Is a Micro Business is Right For You?

The main purpose of a micro business is to learn while earning money. Micro owners are interested in learning everything they can about running a business. They intend to make money from their micro, but learning is paramount in their minds.

The goal is to learn and earn

Running a micro will teach you to:

• manage your time
• serve customers
• overcome shyness
• be unique
• express yourself
• gain confidence
• balance commitments
• overcome fear
• multi task
• and much more

It might be overwhelming to be stretched to learn by doing new things, but it can be exciting too as you grow in confidence and success. Here’s some encouraging advice from the Bible that the apostle Paul gave to his student, Timothy.

Don’t let anyone look down on you for being young. Instead, make your speech, behavior, love, faith, and purity an example for other believers. (I Timothy 4:12)

Do you want to learn more about whether a micro business is right for you?

Sign up for my free mini ecourse 5 Reasons Why a Micro Business is Right For You here or go to Products on the menu and click on “free mini ecourse.”

You’ll receive 5 emails, one a day for the next 5 days, explaining why a micro business might be the best way for you to earn money.

What is a Micro Business?

Micro business differ from small businesses in several ways. Their unique descriptors are:

• Simple and fast to start up and to close down if you need to.

• No employees. Only one worker, the owner.

• Sole proprietorship (only one owner, no partners).

• Little start up money needed or completely debt free.

• Usually home based.

• Low risk.  You’re not in this to lose money.

• Manageable.  You can still have a life, be in sports, youth group, and finish your homework.

• Learn a lot while earning cash.

Notice I didn’t say anything about micro profits! You can earn a lot of cash with a micro business.

Carol Topp, CPA

Questions to Ask Your Accountant

The relationship between a micro business owner and accountant is very important. As a new business owner, you have a lot to learn so seek out an accountant with the heart of a teacher. Interview several accountants looking for someone that you understand. If you leave an interview more confused than you entered, keep looking. You should leave the meeting saying, “I learned a lot.”

Grill your CPA

Ask an accountant these questions:

• Tell me about your small business clients? Are the similar in size and industry? Any teenagers for client?

• Could you share 2-3 names as referrals

• How much do you charge?

• How often an I billed?

• What is included in your services?

• What is NOT included?

• How often will we meet? Where?

• What do I need to bring to our meetings?

• Why is bookkeeping important?

• Explain the reports that I will receive from you

Test your CPA

A good accountant will explain difficult subjects in a clear, understandable way. Use a few test questions to see if your accountant communicates well.

• What is depreciation? Why can’t I deduct the cost of equipment I the year I purchased it? (you can and the accountant should explain something called a section 179 deduction)

• What are the advantages of Limited Liability Incorporation? What does limited liability mean? When should I consider forming an LLC?

Carol Topp, CPA

Picking a Micro Business Idea

Picking a micro business idea is not difficult if you follow a guided plan. Begin by brainstorming what you already know and then check those ideas with a mentor or adviser. Finally test your idea by doing a simple market survey.

Do What You Know

1. List all your former jobs, hobbies, volunteer efforts, experiences, passions, interests and classes you have taken. This is a brainstorming session, so put everything on the list. You can evaluate the merits of each item on the list in the next steps.

2. Mark those areas with potential money-making ability and a market for your knowledge.

3. Cross off those that you do not have a passion for doing. If you cannot see yourself spending 10-20 hours a week on the task, cross it off.

Mentor Check

Take you idea list to several trusted advisers or mentors who know you well. Ask at least three people who will be helpful to you. Ask for honest feedback. You might ask an accountant, a current business owner or a business instructor.

Market Check

After your brainstorming and mentor check, find a your market and ask several people their opinion on your business idea. Ask a potential customer,

• Would you buy this product or service?

• How much would you pay?

Meet a Need

Another approach: Some micro business got their start because someone saw a need and decided to fill it. Consider Dream Dinners, the first meal assembly franchise, that was started by two busy working moms that needed an alternative to take-out food and restaurant dining. Jeff Campbell, founder of Speed Cleaning, took a mundane chore and build a business teaching people how to clean a house quickly and get on with enjoying life. Your idea doesn’t have to be revolutionary; it can just be a new way to do the same old jobs like cooking and cleaning.

Carol Topp, CPA

Finance a Micro Business Without Debt

Most micro businesses do not require a lot of start up funds, making them an attractive way to launch a business. Some entrepreneurs even start micro businesses as a means to fund another, larger business. Try to start your micro business without any debt. Then all your profits can go back into the business or better yet, your pocket!

Save the money first

If you could pay back a loan, then you should be able to save up some money beforehand. Don’t believe that the business will pay for itself. Most businesses fail and frequently because the owner had too much debt.

Start small as a hobby

Aim to break even by covering your expenses at first. You will learn a lot about marketing, pricing and customer service.

Find an investor

Investors are willing to take a risk on a new business and may not expect to be repaid for a long period, if ever.Ask your parents or grandparents to be your first investors.

Sell something

If you have an asset such electronics, books, toys or games, raise cash by selling it. Or have a garage sale and advertise it as a fund raiser to launch a new business. Advertise your business and raise money at the same time.

Work a temporary job

Work retail over Christmas, deliver pizzas for a few months, mow some grass or babysit like crazy to earn some cash. You’ll practice the time management skills you’ll need when you start your micro business.

Carol Topp, CPA

20 Easy Micro Business Ideas

Micro businesses are small, one-person operations frequently started on a part time basis from home. Here are 20 business ideas that work great for a micro business.

1. Tutoring

2. Childcare

3. Music lessons

4. Editing papers

5. Web design

6. Bookkeeping

7. Event planner

8. Virtual assistant

9. Writer/Author

10. Cook/Baker

11. Cake decorating

12. Life coach

13. Blogging

14. Crafts (knitting, card making, soap, etc.)

15. Counseling

16. Photography

17. Fine arts (painting, sculpture, etc.)

18. Sewing/Dressmaker

19. Translation

20. Art lessons

Most of these businesses require some special skills or experience. Get some training, read a book and your micro business will be very successful.

Carol Topp, CPA

The Best Software for Record Keeping

Record keeping is vital to the success of a micro business, but what software can help the busy micro owner keep good records? The best system is the simplest one that business can get by with. Sometimes a simple paper system will suffice, but some micro businesses need a computer spreadsheet or software.

Start with a simple spreadsheet

Microsoft Excel or the free Open Office Calculate programs work well for keeping the records for  thousands of micro businesses. Business expenses can be categorized in columns to make tax preparation easier. Totaling income by month, by customer or by product is quickly accomplished. You can get a little more sophisticated and use multiple worksheets for each month that flow into an annual summary sheet. The spreadsheet is a powerful tool because of its simplicity and flexibility.

Personal money management software

Some micro owners find that personal money management software like Quicken can work well for record keeping. Although these programs were not designed for business use, they have may already be familiar software from your personal life, are very intuitive because they look just like a checkbook register and they will generate simple reports showing income and expenses.

But personal finance software cannot create invoices or bill customers, record payroll, record sales tax or track inventory. For those business-like functions you’ll need accounting software.

Small business accounting software

Accounting software such as Quickbooks works better that personal financial software if you send your customers forms such as invoices, receipts or statements for progress billing, or if you manage inventory. Accounting software can:

• Print checks, pay bills, track sales & expenses

• Reconcile bank accounts
• Create estimates, invoices & reports
• Track employee time and calculate payroll withholding
• Generate reports
• Download credit card & bank transactions
• Track inventory and set reorder points
• Create business plans, budgets & forecasts

Start with the simplest method you can for keeping your micro business records and graduate to more sophisticated systems as needed. A good CPA can help you set up an easy to use system whether on a spreadsheet or using software.

The important thing to do is to keep good records.

Carol Topp, CPA

How to find customers

To find customers for your micro business, you must think like them.

In the movie, Caddyshack, actor Bill Murry plays a golf greenskeeper that must deal with a pesky gopher. He tries to think like a gopher when he says,

“I got to get into this dude’s pelt and crawl around for a few days. Who’s the gopher’s ally? His friends. The harmless squirrel and the friendly rabbit.”

You should ask yourself a few questions to think like your customers:

Where do they live?

• Where do they shop?
• Where do they spent time?
• What do they read? Magazines, newspapers, websites?
• What internet sites do they visit?
• When are they home?
• Where do they go for information or products?

Here’s an example:

My daughter, Emily, wanted to start teaching piano lessons to children. She knew that she needed to reach a child’s parents, specifically the mother, with her advertising. She knew that many mothers communicated with each other on-line and thought that would be a quick, low cost way to advertise. Facebook is a great tool, but wouldn’t really work because Emily was connected with her friends there, but not mothers. Instead, she went to where the mothers chatted on-line. She put out a post on our local homeschool e-mail list. Within a few weeks she had three students and then word of mouth took over. One student’s mother told another mother and soon Emily had seven students and was turning away more interested customers.

Carol Topp, CPA

How to pick an idea

I once listened to a lecture by a Harvard MBA about the 50 things you need to consider when evaluating a business idea. 50! It made my head swim. Micro business should not need 50 evaluation criteria, but perhaps you should consider 5 things when picking an idea for a micro businesses.

1. Do you like the product or service? You need to be enthusiastic about what you are selling in order for people to buy from you. Hopefully you have used the product yourself and can tell customers how great it is from personal experience.

2. Can you make a profit? Do a simple cost-benefit analysis (find one in the Business Plan chapter in my upcoming book, Micro Business for Teens) to calculate how profitable your business could be.

3. Is there a market? You can’t sell ice to Eskimos-there’s no market, but you can sell ice in Florida! Evaluate if there is market for your product or service carefully. Try doing some surveys of potential customers or test your product on a few customers first.

4. Are start up cost low? Micro business should not need a lot of start up money. If your idea takes a lot of money just to start, it is too risky for a micro business. Think about launching another, simpler micro business first to raise the start up money for your second venture.

5. Is it manageable for you? You may have a great idea, but it might consume all your free time. Save that idea for when you have more time and launch a simpler micro now to learn the ropes.

That’s enough to determine if your idea would make a good micro business. Now get brainstorming!

Carol Topp, CPA