Microbusiness manifesto

Posted on | December 11, 2009 | 8 Comments

Photo by cyberuly (via Flickr).

I’ve been doing this for a very long time.

This past September, I celebrated my 10th anniversary of publishing The MicroEnterprise Journal (in all its incarnations). My archives here at The Journal Blog go back almost five years, back to February 2005.

I bet you wouldn’t think there’d be that much to say about microbusinesses, huh?

After all, they’re so small …

Are you wondering where I’m going with this?

You see, every now and then, when I start getting tired and feeling like nobody cares and I’m wasting my time, I stop to remind myself of what I’m doing and why I’m doing it. If I don’t do that, I get stale and I’m in danger of burnout.

But, over the years, I have accumulated a lot of knowledge about microbusinesses and I am always learning new things about them.

As I learn those new things, I will teach them to you. I hope you will find them as exciting as I do.

So, here’s the thing: the whole microbusiness thing is kind of amazing.

They are almost all the businesses in the country, more than nine in ten of them.

But nobody wants to talk about them.

There’s a couple of reasons for that. One is that there are still a lot of people who don’t realize just how small most U.S. firms are. And they feel justified in pretending microbusinesses aren’t there because microbusinesses don’t make all that much money.

See, policy makers and economists and folks like that are in the habit of looking at the economy in terms of numbers, BIG numbers — like the multi-trillion dollar U.S. gross domestic product.

When you write about microbusinesses, on the other hand, it kind of forces you to look at the economy not in terms of very big numbers but in terms of what real people are doing.

Microbusinesses are different from other kinds of businesses because there is more to them than just making money. Similarly, microbuisnesses are interesting because their existence has meaning beyond their contribution to GDP.

So, what does the existence of microbusinesses mean?

Well, for starters, it means that the economy has changed. People still defend the “you gotta grow” theory on the grounds that “one person can only do so much.” That’s true, too, but technology has increased the amount that one person can do by quite a lot.

What that means, probably, is that businesses can reach scale (defined as the size at which you realize reduced production costs per unit produced) at a much smaller size in a service-based economy in which productivity has been significantly increased by information technology and digitalization of product.

As a result, firms start out as microbusinesses (which has always been the case) but more and more of them are staying microbusinesses.

Which brings us rather neatly to the other meaning behind the microbusinesses. That is, microbusinesses represent human scale in business.

Microbusinesses are not designed by their owners to be money-making machines. Instead, they are designed to provide a (usually) modest living for their owners and employees. Everything about the firm is about people — owners, employees, clients, vendors.

Microbusiness owners are more comfortable that way. They don’t want layers and layers of organization to distance them from either their products/services or their workers or their customers. They don’t want the organization to get so large that the people stop being people and start being numbers or other abstract concepts.

Microbusinesses are often run by corporate refugees, people who don’t want to have to compartmentalize their lives, people who once worked in an environment in which they were expected to put everything about their lives on hold during “office hours” and to cheerfully become a cog in the machine.

Microbusiness owners tend to prefer a more holistic way of living, in which their work is not separated from their life because, in reality, life is part of work and work is part of life.

Microbusiness owners tend to be low on resources. So, they are among those in the economy who almost literally make something out of nothing, continually innovating — even the ones who don’t have any patents to show for it. They are the original value-creators.

And the numbers really are fascinating to me, too. That is, the way the population of microbusinesses is growing while larger small businesses are shrinking as a portion of the overall business population. Those non-micro small businesses aren’t going away, it’s just that the micros aren’t growing beyond micro size.

And, contrary to the way many people act, microbusinesses do have a place and they serve a purpose in the U.S. economy.

What that purpose is still has not really been thoroughly researched, so the answer to that question is emerging in a slow and fuzzy fashion. Some believe that, in certain kinds of recessions (specifically, asset-based recessions), microbusiness employers can help to cushion the shock of the downturn for the labor market.

In fact, because microbusinesses are often counter-cyclical in their behaviors, they may balance what is happening in the economy and make it more stable and less likely to be volatile.

We know that microbusinesses, “Main Street” businesses, are as important to community development as they are to economic development.

It would appear that nonemployer businesses are becoming increasingly important, although almost nobody is doing research on them. They seem to come in two types: the independent contractors who have created jobs for themselves by offering various sorts of services, and the businesses that are more likely to be offering product (including digital product) rather than service.

Almost all U.S. businesses are nonemployers and the fact that they come in those two types has all sorts of implications for both the small business universe and the labor market.

You could say that microbusinesses are an indicator of the ways in which the 21st century economy is taking shape. I prefer to say that microbusinesses are a catalyst in the way the 21st century economy is taking shape.

Eventually, somebody is going to notice that. Well, truth to tell, some are already noticing.

But eventually, the implications will be too vivid to ignore. They will inspire action.

And when that happens, I will still be here. Still learning. Still teaching.

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Have a great weekend, folks!

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