What is microenterprise?

We explain what a microenterprise is and what its main characteristics are. In addition, the advantages and disadvantages it has.

1. What is microenterprise?

The microenterprise concept is a term used to differentiate a company by the monthly or annual income it owns , in addition to size. It is contained within the category of SMEs.

Microenterprise is usually created for various reasons, including the need for income to survive or to find an economic way out of various skills . Also for wanting to develop from the base, that is, it aspires to medium and / or large companies .

The microentrepreneur is a person capable of raising one or several small microenterprises , he is not only the owner, but also has direct participation in his development, that is, he is one more worker. There are even microentrepreneurs who do not have employees.

2. Microenterprise Features

A small business has certain characteristics that make it fall into this category:

• It has a maximum of 6 employees, only in some cases this figure is exceeded up to a total of 10.
• The owner is counted among the workers (although there are exceptions).
• It has a limited turnover, that is, it does not easily allow growth.
• They do not significantly affect the economy , either of your city or national.
• They are created with relative ease, depending on the country, since they can start from food sales at home.

3. Advantages of small businesses

• The main thing is that it becomes a source of income , being a livelihood.
• Being small, it has the ease of being modified in case the first one does not work.
• Depending on the country, there are grants or contests to which you can apply and thus receive help from the government . Or, within the banks, different types of financing have been created so that those who have projects to undertake can access them.
• Its structure can be easily modified.
• They are generators of employment, although not on a large scale but they do offer someone the possibility of having a salary.
• Decisions are made quickly, since it is usually the owner who has the reins of the business or a small group that reaches agreements quickly.

4. Disadvantages of small businesses

• They have trouble getting credits.
• Its technology or equipment is usually scarce, limited and little evolved, so it requires more effort from its workers.
• Workers may lack training and specialization.
• Its production tends to be limited, in some cases for immediate consumption that responds to the needs of the immediate context.
• The workers of the company do not usually have too many hierarchical structures and are far from the corporate models that characterize large companies.

5. Types of microenterprises

• Survival : They are created by economic necessity and do not have a base capital with which operating costs are managed, if not that it is of immediate and limited production. For example, street vendor.
• Expansion : They have a little more income than the previous one. However, this remaining money is not enough to further develop the SME.
• Transformation : It is more superior than the previous ones in terms of turnover, since the income allows to form a capital and therefore has greater possibilities of growing.