The ABS Statistics "Under the Microscope", by the Micro Business Consultative Group, and The Casey Home Based Business Study, provided the following statistics:
- Sole proprietorship’s/partnerships make up 38% of Micro businesses.
- Home-based businesses make up 62% of all small business
- Micro businesses contributed $20,193 million to industry gross product in 1994-95 which was proportionally greater than firms employing between 5-9, or 20-49, or 100-199.
- 63% of firms employing 1-2 aspired to growth
- 75% of firms employing 3-4 aspired to growth
- 33% of Micro business operators are women, with 47% operating from a home base
- Micro business act as a seed-bed for entrepreneurial talent eg. Apple Computers and Microsoft started as Micro businesses
- Australia lacks a strong entrepreneurial culture, and this acts as a major barrier to economic growth and development
Micro Business Weaknesses
- Micro businesses spend nearly every dollar on producing the product and rarely have anything left for such things as marketing, advertising, promotion, etc.
- Micro businesses need to research eg. the market, finances, competitors, etc.
- Micro businesses need to spend more time working on the business - they spend too much of their time working in the business
- Micro businesses often do not use technology because they do not have the Capital, Expertise, or Time to learn how to use it.
Common Mistakes Made
- Most Micro businesses want to offer a service or a product that they enjoy making/doing. Unfortunately, many do not realise that they need to research the market and find out what the potential customer wants that their skills will enable them to produce.
- Many businesses commence with very little planning/instead of having a business plan that incorporates such essentials as Marketing and Financials, which is essential for a successful business. For such a plan to be a ‘living’ and useful document it must be accompanied by a time line (a critical path) and must be ‘actioned’ constantly.
- Most ‘start up’ businesses are unrealistic in their expectations. Goals to be achieved should err on the conservative side to avoid disappointment.
- In manufacturing, Micropreneurs seldom cost the product accurately. Many do not understand how they can be very busy yet still not have any money in the bank.
- In the Service industry (especially in the Trades) Micropreneurs allocate a wage to themselves but often forget to add a profit margin. In the event of illness, or holidays, then costings do not allow someone else to take over the workload and still leave a margin for the Micropreneurs.
- Records are often not kept up to date causing difficulties with such things as accounts and stock (this will cause massive numbers of Micro Businesses to collapse with the introduction of GST).
- Research is seldom undertaken, particularly in the area of Marketing and Competition.
- Often, customer service is not fully developed using such tools as a database. Much effort is put into gaining new customers, very little into satisfying and therefore keeping existing customers.
- Micropreneurs seldom take a set wage from their business. However they do pay the bills and personal requirements that a wage would normally cover.