Micro Entrepreneurship: A Guide to Starting Small

Google and Facebook were conceived in dorm rooms. Yankee Candle (recently sold for $1.75B) began with a homemade gift. Influencer Lele Pons (who charges $180k per post) launched her career by making YouTube videos about skipping school. 

Big dreams have to start somewhere, and often the best place to begin is small — or even micro. Or sometimes the goal is to start micro and stay that way. After all, good things can come in small packages. 

Whether you want to launch a family business, turn a hobby into extra income, or invest your savings in an online shop, micro entrepreneurship may be the way to turn your ideas into reality. 

What is micro entrepreneurship?

Micro entrepreneurship is entrepreneurship on a small scale. Features of microbusinesses may include:

• Small team: The Small Business Administration defines a microbusiness as any business with one to nine employees. Many small-business owners are solopreneurs, meaning they work alone. 
• Minimal capital: A micro entrepreneur usually starts out with their own savings, a modest investment from friends and family, or a small loan. More than half of microbusinesses are launched with less than $5k, and around 16% of microbusinesses require no startup capital at all.  
• Scale: Microbusinesses tend to offer a limited number of products or services, and/or serve a limited pool of clients. For example, you could operate a neighborhood bodega, or make hand-sewn handkerchiefs on your weekends and sell them online. 

Microbusinesses are huge for the economy — 92% of all businesses in the US are microbusinesses, and the average micro entrepreneur creates two or more jobs on top of their own.

Micro entrepreneurship is a growing trend too. Almost a third of all existing microbusinesses were created in 2020 or later.

Micro entrepreneurship examples

There are tons of different businesses that you can start on a micro scale. Here are a few common categories.  

The Fiverr model

“If you have technical or creative skills, you can easily get started with a small online business, even if you’re working a full-time job,” says Leland Dear, who mentors small-business owners through nonprofit organization SCORE. Platforms like Fiverr and Upwork make it quick and simple for freelancers to set up a profile and connect with clients. Popular services on Fiverr include:

• Graphic design
• Proofreading
• Video editing
• Illustration
• Voice-over work
• Translation
• Customer support

Upwork is popular for services like:

• Architectural design
• Web development
• Bookkeeping
• Legal research

You can also freelance online independently, if you have a marketing strategy that will help you reach clients.

Home services

Cleaning, interior design, landscaping, and other garden services are all businesses that can be started on a very small scale in your local neighborhood. 

Take Netflix’s The Home Edit, for example, which started as two friends organizing people’s pantries and closets. It has since been acquired and has a line of products in Walmart. 

Many of the services in this category can also be B2B (business-to-business), such as an office-cleaning company. Other services that can be offered in your clients’ homes include babysitting, pet sitting, tutoring, and music lessons. 

Coaching

Coaching services — like personal training, dating coaching, or life coaching — are microbusinesses well suited for solopreneurs. You’ll need the necessary skills and traits to succeed, but it’s possible to get going with very little capital. Plus, this kind of business is easy to fit around your schedule.

For instance, Alice Stapleton, a career coach, started her business while working full time. At first, she offered her services for free. After a while, she started charging clients and asking them for referrals. 

She also set up a basic website and attended networking events to help build a client list. Her only costs were purchasing business cards and a couple of other marketing materials. Stapleton now sees two to three clients a day and charges ~$3k for 12 sessions of 60-90 minutes. 

Online courses

If you have knowledge that others could benefit from, you can create an online course through a platform like Udemy or Thinkific. If you get it right, it can earn you money while you sleep as your prerecorded lessons reach students across the world. 

Courses can cover any topic from how to promote a podcast to training your puppy or managing your child’s diabetes.

Consulting 

If you have experience in a particular business area — be it building a sales team or breaking into new geographic markets — you can turn those skills into a consulting service. 

Former freelance writer Celia Polkinghorne started Bonsai Digital Marketing after she got tired of working 10-hour days and still not earning what she wanted. She didn’t have any capital available, so she used a credit card to pay for LinkedIn’s Sales Navigator tool, a few small software items, and a professional marketing coach.

“Getting a mentor or a coach is the best thing,” Polkinghorne advises. “Otherwise you have to figure it out on your own, which is gonna take years and years.” In her first month, she made $4k. Now a $10k month is “quite an easy sleepy month” for her.

Ecommerce

Ecommerce is another affordable way to launch a business, especially since you can leverage cheap digital marketing (e.g., social media) to drive traffic to your store. If you use dropshipping to fulfill orders, you don’t even need to carry any inventory.

Manmeet Kaur Berryman’s business, White Rain Designs, began as a hobby. She loved creating handmade ceramic gifts and jewelry from her home studio but didn’t have a “business brain,” so she attended workshops and spent endless hours researching to get better educated.

In 2015 she set up a store on Etsy where she sold a small range of personalized gifts. Demand boomed during the pandemic lockdowns, and a loyal customer base developed. 

Now Berryman and her husband work on the business full time with a part-time studio manager. In addition to the direct-to-customer strategy, they’ve also opened up to wholesalers. 

Brick-and-mortar businesses

Starting an offline retail business involves more capital and risk than ecommerce, but there are many successful neighborhood mom-and-pop shops. You could think about a:

• Convenience store
• Bakery
• Laundromat or dry cleaners
• Coffee shop
• Tailor
• Hair or nail salon
• Hardware store
• Secondhand bookstore

Events

Possibilities in the event industry range from conference planning and flower arranging, to food trucks and custom cake toppers. 

Daniel Riou, a former running shoes salesman, became his own boss by founding Groupe Defis, a business that manages sporting events such as road and trail running races. They operate in Canada’s Quebec province and host about 10 events per year. 

He started with a $2k loan from his father, but he says he could have managed with $500. It took a year for the business to turn a profit, and he had to work other jobs for the first two years. Now he’s with the business full time and employs three others.

 “We tried scaling,” says Riou, “We found it to be too time consuming and risky to launch events across Canada, so we decided to stay small and create a working environment that we like.”

Benefits of micro entrepreneurship 

Starting small can be a stepping stone to something bigger. Micro entrepreneurship represents an opportunity to launch a business even if you have very little capital. Later you can choose to grow, but 31% of solopreneurs say they want to stay small in the long run. Here’s why. 

Better work-life balance 

Being small gives the founder more control over their schedule, and allows them to prioritize other life goals such as family or hobbies. Stapleton says there are plenty of ways she could scale her business, but “I find the busier I get, the less happy I am, so it’s a conscious decision I have made to keep it small.”

Similarly, Polkinghorne says having a small operation gives her the lifestyle she desires. “If I’m done with a client session and I don’t have another session for a couple of hours, I can go to the beach.” 

More profits

Companies can become more profitable as they grow because of economies of scale — cost advantages that result from overhead costs being spread across more goods. But as a business expands, higher operational costs can negatively impact cash flow. 

For example, if you decide to grow your homemade crafts business, you might need to rent a studio space and hire a customer service manager. If the increased revenue from selling more crafts cannot cover these new expenses, it makes more sense to stay small. 

Less risk

Failing is always disappointing, but if you start micro, the stakes are lower. You may be able to try out your micro venture as a side hustle first, which means you have something to fall back on. 

Bigger businesses usually need more staff and more capital. You might need to take out a loan, or recruit investors who expect returns. If the company experiences a downturn, your employees might lose their livelihoods. That’s a lot of pressure. 

Simplicity

When you are a small-business owner, you have control over every aspect of the company, and you can design and run everything to your liking. You deal with fewer employees and there is less red tape. Overall, it’s simpler. 

Stapleton says of her business, “It feels manageable, and I’m able to keep on top of it all.”

Community and culture

It’s easier for founders to foster and maintain the culture that they want in a close-knit environment. “If you stay small, you can spend more time one-on-one with your team and customers,” says Dear, “so there could be more employee development and better customer relations.”

Characteristics of micro entrepreneurs

People from all walks of life can be micro entrepreneurs. The skills and traits required depend on the business, but there are some common characteristics that can help guide a microbusiness to success.

• Consistency: “To be consistent day in and day out is one of the hardest things to do in business,” says Dear. “It’s easy to be the best. It’s very hard to stay the best.”
• Persistence: “The first thing you’ve gotta do is not give up,” says Polkinghorne, “because you’re going to feel like giving up a lot.”
• Self-awareness: Becoming a successful entrepreneur requires a willingness to take feedback, acknowledge your weaknesses, and throw yourself into personal growth.
• Self-motivation: “Your business is largely down to you so you have to be able to get yourself going each day,” says Stapleton.
• Independence: You need to be comfortable making big decisions and solving problems on your own. Depending on the business, you may also need to be happy spending a lot of time alone. 
• Leadership: Being able to motivate others to buy into your vision will be helpful for selling your product, recruiting and retaining a team, and making strategic partnerships.
• Patience: Depending on the business model, it can take time to build something profitable. You need to be able to hang in there. 

Tips for micro entrepreneurs

If you’re ready to get started, here are a few top tips from people who have been through it all.

1. “Find a mentor,” says Dear. “Preferably one that’s free. It could be through SCORE, or it could be someone successful in your industry.”
2. “It doesn’t need to be perfect to start with,” says Stapleton. “You can review, edit, adapt, pivot, rebrand as time goes on. Strive for progress, not perfection.”
3. Find out what support is available. In addition to nonprofits like SCORE, there are online networking channels, chambers of commerce, and government agencies like the Small Business Association. Only 3 in 10 microbusinesses are aware of what local government assistance and funding is available to them.

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