What is Micro Business? Definition and It’s Three Types.

A micro business or micro-enterprise is a small company. Its definition varies according to each country, although, in general, it can be said that a micro-enterprise has a maximum of ten employees and limited turnover. On the other hand, the owner of the micro-enterprise usually works in it.

The creation of a micro company can be the first step of an entrepreneur when it comes to organizing a project and take it forward. By formalizing their activity through a company, the entrepreneur has the possibility of accessing credit, having retirement contributions, and having social work, for example.

It’s vital to highlight the fact that within the micro business sector we find what is called micro-entrepreneurship that is nothing more than the start-up of a business of that type where the entrepreneur himself is the owner and administrator of the same and in which, in addition to having carried out a low investment, it has no employees. The owner and even his relatives are the ones who set up and develop that company.

Micro Business

In this sense, under this denomination, three different types of micro business would be found: expansion, transformation, and survival.

The micro company can be framed within small and medium enterprises (SME). These are companies that do not have a significant impact on the market (they do not sell in large volumes) and whose activities do not require large sums of capital (instead, labor predominates).

When it comes to determining the main advantages of a micro company, without a doubt, its flexibility should be highlighted. And it is that it allows not only that it does not have a rigid structure that prevents decisions and actions from being undertaken quickly, but also that it adapts perfectly to the market and its tendencies.

However, it also has its drawbacks. In particular, among the most noteworthy are the fact that it is limited to a very small market because it does not have the resources, human or material, to be able to carry out a large production. In the same way, it should also be stressed that the lack of financing is another of its disadvantages, which means that it cannot invest too much in technology or develop widely to reach much higher goals.

Beyond the fact that the main characteristic of micro-enterprises is their limited size, this type of company has great importance in the economic life of a country, especially for the most vulnerable sectors from the economic point of view.

This happens because micro enterprise can be a job for an unemployed person or a housewife. The elaboration of crafts, small-scale gastronomy, and professional consulting are some of the most common fields in the development of micro businesses. Over time, a successful micro-business can become a larger SME.