What is a micro-business?

Written by Willem Gous

Tuesday, Jan 10


Why should governments take micro-businesses seriously? Is it a side hustle? Is it a micro-business? What is the difference? Did you know most small consultancies and hairdressers, et cetera, are micro-businesses?

If you already have a business, there’s a 90% chance of it being a micro-business. Micro-businesses are big business and, in most economies, one of the biggest economic drivers.

There is no specific definition for micro-businesses. However, when it comes to the size classification of a micro-business, the number of employees will also include the owner. A micro-business leads to immediate self-employment for the founder or the owner while creating other job opportunities. Thus, a micro-business is the perfect short-term and long-term job creation tool.

I favour the South African definition of a micro-business: 10 or fewer employees with annual revenues below 300,000 US dollars. Keep in mind that this is an emerging market with high inequality. According to data, 60% of South Africans earn a salary of less than a hundred US dollars per month. Thus, a micro business is a perfect tool that they can use to uplift themselves economically.

Micro-businesses have a very low startup cost and, in some cases, near zero. That means you can start the business now in a very short space of time compared to starting a small business where you possibly have to wait months for the funding to start that business because it’s so cheap to start, it is accessible to a wide range of people leading to more diversity in the people who start these.Because they’re cheap to start, you simply start another one if they fail. Imagine you raised hundreds of thousands of dollars to start a small business, and it fails. You could destroy your financial future.

Side hustle, and micro-business, what is the difference? Well, they both start in the same way: with you as a sole proprietor. However, as it grows, the micro-business eventually incorporates and creates job opportunities for others. Many governments do not pay attention to micro-businesses, which is reflected in the number of programs catering to the needs specifically of micro-businesses. If governments focused more on the rapid development of thousands of micro-businesses in the short term, they could have a bigger and more stable tax base in the long term.

Micro-businesses are big businesses and the perfect tool to create jobs and economic growth in any developing market. If you are in a situation where you need to create thousands of jobs within your country, reach out to us. We can help you get your country back on the road to economic recovery and prosperity.

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