsewhere as a fictitious name, or a 'name by which the business trades commercially.' Uhh .. wouldn't that really be virtually ANY name a business has?? I mean, the whole point of a for-profit business is to 'trade commercially', right? Second, if my LLC is XYZ Corp, and I do business and trade commercially as XYZ Corp, then XYZ corp isn't technically a fictitious - or trade name - or is it? Or is it BOTH the trade name AND the officially registered LLC name? And if so, do I have to BOTH register the LLC at the state and federal level AND register the LLC at the local/county level, too? And even so, why are the Fed, State AND County govts all hitting me up for at least $50!!!?? I could go on, but I'll stop. Before I get too cynical of all the government's wonderful efforts to 'make sure I'm well informed of the rules of play.'' Ugh!
I never knew that my Accounting Services Business with Financial Templates was a 'microbusiness'! I guess everything gets a fancy name sooner or later. Well, I'm very happy with it and have high hopes for its growth. What I ended up doing was leaving it as a sole proprietorship. I did form a corporation following the advice of a tax accountant who gave the same advice to everyone, but then, thankfully, I went to a second tax person who himself, after 30 years in the business as a tax preparer with a couple of employees is also a sole proprietor and after talking to him about my particular situation I quickly dissolved my just formed corporation and went back to the simplest (and for me the most economical and appropriate) legal structure. So, that's what I would advise everyone - get a second opinion!

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