There’s no doubt that running a micro business is a very scary and stressful endeavour. In this piece, I’m investigating the key elements of running a micro-small business that many business owners (and even small to medium enterprises) don’t think about. The most important question of all: are you feeding a starving crowd? Here’s my take on the struggles of micro businesses in 2023 and beyond.
Remember the days of early YouTube and dudes leaning on lambos?
Do you remember in the early days of YouTube when you’d open up a new video and up would pop a douchebag leaning on a Lamborghini? He’d immediately leap into, “Here I am just in my garage with my lambo in my 4m dollar house…” The rest is so obvious I haven’t committed it to memory. In short, however, he would immediately start telling you about how you can also make the same type of coin by basically just sitting around on your ass all day.
Okay mate.
Cut to early 2020 and Covid suddenly kicks in. Big business see their profits melt like our ice caps. Except for Facebook, of course. Suddenly, we’re all stuck inside and we’ve got nothing better to do than worry about toilet paper and surf social media.
This is when the trouble starts for micro business
I re-launched Dellar Media during Covid-19. From predominantly media production focused to a digital marketing agency. My Masters was complete, and I was ready to start making waves in the digital marketing space. This is also when I saw a disturbing trend emerge on social media.
The trend of ‘follow my formula, and you’ll make a million bucks just like I did’. Sound familiar?
It was a great time to see all these amazing ideas blossom into micro businesses. But too many budding business owners were putting their savings into quick-fix formulas that work only for – well – the person that’s selling the formula.
The only content I’ve ever come across that tells the truth about launching a micro business is Alex Hormozi’s book $100m Offers. Before you ask, no, this is not a sponsored post.
Are you selling to a starving crowd?
In his book, Alex Hormozi offers a marketing anecdote that’s so excellent I refer to it almost every day.
A marketing professor asked his students, “If you were going to open a hotdog stand, and you could only have one advantage over your competitors… which would it be…?
“Location! …. Quality!…. Low prices!…. Best taste!”
The students kept going until eventually they had run out of answers. They looked at each other waiting for the professor to speak. The room finally fell quiet.
The professor smiled and replied, “A starving crowd.”p.32
We saw a massive influx of micro business during Covid-19 for these reasons…
- There was a lot of people that needed a surplus income
- Facebook was ahead of the curve and created the ‘support community’ and ‘support local’ stickers on IG stories (they were making a tonne of money on FB ads at the time. Plus they see social trends happen way before anyone else does)
- There was an increase in community and local business support as the general public realised the importance of community in their lives
- Large enterprise started to struggle with supply and demand so micro business owners started coming up with their own ways to feed that supply
- We all had a lot of time on our hands
- There were way too many gurus telling people they could circumnavigate marketing tactics with pretty much zero effort and make a tonne of money while doing it
Now that Covid is mostly over and everyone is back to work, interest rates are up, the cost of living is up and we’re all worried about the looming recession.
Marketplace trends are shifting. People are worrying about their hip pocket and finding cheaper alternatives. Micro business is now trying to compete with big business stealing their ideas and undercutting them horrendously.
The focus on environmental impact and supporting local still exists but it’s drowning in tiktock trends, shortcuts and cheap alternatives.
A dire state to be in for a micro business
How do you know if you have a micro or small business that’s got legs?
I too fell into the trap of ‘follow my formula and you’ll be able to have a full-time nanny just like me’. I needed advice from a fellow digital marketing agency owner. Granted, she gave great advice – and continues to do so. However the numbers don’t lie. If you want to know whether your micro or small business has legs, let’s look at the reality of the numbers.
What are your numbers telling you?
In one of our workshops, our amazing agency guru gave us the numbers. We were all agency owners in our small group and we each had our specific area of expertise and experience level.
To make your agency viable, you need to pay yourself a CEO salary.
I know that if a small business breaks even in the first 12 months it’s got potential to survive. With the advice of my agency guru, I set to work. I paid myself a tiny salary in the first 12 months but I also paid my team and helped my clients hit some truly awesome milestones.
The second 12 months saw a healthier salary for myself and my agency grew.
I took those numbers to my financial advisor. I thought I would be able to come away with a solid game plan.
I was wrong.
He calculated our profit margin. He asked me what I wanted to pay myself as a CEO. He then calculated how much the business would need to make in order for me to pay myself that salary. The business would need to make close to a million dollars in revenue.
I almost fell over.
It’s not an insurmountable amount of money but the work it would take would burn me out.
