Micro-businesses are the first step along the path of business growth. You’ve started your business and instead of outsourcing all the help you need you’ve decided that its time to start hiring at least one person to help.
If you have between 1 and 5 employees you likely are a micro-business. The business still completely revolves around you and you’ve come to understand that all businesses have a lot of “busy work” that’s attached to them. You have a choice - you can either continue doing it all yourself or find someone to help with the details of your business.
The joys of a micro-business
A micro-business is a pretty easy business to operate. You don’t need a great deal of business skills. If you are good at delivering a product or service and you are clear about what your customers want then you can easily run your business.
You might have some systems that you use, but they can be a lot more informal than with larger businesses. You likely have everything you need in your head. It’s easy for you to transfer information to others in your organization. You are in very close proximity and you talk several times a day.
A micro-business can produce a great deal of profits. If you learn how to have your assistants take all of the activities that don’t produce revenue off your plate, you can concentrate on producing revenue. You might find that after hiring that first person your productivity skyrockets by as much as two or three times. This means more cash coming in and more cash available for you at the end of the year.
This is called leverage and it’s what allows businesses to grow. You’re starting to learn that using others well provides you with opportunities you never had when you were doing everything yourself. Your decision is whether you want to stay with a simple micro-business or you want to grow to the next level.
Challenges you might be facing
The biggest challenge that micro-businesses have is what I call lumpy sales. This is where you have great cash flow one month and then the next the cash dries up. The cause for this is you still create most of the business yourself. The challenge is that you now have payroll you have to meet and in the dry months this can be a problem.
The solution to this problem is to make sure you allocate a certain percentage of your time for marketing. No matter how busy you get you must schedule time for keeping new potential customers for your business in your sales funnel. If you don’t do this you’ll just end up with a cash flow problem which will take your mind off of creating value in your business.
Your big decision
If you’re successful as a micro-business owner the decision you’ll have to make is whether to grow your business or not. There is no right or wrong answer here. The decision is about what you want. If you want to grow, then you’re going to have to put yourself in a position to do so.
If you’re a professional service provider, this might mean brining someone else into your company that is a senior provider. If they are able to produce significant sales, you will want to think about making them a shareholder in your company. If they are technically competent and don’t create a lot of sales, you’ll find that you spend more time selling and less time servicing.
If you decide to stay small, you’ll just keep on doing what you do. If you concentrate on niche management and development you’ll learn how to make more money per client. This will help you eliminate clients that aren’t profitable for you.
It’s all about what you want
As a micro-business owner you only have a certain amount of capacity for strategic or non-revenue producing activities. You have to choose wisely on what you spend your time on. Knowing whether you want to grow or not will dictate what activities you pursue. Growing will take time away from present production. You’ll likely see your revenue drop for a period of time while getting new people on board.
Micro-businesses are lots of fun to run. This is especially true as you get a reputation for providing a certain type of service. You’ll find that people contact you and your marketing efforts get easier. That’s when success comes and your cash will get less lumpy. Doesn’t sound like a nice place to be?