The rise of the micro-business

Micro-businesses takes many forms, but collectively provide income and economic impact to our region

By Chris Wendel

The term micro-business is used freely these days as a catch-all phrase without much regard to its true meaning. The traditional definition of a micro-business is a company that employs less than five people, with annual sales of less than $35,000. Some might dismiss businesses that fall into this category as minor players in our region’s economic development, dismissing them as mere hobby or cottage businesses. The updated version of a micro-business model takes on various forms and collectively these smaller operations provide additional income to families, new employment, and are the feeder system for future fast growth companies.

Today people want to run a business on a small scale that can be worked in to their lifestyle, and started without a huge financial investment. The advent of the internet has been the catalyst to a significant wave of small business development that delivers both job growth and economic development in northern Michigan. One can look at Haggerty Insurance in Traverse City as the classic example of the company literally started in a basement office that now employs over 500 people.

The new micro-businesses models can involve less financial risk than its traditional counterpart, and can be started or exited without a lot of fanfare. The time to assess if the micro-business model can sustain itself and succeed can be determined quickly, sometimes in a matter of months. This movement takes on many forms that at a second glance may sound familiar to many of us:

The part-time business: Changes in our national and regional economies have created micro-businesses that people start out of necessity. This could be any type of part-time work that supplements other employment, people who start a company to fall back on if they believe they may lose their job, or early retirees who well positioned (both financially and with experience) to start a small company.

The virtual workplace: A micro-business can also be a company that is started on a very small scale using skills and resources that an entrepreneur has accumulated along the way.  Think of a graphic designer who wants to be home with their kids and now has some time to work virtually from a computer, supplying professional work to a company located elsewhere. The flexibility of the virtual workplace allows people to live where they want to and not tied so tightly to commuting to a larger urban center, thus breathing new life into villages and schools suffering from population loss.

Small farm operations: Farms producing specialty crops (hops, heirloom tomatoes, specialty wine grapes) and value-added food products are growing in number throughout Northwest Michigan. This also includes small-scale C.S.A.’s (community supported agriculture), farms that sell shares to members prior to the growing season. It could be the woman who grows rhubarb in her garden and sells it to the farm stand up the road to help pay for housing expenses, the family farm passed down to heirs that continues to supply income, or innovative young farmer that leases land from an established farmer to grow an new commodity.

Value added food producers: This sector includes agricultural commodities that are transformed into products that command a much higher price once transformed into a product such as wine, beer, preserves, salsas, dessert toppings, or dried fruit. The variety of these products will continue to grow and fit particular market demands. Classified as manufacturing, value-added food production will serve going forwards as substitute of sorts for traditional industrial manufacturing.

Web-based commerce: Products can be produced locally can now be shipped to retail or wholesale customers throughout the world. Niche market communities can be developed through online marketing venues that circumvent capital intensive advertising methods. This area also provides potential growth for existing retailers who want sell to their traditional summer customers throughout the year, writers, publishers, and artists.

The rise of the micro-business economy plays into the hand of our region’s economic development and attracts people who choose to live here because of the area’s lifestyle and natural attributes. The region’s population is projected to grow significantly in the 30-39 (14%) and 60-69 (34%) age groups between now and 2020, and with the growth will come a wide variety of entrepreneurial companies starting on a small scale. Many in these population sectors will provide jobs not just from their own self-employment, but also from the employees they hire as these new companies grow and expand.

Chris Wendel is the Regional Director for the Michigan Small Business & Technology Development Center (MI-SBTDC). The MI-SBTDC offers business counseling, entrepreneurial education, and technical assistance for businesses in the Grand Traverse Region and throughout the State of Michigan.

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One Response to The rise of the micro-business

  1. Dylan says:

    I really enjoy taking traditionally non-interent business models like those mentioned here (small operation, part-time business, niche product) and making them available to a national or international market that cannot be reached from a Traverse City or Petoskey corner store.

    Marketing products or cottage services online opens up your seasonal offerings to a year round market where the customer’s local climate (warm and sunny or cold and snowy) fits your products better than it does here in Michigan. You may sell winter gear and box it up in April but in mountain states it’s still snowing until early June. If you have yachting gear, bathing suits and sun dresses, start winter marketing campaigns to people on the southern coasts, Caribbean or Central America.

    Rural entrepreneurial activity is the best way to add wealth to Northern Michigan. Dollars raised by sales to southern Michigan, other states or countries is new wealth in our community and funds economic growth altruistically. Buying and selling goods and services locally is great but it doesn’t improve our situation, instead it just shuffles the same cash from person to person until one person relocates and then that share is gone.

    We need new money coming into northern Michigan from other areas and business models like those listed in this article can do that.

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