microbusiness

Microbusiness refers to a very small for-profit enterprise typically operated by one person or a small team. Definitions vary by country, but microbusinesses are generally owner-operated, with few employees and low startup costs. They often rely on local markets and personal networks and may operate from home or a modest storefront.

Characteristics: lean operations, direct control by the owner, limited overhead, and use of digital tools for selling and communication. They usually serve niche or local demand and offer flexibility but have limited scalability and formal processes.

Economic role: Microbusinesses contribute to employment, income diversification, and local entrepreneurship. They commonly act as entry points for aspiring entrepreneurs, particularly in developing economies and underserved communities. They also diversify local supply chains and can build resilience against shocks when supported by community networks and access to credit.

Common sectors and models: freelancing, crafts, professional services, food-based ventures, and online retail. Many microbusinesses sell directly to customers through marketplaces or social media, keeping overhead low.

Financing and challenges: Startups often rely on personal savings, family loans, microfinance, or crowdfunding. Common challenges include cash flow management, access to working capital, licensing requirements, taxes, and regulatory burdens.

Relation to small business: Microbusiness is the smallest category in the private sector, distinct from small and medium-sized enterprises by headcount and often revenue. Legal forms vary, with sole proprietorships and small partnerships common; some adopt LLCs as they scale.