A microenterprise is considered to be a small business with up to 10 employees, limited income and generally focused on the local market. Examples of microenterprises include corner stores, hair salons and basic services such as plumbing or gardening.
Microenterprises are an important pillar for the economy of each country. According to data provided by the Economic Commission for Latin America and the Caribbean (ECLAC) , they represent 99.5% of all companies, 60% of jobs and account for 50% of global GDP .
However, despite its great impact, little is said about its characteristics, advantages, obstacles and the type of professions that are integrated into this vast category.
Therefore, we invite you to continue reading in case you are thinking about starting your own micro-business .
What are microenterprises?
Microenterprises are small businesses number database that operate with fewer than 10 employees , generally focused on serving a local market and have limited resources for operation and growth.
Characteristics of a microenterprise
Microenterprises are considered to be businesses that have the following characteristics:
They have two hierarchical levels
They lack structure in chain production
They have a defined market niche
They have two hierarchical levels
These are divided between the owner, or boss, and the rest of the collaborators. Although, of course, there are exceptions.
They lack structure in chain production
However, they manage to employ the structure when using both raw materials and labor.
They have a defined market niche
For this reason, their sales and actions are usually carried out locally and more targeted to a specific audience.
Types of microenterprises
Although there are various origins and structures for microenterprises , they are usually categorized into three main types, which are:
Survival
Expansion
Transformation
Find out the definition of each one below.
Survival
These types of micro-enterprises are created out of economic need, so they do not have a budget, investment, financing or base capital. They are characterized by immediate, limited production and are classified as a family micro-enterprise.
Example : a person who makes and sells cakes from home.
Expansion
Unlike the previous type, this type of microenterprise does have money to grow the business a little more, take ideas to invest or have more labor. This type of business grows little by little, as it generates income.
Example : a person with the ability to delegate to someone else the task of making the cakes for her.
Transformation
This type of microenterprise has a higher turnover and, therefore, begins to generate capital, thereby increasing its chances of growth.
Example : a person with the possibility of renting a premises to convert it into a bakery and hire a team to sell different types of cakes.