The concept of micro enterprise is used to differentiate one type of business based on a monthly or yearly basis, revenues in addition to the size it has. Is categorized within the SMBs. It tends to be raised for various reasons, including need for income to survive or to find an economic output to different skills. Also for wanting to develop from the base, i.e., it aspires to medium or large company.
Person capable of lifting an or several small micro, not is only the owner, but also has participation direct in its development, i.e., is a worker more. Even, there are entrepreneurs who have no employees.
Action to establish a small business of different types but of low investment and that it does not usually represent a major loss in the case of no progress. And depending on the country or State in which it is found, will be part of what is referred to as “informal market” or ‘informal economy’.
Characteristics of micro-enterprises
A small company has certain characteristics that make it to be within this type of categories, these are:
- Has a maximum of 6 employees, only in some cases this figure is exceeded until a total of 10.
- The owner is counted among workers (although there are exceptions).
- It has a limited turnover, i.e. that does not easily allow growth.
- Not affect significantly in the economy, already is in your city or national.
- Is created with relative ease, depending on the country, since can start from the sales of food in the own domicile.
Points in favor of small businesses
- It main is that is transformed in an source of income, being a livelihood.
- To be small, it has the ability to be modified where the first does not work.
- Depending on the country, there are contests that you can apply and so that receive government assistance or aid. Or, within them banks is have created various types of financing for who have projects to undertake, can access to them.
- They are generators of employment, although not on a large scale but provide the possibility someone have a salary.
- Decisions are made quickly, since it is usually the owner who has the reins of the business or a small group reaching agreement quickly.
Points against small businesses
- They have problems to get credits.
- Its technology or equipment tends to be scarce, limited and little evolved, by which requires greater effort of their workers.
- Workers may lack training and specialization.
- Their production tends to be limited, in some cases for immediate consumption which responds to the needs of the immediate context.
- The workers of the company do not tend to have too many structures of hierarchy and are away from the corporate models that characterize large companies.
Types of micro-enterprises
- Survival: are created by economic need and do not have a capital base which are handled operations costs, if that is not immediate and limited production. For example, a street vendor.
- Expansion: have more revenue than the former. However this remaining money is not enough to further develop SMEs.
- Transformation: Is more top that them earlier with regard to billing is concerns, since the income allows form a capital and therefore has greater possibilities of grow.