Americans are starting microbusinesses at record rates. Brookings reports that “17% of the 20 million microbusinesses tracked in the U.S. were started after the onset of the pandemic” and the number of self-employed Americans reached a high not seen since the 2008 financial crisis.
A variety of factors are behind the microbusiness boom, but one big reason is surprisingly simple: It’s a lot easier to start a business nowadays.
Between the growing e-commerce marketplace and a plethora of digital tools for starting and running a business, today’s entrepreneurs face fewer barriers than in the past. In fact, many self-employed business owners start with no outside financing whatsoever.
How do they do it? Kimberly J. Howard, CFP presents some must-have tips and tools for starting a business on a micro-budget.
In addition to their smaller size, microbusinesses have simpler operations and requirements than other small businesses.
- Microbusinesses specialize in small markets. By focusing on a niche or hyperlocal market, microbusinesses avoid direct competition with larger brands.
- Likewise, microbusinesses stick to a limited product mix or launch with a minimum viable product. An MVP gets startups to market with less time and money and generates vital feedback to inform growth.
- Unless a microbusiness is seeking outside funding, a one-page business plan that covers finances, marketing, and other basics is adequate for most startups.
- Most microbusinesses operate as pass-through entities. While sole proprietorships are most common, some microbusiness owners choose a single-member LLC for the liability protection and branding advantages.
Running an efficient business doesn’t have to cost a lot. These are the must-have resources for starting and running a business on a tight budget.
- The Small Business Administration, SCORE, Small Business Development Centers, and other organizations offer a wealth of free educational resources for entrepreneurs.
- Microbusiness owners can take advantage of free and low-cost tools for running a business such as accounting, project management, and point-of-sale software.
- Can’t afford a professional? There are lots of online tools to build your brand for cheap, including website builders, logo generators, and brand style tools.
- You can also find an online Facebook ad template that can help you put together customized ads for the popular social media platform featuring your business’s logo, photos, choice of fonts, colors, and a library of other graphic assets.
Microbusinesses also save money on the everyday costs of running a business like office space and payroll.
- More entrepreneurs are choosing to start their businesses from home. In addition to free rent, home offices are eligible for tax deductions.
- Buying business equipment is expensive but business owners can save money by leasing equipment instead of buying or purchasing secondhand and surplus equipment.
- For extra help, turn to freelancers instead of hiring employees. Freelancers are more affordable than permanent employees as long as you follow the legal guidelines for independent contractors.
You don’t need heaps of startup capital to make your self-employment goals a reality. Microbusinesses are lowering the barrier to business ownership for millions of entrepreneurs through lower costs and a streamlined path to startup. If you’ve been looking for your path to business ownership, consider starting a microbusiness of your own — it’s closer than you think!
Kimberly J. Howard, CFP is your go-to source for financial planning advice and financial services. Connect with Kimberly today for more info!