When it comes to running a successful business, does size really matter?
The world of business is filled with big ideas, and entrepreneurs often find themselves aiming straight for the top: the largest corporations, the highest revenues, the most influential CEOs. Yet, when we focus only on the top of the ladder, we overlook the underdogs. It’s important to shift the focus of the business landscape to its unsung heroes: microbusinesses.
What is a microbusiness?
Microbusinesses, typically defined as entities with fewer than ten employees and less than 2 million Euros in annual turnover, represent a significant portion of the global economy. Despite their small size, they collectively pack a powerful economic punch, representing 75.3% of private sector employers in the USA alone, according to the US Small Business Administration.
In the UK, microbusinesses dominate the business landscape. According to UK parliament, microbusinesses accounted for 95% of all businesses in the UK, and there are upwards of 5.2 million microbusinesses across the country.
How Microbusinesses spearhead innovation
Microbusinesses form the economic bedrock of local communities. They not only provide employment opportunities, often in areas overlooked by larger entities, but also contribute to the local tax base and stimulate local economies. These organisations often foster innovation and creativity, unhampered by complex hierarchies that may stifle novel ideas in larger entities.
Microbusinesses have a notable capacity to adapt to changing circumstances. Their relatively smaller size enables quick decision making, faster pivot times, and a direct line of communication between the company leadership and employees.
This agility was particularly beneficial during the COVID-19 pandemic when they were among the first to shift towards remote working models and new business strategies. According to BHP Chartered Accountants, more than 8 out of 10 microbusinesses are based in the owner’s home.
The challenges facing microbusinesses
Running a microbusiness isn’t without its challenges. Accessing the funds needed for growth is often a primary obstacle, as many traditional financial institutions regard these small entities as risky ventures due to their low collateral levels. According to a Federal Reserve report, roughly half of microbusinesses face financial shortfalls, limiting their growth potential.
Yet, digital innovation is bringing about revolutionary changes to the microbusiness landscape. Fintech firms are stepping in to bridge the funding gap left by traditional banks, offering microbusinesses the financial leverage they need. Crowd-funding platforms and peer-to-peer lending have also emerged as significant resources for these small businesses.
As technology evolves, so too do microbusinesses
In the digital era, microbusinesses are making their mark online. They are using digital platforms to reach out to customers far beyond their geographical confines, thus expanding their markets exponentially. The proliferation of e-commerce platforms and social media marketing has allowed these entities to compete on an almost equal footing with much larger businesses.
The rise of remote work technology has also played a pivotal role in supporting the viability of microbusinesses. Cloud-based solutions, project management tools, and communication platforms like Slack and Zoom have reduced the need for physical infrastructure, thereby lowering operational costs.
Microbusinesses offer a human touch
The future role of microbusinesses in the global economy cannot be understated. They serve as the building blocks for larger business entities, incubating innovative ideas, and even occasionally evolving into larger firms themselves. Microbusinesses rely on the loyalty of their smaller customer base, and as such, offer a more personal experience than a consumer would receive with a largescale corporation.
In an era of increasing automation and digitization, the human touch provided by microbusinesses may well be their most significant selling point. The personalized services, authentic connection, and dedication to community-building that many microbusinesses offer is something that their larger counterparts can struggle to emulate.
Microbusinesses: the future of economic growth
The economic landscape is changing, and microbusinesses are at the forefront of this transformation. While their size might be small, their potential is enormous. By focusing on these small yet mighty entities, we can ensure an inclusive, dynamic, and resilient economy that truly works for everyone.
In the face of an ever-changing economic landscape, the small but mighty microbusiness stands tall as an undeniable force, embodying the spirit of innovation and resilience. From serving local communities to fostering global connections, microbusinesses prove that size isn’t everything. As we step into the future, these compact powerhouses will continue to shape the economic narrative, one small step at a time.