Time To Read: [wpbb post:acf type=’text’ name=’time_to_read’] mins Last Updated October 29, 2018
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Time To Read: [wpbb post:acf type=’text’ name=’time_to_read’] mins Last Updated October 29, 2018
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You’re probably familiar with the concept of a small business, but what most people don’t know is that there is an even smaller class of business. These businesses are known as micro-businesses, and they are among the most popular types of enterprises for first-time entrepreneurs. Here’s what you need to know about what micro-businesses are, why they’re so great for new entrepreneurs and what business models work perfectly at the micro-business scale.
What Exactly Is a ?
Though there are some disagreements as to what constitutes a micro-business, the general set of criteria involves having five or fewer employees, costing less than $50,000 to start and not requiring external loans or investments from third parties. In truth, many micro-businesses come in well under these criteria, with some costing less than $1,000 to start and having no employees aside from the business owner.
What Are the Advantages of Micro-businesses for New Entrepreneurs?
Starting a business on an extremely small scale has several advantages for first-time entrepreneurs. To begin with, micro-businesses are budget friendly and won’t leave you exposed to massive amounts of debt. This alone makes the micro-business model perfect for new entrepreneurs, since the finances involved in owning and running one are far less complicated without debt repayment being involved.
The low employee numbers involved in a micro-business also benefit new entrepreneurs who may not have a management background. Managing people is a skill that is developed over time, and someone without much experience won’t be able to effectively manage 20 or more people right off the bat. By starting with a small, tight-knit group of employees, micro-business owners can learn to manage people in a more gradual way.
Finally, micro-businesses are easier to start and run than larger enterprises, including more traditional small businesses. A micro-business can run on a very lean staff, minimal investment and can change courses quickly when it needs to. This structure is perfect for new entrepreneurs, as it allows them to run their businesses very directly in a way that will give them good insights into the best ways of handling different challenges and situations.
Some Examples of Micro-businesses
While there are literally thousands of different micro-business models out there, a few are fairly popular and will be familiar to practically everyone. Here are some of the business models that often fall into the category of micro-businesses:
- Wedding planning and photography
- Small specialty shops
- Small tax preparation businesses
- Startup social media marketing agencies
- Website Development/Sales
If you want to become an entrepreneur but feel overwhelmed by the idea of starting a traditional small business, a micro-business model may be the best solution for you. Of course, you can scale micro-businesses up over time, just like any other business. The beauty of micro-businesses, though, is that they keep things relatively simple at the beginning and allow you to scale at your own pace.
How to Set-up a
Have an idea about what you want your business to be? Why not start by selling websites. A Web Agency is a common micro-business that requires little capital on your part and is easy to register and start. Once you have a clear idea of what service or product you want to sell, your next step is planning the business model.
The first question you need to ask yourself is how much money are you willing to invest to start your business. This does not mean you have to break your bank; there are plenty of micro-businesses that allow you to offset your own cost of hiring, development, designing, etc. For example, Fancy Hands is a micro-business service that allows you to delegate small tasks to your own personal virtual assistance team. You can utilize this service for administrative duties such as cropping pictures or even sending out reminder emails to a client. As with managing any business, the responsibility of creating guides and spec documents to direct assistant services such as Fancy Hands falls onto you as the business owner.
Documentation is important. You should be creating procedural guides on everything that you do so that training new people to manage the business for you is as simple as possible.
Beyond the cost of supporting your workflows, your first major investment in the business will be registering as a formal business. This includes filing for an Employer Identification Number (EIN), which is essentially the social security number of your business, and registering your business with your state’s Secretary of State or Division of Business. The fees for these filings range state-by-state, but average between $50-500.
Once your business is registered, you will have the ability to open a business banking account and begin accepting payments for your products and services.
These steps might seem daunting, but thankfully you can find all-in-one providers, such as Stripe Atlas, who handle the entire process for you. It’s important that your business start off on the right foot, so be sure to take time to understand the filing processes.
Part Time or Full Time?
After financials, the next investment—and arguably your most important—that you need to make is your time. We’ve covered why time management is important in the past, but it can’t be stressed enough that the hours you put into starting your business are crucial to your success. First, decide how much time you are willing to spend per day working on your business. Some people will have the capital on hand to comfortably work full time on their business right out of the gate. Others, like me, might have to work another part-time job until the business brings in enough profit to support a full-time investment. Every person and every business will function differently, so choose what works best for you and fits well into your life. Just expect put in at least a couple of hours a day!
Once you have the business filing, banking, and legal formalities out of the way, one of the big things to keep in mind is the future of your business. While brainstorming ideas for your business, did you ask yourself where you would like to see the business in one year? Five years? If you didn’t create a timeline for your business model, now is the time to do it. Scaling your business comes in two phases:
- Business planning and initial launch
- Building profitability and scaling over time
These are questions that you will have to explore and answer on your own, but you can find really great resources, like the ones linked above, to help guide you through these efforts.
The hard work is out of the way. You have everything from your products, to your workflows and business model created and set. Now is the time to use your capital on things needed to prepare your business for launch and to get it over the finish line.
Building A Team
Aside from a few services that can be managed by yourself when starting a business, you are probably going to need some help. Hiring can be a daunting task, so take time to look closely at each candidate to make sure you are bringing in people that really fit within your business vision. You can either look for freelancers locally (seriously, support local freelancers!) or you can hire online by using services such as UpWork. As it happens, contracting freelancers is the most common form of hiring in both small businesses and micro-businesses.
If you are looking for a more hands-off approach to building a highly skilled team, you can also hire Synico to build websites that you sell as your own product.
Set Your Price
You have your product or service, but how much do you plan on charging for it? Paying close attention to how much time and money is spent to produce your product or service is critical to success. The last thing you want to do is cost yourself money just to make a sale. My personal advice to anyone starting a business is to accurately value your time and never work for free. Ask yourself “how much do I want to be making an hour?” and calculate your cost-per-sale around that. Typically, a website will cost you at least $2000 to produce, so make sure you are invoicing above that to make a profit. This is an ongoing process that you will want to continually revisit and tweak as your business grows.
Generate Marketing Material
Creating buzz about your company and your brand is a must before you launch your business. If you are launching a storefront, hiring a designer to create print media for your company is a good idea to get an idea of community reaction. If you are selling websites or digital products, one focus should be gathering marketing material for social media. There are plenty of free design services such as Canva that take care of optimizing your social media marketing. We’ve written a guide on things everyone needs to consider for their social media marketing strategies.
We also have a free starter pack of design templates that you can use for social media marketing. Enter your info below to download them.
Learn How to Sell Websites
Obviously, the best way to make money when running a business is to make sales. This should take up the majority of your time, or the time of a sales associate that you hire. Selling is something that comes more naturally to some than others. Look for a target audience that builds your niche in the industry. You can be the one that sells websites to small local businesses that need them or work in the music industry to sell to music artists, teachers, or bands. If you need some help on becoming a better sales-person, there are guides on both YouTube and uDemy that can teach you the fundamentals of selling websites.
Build Your Mailing List
When you sell digital items like websites, you are more often than not going to have visitors to your website before you have customers. Digital consumers are more likely to spend time researching and considering their options, even if they are interested in the product or service. To retain these visitors and convert them into customers, it’s a good idea to create a mailing list so that visitors can follow your business. Mailing lists are a great way to push news about the business, distribute discounts, and get visitors to keep coming back to your website.
MailChimp is a great tool for any business to manage mailing lists. MailChimp allows you to create automated email campaigns that send customized messages to potential customers at to support your sales process. These campaigns work in tandem with your marketing strategy to keep visitors interested in your brand. If a visitor is reminded of your service via scheduled emails, they are more likely to return to your website to complete a purchase. Here is a comprehensive guide on how MailChimp works and also how it integrates seamlessly with websites. MailChimp even has a free plan that is perfect for micro-businesses!
Setting Up Your Tracking
An important metric you need to keep track of while running your business is the traffic that is coming to your website. Using tools like Google Analytics allows you to see how many people are visiting your website each day. If you are in the middle of a marketing campaign, keep an eye on how many people are responding to your marketing and clicking through to visit your website. You can also use HotJar to monitor where on the webpage visitors are scrolling and clicking. By figuring out exactly which parts of your website that visitors are interacting with before leaving, you can adjust the content on your page so that your product is visible to boost your sales conversion.
The hard work is out of the way. You now have everything from your products to your workflows, and your business model is ready to be put to work. Now is the time to use your capital on things needed to prepare for a successful launch.
Keep Clients Updated
If you want to continue making revenue from any client, you need to make sure they are kept in the loop of your projects. From the start of a project to the final sign off, you should be sending an update about the project to your client weekly. It doesn’t matter if it’s an email or call as long as the client is receiving correspondence. When you are giving updates to the client, be sure to be present and engaging with them. The level of excitement and energy you put into a project directly affects how good a client feels about the work you’re doing. Even if you don’t have a substantial update for the client, a simple “we’re still working on this” will often be enough to keep the client happy. Happy clients are paying clients.
Communicate EVERYTHING with Your Team
The largest pitfalls of new business owners is not letting their team know everything that they need to. As the leader, it falls onto your shoulders to make sure your team is well supported, well informed, and are highly motivated. As mentioned above, making sure you have documentation to answer any questions your team might have is crucial. Make sure your team has access to every resource that you have; every email that might contain details to help them finish a project, any notes you may have from meetings – everything. My recommendation is to use secure chat platforms such as Google Chat, Skype, or Slack to facilitate communications between you and your team. Organization tools such as Basecamp, Asana, and AirTable are also great for streamlining project communications and keeping everyone on the same page at all times.
Here’s the part that many people will be most interested in. Work can’t start if you aren’t getting paid. It can be difficult for new business owners to be forward about payment. Some may feel timid about invoicing clients while others may not see the importance of prompt billing. The fact is that revenue is what keeps your business breathing and thus it is important to keep clients on a solid payment schedule. As soon as the client signs the agreement for you to start working, send them an invoice to cover half of the total expense. Their payment signals the official start of the project. Once the project is finished, invoice the rest of the bill before launching the website. We use FreshBooks as our preferred invoicing method since it makes payments easy and allows us to email invoices to the client so they can pay online.
Start Upselling When You’re Ready
If you want to boost your profits, try taking your business one step further by selling recurring services. On its own, a website won’t be as pivotal of a tool as it could be. A client is going to need more than just a website to manage their digital brand. While you are initially selling a website, or soon after the project’s completion, think about proposing an on-going maintenance package. After a website launches, it will still need updates, security patches, or even additional edits to content. This is an easy way to grow your revenue stream month-over-month, giving you more cash on hand to promote and scale your brand.
You can also utilize other micro-businesses such as the Design Freq Club, Liz Marie Photography, or Post Planner to sell services for graphic design, photography, and social media management respectively as a way to boost your own profit. As a whole, micro-businesses rely on each other to be profitable. You don’t need to be a large enterprise to be a successful business owner. All you need is to find your circle of micro-business service providers thats you can build off of.
It’s not an easy task, but starting a micro-business by selling websites has never been a more viable way to build a full-time income. People are starting new businesses and ventures everyday, and thanks to the very tech-centric culture we are in there has never been a greater need for an online presence.
Synico believes that anyone should have the ability to work for themselves and we love sharing our knowledge and resources. If you need any help with starting a business, feel free to reach out and chat with us.