How your community can support microenterprise growth

By definition, microenterprises are businesses that require less than $35,000 in capitalization to start and have fewer than ten employees. Most are focused on the owner’s personal expertise—consulting, design, lawn care—and may not require a physical location. Microenterprises—both online and brick and mortar— represent about 77% of overall businesses in the U.S., and in today’s economic environment, more and more Americans are opting into the online microbusiness boom.

The rise of microbusinesses

Nearly 30% of small businesses closed during the height of the pandemic and workers quit their jobs at historic rates. Many people pivoted to self-employment out of necessity, but others wanted to solve a problem, be their own boss, improve their quality of life, build generational wealth, or explore new passions and interests. This shift in business culture is reflected in the data, with 2.8 million more online microbusinesses documented in 2020 than in 2019, and about 90% of them employing fewer than 10 employees.

Microbusiness ownership grew fastest among groups hit hardest by the economic fallout from the pandemic. Black owners account for 26% of all new microbusinesses, up from 15% before the pandemic, while the number of Latino-owned businesses continue to increase at their same pre-pandemic pace. Similarly, women-owned businesses surged to 57% of new microbusiness starts, up from 48%. Microbusinesses also became a more popular option for those without a college degree, rising from 36% to 44%. Many of these microbusiness founders say their enterprise is currently a supplemental source of income, and the majority of them would like their microbusiness to become a full-time job.

So how do we support entrepreneurs in successfully starting and operating these small enterprises? And how do we make sure these efforts include support for the often-underserved entrepreneurs that are making valuable contributions to our communities and economy? Here are a few ways you can help.

Tailored support

Resources for small businesses tend to cluster around the types of entrepreneurs they serve. Microenterprises require different types of support than innovation-led companies and second stage companies. Understanding the barriers to growth and the unique needs of this type of entrepreneur, as well as what resources already exist in your community to support them, is integral to developing an economic growth strategy that includes these businesses.

To provide tailored support to local microbusinesses, look for resource organizations that can provide:

  • Equitable access to affordable capital and funding, especially microloans

  • Coaching, mentoring and training from experts and other microbusiness owners who can share their experiences with challenges, opportunities and success

  • Universal broadband and easily accessible online services

  • Events and networking opportunities with fellow microenterprise owners

  • Practical assistance and education on a wide variety of business operations, including:

    • Marketing
    • Legal issues
    • Real estate
    • Accounting
    • Financing and cash flow advice

In the microenterprise space, there is a segment of support organizations that help those in poverty build wealth through microenterprise programs. Referrals may come from social services agencies, and this group may need additional technical assistance due to lack of basic math skills, writing skills, etc.

Local SBA offices, SCORE Chapters and libraries are excellent sources of practical assistance and education. Accessible funding can often be found at microfinance organizations and community development financial institutions. As a result of federal funding, many communities are offering grants to small businesses owners and creating programs that support them. Mapping the resources in your community is a great place to start, and once you have an understanding of what’s available, you can begin to identify gaps in support.

Connected networks

A strong, visible network of support is the first step in providing microbusiness owners access to the assistance they require.

One great example is the work of Washington State Microenterprise Association (WSMA). Recognizing that Washington’s smallest businesses make some of the biggest impact on the state economy, the WSMA team built a platform to connect entrepreneurs with Microenterprise Development Organizations that assist local businesses with five or fewer employees. After helping hundreds of microenterprise owners innovate and grow, WSMA realized they could do more to support Washington state residents on their entrepreneurial journeys. They expanded their network to include statewide partners that serve entrepreneurs at every stage of businesses and created Evergreen BizLink. While this new resource hub caters to all entrepreneurs, both WSMA and Evergreen BizLink continue to nurture the smallest businesses across the state of Washington, ensuring the needs of microenterprise owners are acknowledged and met.

Another organization spearheading microbusiness success is the MicroEnterprise Collaborative of Inland Southern California. Over 90% of all businesses in the region are small businesses, accounting for over 23% of all employment. “Development of microbusinesses is just as vital to a healthy economy and job creation as attracting large organizations to your area. However, microbusiness owners need access to the information, expertise, and capital to grow and succeed,” stresses Catherine Marshall, former executive director and CEO of the MicroEnterprise Collaborative, and California Association for Microenterprise Opportunity (CAMEO).

If you have questions about how to provide better support to the microbusinesses in your region, we’d love to connect with you. Email us at [email protected] to start a conversation.