If you’re unsure of what micro businesses are, then think again. You know that Amazon Shop you started? Or the homemade bakery that your sister is busy with? Or how about that software your roommate built to connect healthcare professionals to caregivers?
Yep, those are all micro businesses.
What is a micro business?
Although a relatively new trend, micro-businesses are very much just small businesses. The main difference is that a micro business operates as a subset of the small business community. As we described in a recent article, truly small businesses are often distinguished from their small business counterparts based on three key traits: total annual business transactions, annual sales and assets, and number of employees.
Though seemingly granular, these traits can easily alter the needs of each business—whether it’s in the form of sales, marketing, accounting, or operational needs.
Micro businesses advantages & disadvantages
There is no right or wrong business size. After all, every business is different. Choosing to scale up your business versus staying steadily at your size to service your customers are two very different things. It also describes two businesses in very different stages: take a startup in its growth stage versus Microsoft, for example.
At a glance, here are some advantages and disadvantages that business owners face when running micro businesses.
- Take Ownership. Nothing feels better than making a direct impact on the bottom line. As the founder of your micro business, you often feel good each day knowing that your work is making an impact, both small and large.
- Proliferation of the Digital Nomads. The combination of the internet being accessible from almost anywhere in the world, easy entry, and low startup costs have made micro businesses extremely attractive. In fact, the concept has really taken off in recent years with people seeking multiple streams of income and a new lifestyle.
- Lack of Resources. It’s not rocket science. Less staff equals fewer resources to get stuff done. If you ask any micro business, entrepreneur, solopreneur, or freelancer out there, the answer is the same: time is of the essence! Luckily, there are government support programs, like loans, and start-up incubators/programs that can assist your business if you qualify.
- Government Loans. Being a micro-business, it can be more difficult to get loans from banks because of your company size. With limited resources, you’ll also be doing most of the work all of the time unless you choose to outsource work, like HR, marketing, or accounting.
The Small Business Administration (SBA) set a size standard that small businesses, including micro businesses, can refer to find out if they make the cut for government-backed loans and government contracts.
According to the SBA, size standards vary by industry and are generally based on the number of employees or the number of annual receipts a business has.
Accounting software benefits for micro businesses
Micro businesses are typically made up of 1 to 5 staff—sometimes even less. You’re also competing against much more established businesses and organizations often in a competitive, saturated market. Unless you’ve found the perfect market fit in a niche that’s not already dominated by other products or services, you’re going to need to keep your books in good shape.
For accounting specifically, there are 4 key ways that micro businesses can leverage cloud accounting software to make your business more efficient and effective. Here’s how!
1. Ease of use
Working day in and day out in Excel spreadsheets is not ideal. When it comes to your business accounting, a cloud accounting software solution houses all your financial data and is presented in a self-serve manner. Most accounting software offers features that directly streamline your daily accounting tasks, such as expense management, invoicing, bank reconciliation, and reporting. At the end of the day, micro business owners want a product that is easy-to-use and is intuitive and friendly. You want a product that you actually want to use!
2. Use features that only you would need
Micro businesses are unlike other businesses in many ways. In the accounting sense, what’s more important: sending that invoice and getting paid on time, or being able to configure your chart of accounts?
Probably not the latter.
Micro businesses are generally made up of entrepreneurs, solopreneurs, or a core group of founders with a mission to change the world with one product or service. You’re likely catering your focus on prospecting, sales pipeline, acquiring clients, and generating revenue.
Many invoicing and accounting apps nowadays focus on many features—and the real goal is often diluted. With TrulySmall’s Invoicing App, micro business owners can leverage the tools that they need—like invoicing—rather than a full suite of accounting tools.
3. Do your accounting from anywhere
Wouldn’t it be great if you had unlimited vacation? But even then, you might need access to your paperwork back at the office.
One of the biggest benefits of cloud accounting software is the freedom to work on your business from anywhere in the world. Imagine accessing ledgers and reports from South America, or sending off invoices from Japan. No matter where you are, all you need is internet, a device, and you’re good to go.
Remote working has its ups and downs though. But don’t worry, we’ve prepared some resources for you and your team!
- Remote working tips to surviving COVID-19 as a small business
- Build a thriving remote team for your small business
- Pros and cons of running a business while traveling
4. Easily collaborate
Unless you majored in finance or accounting or are (for some reason) an accounting pro, you probably would appreciate a little guidance on preparing your tax return. Micro businesses that use accounting software that allows for easy collaboration can easily add a user to the software to collaborate. For example, within Kashoo, you can add a user, such as an accountant, to review your numbers and make adjustments.