Commonly defined as enterprises employing nine or fewer people, “micro-businesses” are big players on the business stage. In 2013, they accounted for 14% of all businesses newly opened in Australia, but only 9% of businesses shutting down[1].
Any new business will face its share of growing pains. When you’re trying to grow your business without necessarily growing your staff, though, you’ll encounter many obstacles that are somewhat unique to partnerships, solopreneurs and micro-businesses. But, with careful strategy and plenty of preparation, your micro-business (also referred to as “micro-enterprises”) can survive and thrive. Here are some tips to support your micro-business.
1. Focus on annual turnover
Your output is always determined by your input; for micro-businesses with fewer employees to put in the work, it’s easy to see revenue suffer.
The best way to overcome this challenge is to really tighten your spending. You can view your micro-business’ small employee pool as a benefit, in fact, since you’ll have fewer salaries to pay. Really limit overhead spending and reduce expenses wherever possible to make sure that you make the most of your budget.
Don’t just optimise your spending; optimise your processes. Take stock of your company’s day-to-day sales practices, meeting schedules, marketing efforts, and more. Can anything be streamlined or automated? Furthermore, consider ways in which you could be putting your profit margin to work for you. For instance, flashy marketing campaigns are often seen by small business owners as a luxury or a ‘nice to have’; but if your turnover was good last year, why not take some of those profits and reinvest in yourself? You can always start small and focus on inexpensive marketing campaigns using social media/word of mouth, which continue to be considered one of the most trusted forms of advertising, amongst consumers.
2. Shoot for slow and steady growth
Sure, all entrepreneurs dream of bursting onto the market to thunderous applause and skyrocketing profits. Most also realise that this dream is unrealistic. It’s tempting to hit the ground sprinting, pouring all your resources into the startup and early stages of your business.
Tread lightly. Remember, you’re in this for the long run. Set short-term, medium-term, and long-term goals, and stick to them! In our era of fast food, social media news feeds, and television on demand, instant gratification is commonplace – but your business should be different. If you know that you have a long-term objective, you’ll be less likely to overspend resources on your immediate goals.
3. Stick to structure
It’s easy to see why large corporations need strict protocols: they need to keep hundreds of employees speaking the same language. Many micro-business owners fall into the trap of thinking that their small employee base means that they don’t need as much structure.
On the contrary, if you only have a handful of staff, each employee bears a larger share of the responsibility. Make sure that your entire team is onboard – from large-scale things like the overall business plan and long-term goals, to finer points like invoicing deadlines and customer service protocol. Once you’ve got everybody on the same page, keep them there with regular reviews and updates.
A comprehensive and detailed business plan helps to keep your micro-business on track. Clearly defining your company’s goals, mission, and vision will ensure that you and your team focus on the tasks at hand and don’t get distracted by side projects or unrelated business opportunities. Perhaps even more importantly, once you have these items in place, be sure to review them regularly. When you meet a major objective, be sure to set a new one in its place.
4. Get a second opinion
People choose to become entrepreneurs for a myriad of reasons. Small business owners want to make a difference in their local communities, have autonomy in making business decisions, and enjoy the flexibility of creating their own schedules. However, these same benefits can also pose challenges to those working in isolation.
There’s a reason why employees of large corporations who have new ideas for innovation need to pass their ideas “up the ladder,” discussing and reviewing them with supervisors and directors before presenting them to those in control. It’s because having multiple opinions from professionals with diverse backgrounds is crucial to successful innovation. Small businesses often lack built-in structures for reviewing and evaluating new ideas before implementing them, so it’s crucial that you seek out help in this regard.
If you have staff, get them together to review and discuss any new ideas or approaches. Be sure that they feel open and confident in presenting their own innovations, too. You can also tap into your professional networks for help. Reach out to other small business owners and offer to be a sounding board for their new ideas, if they’ll do the same for you.
5. Leverage your position
Whether it’s with your suppliers over supply costs, or clients over the fee for your services, you’ll always be negotiating. The great part of being a micro-business is that you’re incredibly flexible and autonomous when it comes to making deals.
Use this autonomy to your advantage. Do your homework and anticipate the demands of the other party so that you’re prepared with several different offers. If a potential client is choosing between you and a larger corporation, be sure to really sell all the benefits of working with a small business.
In need of Business Insurance?
Allianz offers a range of small business insurance packages, which you can tailor to suit your industry, occupation and budget. Get a quote and buy online today or Call 131000.
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[1]http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/BE7D4569A92E5CA6CA257DF9000E452A/$File/att4no0k.pdf
