A micro enterprise is a small company that started with a small initial investment, often only a few hundred dollars, and has 10 or fewer employees.
The Singapore economy is dominant by small medium enterprises, including micro enterprises. Collectively they make up 99.5% of all busineses in Singapore. For many entrepreneurs, micro enterprises are the springboard to other business opportunities and possible wealth.
Micro vs. Small Medium Enterprises
Micro enterprises and small medium enterprises look a lot alike. In fact, a micro enterprise is a type of small medium entrprise. Both are companies with products and services for sale. Both are profit-focused. The differences start to emerge when it comes to scalability.
Most micro enterprises operate online, often as a part-time endeavor or side hustle, whereas small medium enterprises typically operate within leased space, such as an office or storefront. For that reason, small medium enterprises often require more money to start up.
Micro enterprises cost less than $50,000 to establish (typically, much less). They also have less than $1,000,000 in revenue and/or assets, whereas small medium enterprises have the capacity to generate multiples of that amount.
And micro enterprises are frequently run by a single director, although the official cutoff is fewer than ten employees. They are often considered lifestyle businesses, or companies started to fund the lifestyle of the founder, rather than being an entity that can grow and be sold or passed down later.
Small Medium enterprise business owners often aspire to grow their ventures into larger operations, and they invest in them and allocate resources to improve the odds of that happening.
Despite small medium enterprises' potential for massive growth, it is micro enterprises that are having a moment.
Why Micro Enterprises Are Trending
Among the reasons people are starting micro enterprises:
To Generate Disposable Income
Ms Kartika Marshall has had a side hustle for most of her working life. Her current full-time job is overseeing business development, sales and memberships at Crane, a social space that hosts coworking and events. “Actually I’ve come to love side hustles over the years. My love for side hustles is kind of just doing various things that I like, and then somehow figuring out how to make money from them as well.” The 29-year-old first worked in the corporate hospitality sector for four years, while planning destination weddings to Bali on the side.
A break from working life
Take 30-year-old Mr Haiqal Haffis who works in the recruitment industry. Mr Haiqal’s side hustle as a home barber provides the chance to catch up with friends.
“It just doesn't feel like a job … Cutting hair is rewarding myself for the hard work that I did,” he explained.“I always tell people that for me when i’m cutting people’s hair … It is more like I’m catching up with my friends and I just happened to be cutting their hair.”
Pursure personal interests
Ms Amanda Pang who started off carving rubber stamps as a hobby in late 2019.
Ms Pang, who currently works in the construction industry, posted some of her hobby work on an Instagram page. Initially, she worked on designs for personal use, before going on to make them for friends.
Soon after, she began to get requests for commissioned work.
“Initially, I charged really, really cheap because I felt that it was just something that I really like to do. But after a while it was a bit more serious and I felt like I should start charging according to how long I take (carving the stamps).”
Try something new or let off steam
The negative news cycle stemming from the COVID-19 pandemic could also be motivating employees to just try something new. While adapting to new working conditions while working from home, employees may start to look for other outlets to let off steam. The flexibility of working from home, for many employees, means people have more bandwidth to engage in hobbies or take up other jobs.
For Ms Kwek Xiuyi, her polymer clay earring business clay.et.al was at its peak during the circuit breaker period.
Describing it as her “most efficient” period, the 31-year-old research associate, who works in a biology laboratory, said she could churn out a new collection of earrings every month because she was working from home.
“This is really like a hobby and then it accidentally turned into a business. Earnings-wise, it’s not as important because it all started from a hobby,” said Ms Kwek.
“Of course if people like my creations, that would be great, I’ll be very happy that people like them.”
To Increase Savings and/or Investments
Desmond Koh and his fiancée both have demanding full-time jobs, but they started a tutition practise, Tute My Maths Pte Ltd. “to build additional equity that we can call our own," he says. They do this by running the business on their off-hours, generally early evenings and weekends. “We created TMM as a micro enterprise to complement our lifestyle and raise awareness for a cause that is near and dear to us—literacy in numbers among kids."
They Need Money to Cover Living Expenses
Manu Verma, founder and sole full-time employee of Verma Solutions established his IT firm specifically “to help micro enterprises with their IT needs and business goals," he says. It is now his primary source of income. What he appreciates about running his own business is the flexibility. “If I need to take the day off, it's very easy, as my workload is small enough that it can easily be made up the following day without issue."
More adults are starting businesses to replace their salaries. Many want the freedom to be their own boss and decide when and where they work. That need for independence and freedom is the primary driver of most entrepreneurial activity.
Steps to Start
The steps involved in starting a micro enterprise mirror the process for starting any business, although the main difference is the investment made to get it up and running.
- Decide on a product or service: What need have you identified in the market that you can provide? Or what skill do you have that you can use to serve customers in need?
- Choose a name: Naming is important because it drives your online presence. Many micro enterprises are online only. Finding a domain name that matches your business name is essential.
- File official paperwork: Depending on where you practise, your new business may require a license, permit, or other filings. You may also set up an official legal entity, like a Pte Ltd, for your company. Check with your corporate regulator to learn what you need to submit to be legit.
- Set up a payment solution account: Once you've filed to establish your new business - whether that's your doing business as Pte Ltd, Sole Proprietorship, LLC or LP - take those documents to a digital payment provider and set up a business account where you can deposit your business revenue.
- Start marketing: Once you're officially in business, start spreading the word. Set up social media accounts, create a simple business website, and email friends and prospects to let them know what you can do for them.
One of the biggest advantages of a micro enterprise is you can stick with it as long as it makes sense, and shut it down if you lose interest. In the meantime, it can provide valuable supplementary income.
Ready to start your micro enterprise?