Five tips to help your micro-business thrive


Quote & Buy
Retrieve a quote »

Five tips to help your micro-business thrive

Micro-businesses make up more than a quarter (27 per cent) of all businesses in Australia and tend to have a lower exit rate than sole proprietorsi. In 2013-14, the entry rate of micro-businesses was 14 per cent of all businesses setting up shop, while their exit rate only represented 9 per cent of all businessesi.

However, there are challenges, as findings based on data from 2010-11 from the Australian Bureau of Statistics show that businesses with a larger number of employees are more likely to survivei.

Micro-businesses or micro-enterprises are businesses with less than five people, including self-employed individuals.

Micro-businesses face special demands that can affect their chance of survival. Here are some tips to help your micro-business thrive.

1. Don't let low turnover ruin your business

Statistics show businesses with an annual turnover of less than $50,000 had the highest exit rate of any other type of business from 2013 to 2014i.

Problem: In a small business, achieving a high annual turnaround can be harder with limited time and staff.

Solution: Optimise your sales processes, customer service levels and marketing activities to increase your revenues. Also, keep spending to a minimum to maximise profit.

2. Aim for steady business growth

As a micro-business, you may want to expand as quickly as possible, but this isn't always the best approach.

Problem: Don't make any hasty decisions.

Solution: Once you achieve your short-term goals, start planning to grow your business at a steady paceii.

Sticking to the primary goals defined in your business plan can help you maintain a systematic focus instead of getting lost in wide field potential business opportunities.

3. Structure is the key to success

An established business in a large company will already have a structure with internal processes for everyone to follow and routines to organise the work.

Problem: Micro-businesses need to find an organised approach.

Solution: Stick closely to the business goals defined in your business plan. This will help you maintain a systematic focus and avoid getting distracted by other potential business opportunitiesiii.

4. Peer review your new ideas

In a large business or a corporate environment, new ideas and approaches are usually revised by team leaders and managers.

Problem: Micro-businesses don't have an inbuilt review system that forces the business to appraise new projects from different angles, identify problems in advance and re-evaluate the benefits.

Solution: As an owner of a micro-enterprise, you can reconstruct this feedback loop with your external peer network. It's important to build a network from the beginning and avoid the trap of isolationiii.

5. Win negotiations

As a micro-business owner, you can be more flexible with your offering and prices than larger corporations.

Problem: You have to negotiate regularly on prices and what you're offering to new and ongoing clients.

Solution: Be clear about what you want and ask for it. Anticipate the needs and wants of your negotiation partner to make the deal valuable to them. Have a positive mindset - if you want the best from the conversation, this can have a positive impact on your body languageiii.

iAustralian Bureau of Statistics. 2015, Counts of Australian Businesses, including Entries and Exits, Jun 2010 to Jun 2014, cat.no. 8165.0, ABS, Canberra, viewed 9 April 2015,
http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/BE7D4569A92E5CA6CA257DF9000E452A/$File/att4no0k.pdf

iiMilman, O. 2012, 'Five key reasons why start-ups fail', Startup Smart, 20 November, viewed 22 March 2015,
http://www.startupsmart.com.au/planning/five-key-reasons-why-start-ups-fail/201211208226.html?displaypage=start

iiiMilman, O. 2012, 'Top 10 challenges faced by sole traders', Startup Smart, 27 June, viewed 22 March 2015,
http://www.startupsmart.com.au/sole-trader/top-10-challenges-faced-by-sole-traders.html