The Micro Pod Episode 2: Busting Some Micro Business MythsDigital Academy
The Transcript of The Micro Pod Episode 2: Busting Some Micro Business Myths
Hello, my name is Kathy Ennis. Welcome to this edition of The Micro Pod.
In today’s edition, I want to do a little bit of myth busting about Micro businesses. So let’s get into the first things.
What is A Micro Business?
Firstly, what is a Micro business as this is something that taxes people’s brains sometimes. However, there is a very specific set of definitions about what constitutes a micro business in the UK.
When I started my business over 20 years ago, we had Small, Medium, and Large enterprises. And they were defined by the number of people that they employed. So, a Small business was designated as a business that employs between one and 49 people; a Medium enterprise employed 50 to 249; and a Large business employs 250+ people.,
As I said, I started my first business over 20 years ago. And, being a solopreneur, a one person business, I sat – or I thought I sat – within the Small business umbrella, because, you know, it’s one to 49. So obviously, Small business applied to me, right?
But what I found was that it didn’t always marry with the reality of my life as a business owner; the way I ran my business, and the sorts of things that I had to do in order to make my business successful. And it was pretty frustrating. You know, you’d go along to events, and they would talk about how you might manage things in your business. And I could quite honestly say “I can’t do that, I don’t have the time, I don’t have the resource and, actually, I don’t have the staff.” Because I didn’t have the knowledge and skills for some of the things that they were talking about.
So it made it really difficult for me to get to grips with the kinds of support and information that I was being given in terms of the type of business that that I was running.
This is what really got me thinking about the types of businesses in the UK that were like mine. Businesses that were perhaps one or two people running something, maybe even running them in their back bedrooms. But it wasn’t the location of the business that was the key. It was the ambition of the business.
The fact that I wanted control over what I did and how I did it. I didn’t ever want to employ anybody. I have been I’d been in employment myself, I’ve managed people, and I didn’t want to go back into that again. I wanted to continue doing the thing that I love to do. When I was an employee, the problem that I had (and this isn’t blowing trumpets at all) because I was good at certain things I got promoted. The problem was the promotion meant that I moved away from doing the thing that I loved, and I didn’t want that in my in my business.
I wanted to stay on my own and outsource to other people, the things that I couldn’t do. I think a lot of other business people are in the same state as me.
That that was the environment that I found myself in.
The State of Small Business Britain
Meanwhile, all of the newspapers, the reports, the things coming out from government, we’re talking about SMEs, SMEs, SMEs – which didn’t apply to me. Then, back in 2018, there was a report published that solidified some of the things that I’d been concerned about. It was called The State of Small Business Britain. In that report, there was a nice chunky section about Micro businesses.
What had started to happen was that the SME description had started to become SMME – Small, Medium and Micro Enterprises. So here we are, all of a sudden, there’s a recognition that there is something smaller than Small. We’ve got we’ve got the Micro.
What we have now, in terms of size definitions of businesses, a Micro business is designated as 1 to 9 people, Small 10 to 49, Medium 50 to 249, and then 250 and above is Large. Now there is a definitive definition of a Micro.
Interestingly, looking at that report, one of the things that it did highlight is that over 90% of the businesses in the UK fall within the Micro category; they fall within that space of 1 to 9 people, which makes them an incredibly powerful force.
Within that, what you have are businesses that have a Founder, or maybe a partnership and some with staff. So up to nine people.
You also have people like me. The one person business. You have people who describe themselves as freelancers, consultants, solopreneurs. Basically, it’s everybody who is responsible for putting their own salary into their own bank account.; that runs a business in a businesslike way (hopefully); with fewer than nine people.
That’s a Micro business.
As I say, over 90% of the businesses in the UK fall into that category. And, interestingly – back to that report again – in 2017 Micro businesses accounted for a £552 billion in sales contribution to the UK economy.
Myth One: A Micro Business is the Same as a Small Business
So, in terms of myth busting, the first myth that I want to bust is that a Micro business is the same as a Small business. It’s not, they are different.
The way a Micro business is structured; the way that they are set up; the way they operate (because of their size) is different to a Small business.
I will say that I do love a stat. Of that 90%+ of businesses in the UK that are Micros, 80% of them are businesses run by two people or fewer. This means we have a massive number of businesses in the UK that are run by two or, most likely, one person.
The way that business runs, the way it responds to what it needs to do, the way it sells, the way it engages with customers is going to be different to the way a Small business does.
I mean, for goodness sake, let’s just take the idea of having departments to do things in a business, I must say I am the department. If something needs to get done, I need to make sure it gets done. I don’t have a marketing department, I don’t have an accounts department, I don’t have a sales department. These days, I do outsource to people, because I believe it when I say “do what you do best and outsource the rest”. But in the beginning, I couldn’t afford to, so I was ‘the business’ and all of the departments were within me. If I didn’t do it, it didn’t get done.
That’s why I really want to get rid of that that myth that Micros are the same as Small. Can we learn from what small businesses do? Absolutely!. We can learn from what Small, Medium and Large businesses do. We can learn from what they do in terms of the organisation of the business, we can think about how we organise our time or organise our mindset in terms of getting things done in the business.
The other thing is to recognise is that, as a Micro, we won’t necessarily have somebody who is giving us a push in the right direction. As a Business Mentor, that’s part of my role with businesses that I work with. And I do work with Micro Businesses. And I often say to them, my role is “ a brain to pick an ear to listen and a push in the right direction”. But as a Micro Business person, sometimes you might wake up and think, oh, I don’t really don’t want to do that today. And the choices are don’t do it today or ‘I have to do it today because, if I don’t do that thing today, I won’t have a client tomorrow’. So yeah, we do need to think about that. If you’re a small business, if you’re a medium business or a large business, the work goes on whatever. So we need to work things into our micro businesses that makes that happen.
Myth Two: A Micro Business is a Lifestyle Business
Here’s the second thing that I want to myth bust.
This isn’t aimed at Micro business owners. It’s aimed at some of the people outside the Micro business community. It’s aimed at those that say a Micro business is a lifestyle business.
I have had that said to me so many times by people.
My business is not a hobby. It’s not something that just passes the time because you know, I’m a lady who lunches, and I just want to do this little thing to get my name out there or to keep me occupied.
A Micro business is a business. And the people that are running them are running them for exactly the same reasons that other people are running businesses of other sizes. It’s something that they’re passionate about, it’s something that they want to do. And it’s something that they want to bring out to the community that they call their customers or their clients.
It is not, it is not a lifestyle business.
There are over 4 million Micro businesses in the UK, are they all run perfectly? Are they all making a profit? Absolutely not. I’m on a mission, I suppose to get as many of them to do that as possible. But the fact is, that somebody who is running a Micro business is actually running a business, it just happens to be ultra-small. And just because sometimes the powers-that-be can’t understand that, or they don’t have a perception of that, doesn’t mean that these businesses are hobbies.
On the other side, we, as Micro business owners then need to take a serious business approach to our businesses. Because if we if we approach them in a laissez faire, “Oh, I didn’t really know I had to do that way”, then we will not be as successful as we could, or should, be.
So, it behoves us as Micro businesses to understand how business work, to make our businesses more successful and more profitable for us. At the end of the day, it is a benefit to us to do that.
And it’s a benefit to our wider communities. If we are successful, that means that we’ve got money to oil the wheels of the rest of the economy.
So that’s the second myth busted; a Micro businesses is not a lifestyle business.
Myth Three: Micro Businesses Don’t Need a Business Plan
The third myth I want to bust – and this comes from a very personal and my own business viewpoint – is that Micro businesses don’t need a business plan.
Micro businesses don’t necessarily need what might be seen as the traditional business plan. That’s the very full business plan that you’d need to take out if you were going to get finance for your business. You might be taking it to a bank or an angel investor or something like that. It’s a very research driven and financially strong document. Something you would take out to prove to somebody that it is a viable business and that if they invest in it they will get their money back.
Micro businesses do need to plan.
There are some micro businesses that need that traditional business plan because, although they’re small, and they’re aiming to stay small in terms of the size, the number of people operating within the business etc. But they’re not intending to say small in terms of the turnover of that business. I’m thinking perhaps about tech type companies that that sort of thing. They can get very large and very profitable very quickly. So the traditional investment-driven plan would be needed by them.
But for the vast majority of Micros, that 80% of businesses that operate with two or fewer people, they may not need a business plan of that nature. But they still need to plan. Because without sitting down and thinking about:
- What is my business?
- What is my vision?
- What are my business values?
- What is my brand?
- What message am I trying to send to people?
Without writing all of this down it’s going to be almost impossible to attract the right type of customer to pay the sort of money that you need for your products and services.
Another thing about planning is that it’s for today, it’s for the future.
So, with traditional business planning, many people may create something that is for a year, or maybe two or three. I always like people to think a little bit further than that. I like my clients to think about where they want to be in five years from now. The method they use, rather than working forwards from where they are now is to work backwards from where they want to be in five years. This will help them see what have to do on a day-to-day basis to reach their goals.
So a Micro business business plan should be about
- This is why I’m doing what I’m doing
- This is who I’m doing. doing it for
- This is why what I’m doing is of value to the people that I’m doing it for
- This is what I want to get out of the business I am running it
- This is where I want the business to take me
My strapline in my business is Taking Businesses from Passion to Profit In the Micro business arena there is masses of passion. But there’s not always that leap from passion through to profit.
My firm belief is that the missing link between passion and profit is planning.
If a Micro business doesn’t plan and commit to objectives – to say ‘this year I want my turnover this year to be x’ – it’s impossible to know how many clients you need, how many of those widgets you need to sell, the kinds of marketing activity you need to integrate into what you’re doing.
So, planning is an intrinsic part of being a Micro business.
It allows the business owner to know exactly what they should be doing on a day to day basis. It allows them to plan their time. And it allows them to understand which tasks they can do, and which ones they’re going to need to outsource.
So for me, those are the three big myths that I wanted to bust in this podcast.
- If you’re a Micro, you’re not the same as a small
- If you’re a micro, you are not running a lifestyle business, and
- If you’re a micro you do need a business plan, but it doesn’t have to be difficult.
Thank you so much for listening. Thank you so much for being here today.
As I said, my name is Kathy Ennis, my business is LittlePiggy. I’d love to talk to you. If you like to talk about anything that you’ve heard in this podcast, please get in contact.
Until next time, Kathy Ennis, from LittlePiggy signing out of The Micro Pod.