The microbusiness boom
Simon Best, CEO of BaseKit, on the boom in online microbusinesses
All over the world, as the technological revolution continues, we’re seeing growth in individuals starting businesses online in a way that we’ve not witnessed before.
Five or ten years ago, a start-up looking to market and sell goods for retail faced an expensive outlay, often prohibitively so, to get themselves up and running.
Now, accelerated by the pandemic and facilitated by the growth of social media, people around the globe armed with an idea and determination are finding a new way to support their livelihoods and make their dreams become a reality.
In the UK, the microbusiness sector was the only one which saw growth in 2020, with a net gain of 5,300 in the 12 months leading up to the start of 2021 according to BEIS.
What we’re seeing now is a new era of the democratisation of digital business, an opportunity for everyone to sell online. It really is a revolution and it’s exciting to see.
Specific changes in the retail sector
In particular, what we’re seeing in retail is a levelling out of the playing field with local and global online commerce. If a company is selling locally – that’s usually how things start – then the step up to selling nationally or internationally is becoming increasingly easy.
So, where microbusinesses have traditionally had a local focus, many are now reaching more distant customers with the help of simple digital tools and simpler marketing platforms like social media and email.
And with classes, events, appointments and the like also moving online there are even more types of businesses that can now reach those distant customers.
We’re also seeing a rapid transition from brick and mortar retail to online selling. Things have been moving that way for a while, but particularly during the pandemic we saw businesses transition literally overnight to serving online customers.
This is supported by a growing number of options for delivery ranging from instant local drop-off services (like Deliveroo and UberEats) to fast international delivery and dropshipping, removing the need for storage or stock.
An opportunity to support
Micro, small and medium-sized enterprises (SMEs) make up around nine in ten businesses across the globe according to the World Bank. In some countries, the distribution is weighted even more heavily to the smaller end of the scale. In the UK, for example, there are well over 5 million micro-businesses which constitute 95% of the total number of companies across the country.
Many of these, especially new start-ups, will be run by people who have an idea or a great product but who in a lot of cases lack the technical or marketing expertise to make it a success.
With an estimated 230 million online shoppers in the US alone last year, there’s a massive opportunity for retailers to tap into.
A different order of priorities
Maybe 10 years ago, new retail companies would have set up a website, tried to drive traffic to it, and then look to sell that way. While SEO is still an essential tool for many companies, we’re increasingly seeing that businesses – particularly retailers selling direct to consumers – are generating interest via social media first and using websites more as ecommerce portals or booking facilities.
Not everyone has a product to sell, of course. Many people are now selling their time, knowledge, or education. Indeed with the global market for e-learning predicted to double in size from 200 billion USD in 2019 to 400 billion USD in 2026, there is an opportunity there to support entrepreneurs in selling their hard-gained expertise.
What all these start-ups need is a range of really intuitive tools to help them trade online. For micro-entrepreneurs with limited technical know-how, the UX needs to shine through.
The importance of user experience
A consistent user experience is vital to ensure micro-business owners find it simple to do business online. The technical aspects of website builders, ecommerce facilities and booking systems shouldn’t be highly complex. What is difficult is creating super-simple, effortless tools where the end user doesn’t need manual or technical support to reach their desired objectives. And creating APIs which work well across different service providers is something SAAS businesses should be looking to work together on.
We’ve talked previously about open ecosystems, whereby several partners can work together to create a common user experience with standardised APIs which work across multiple applications, allowing them to talk to each other. That’s a revolutionary concept but one which we feel is the key to maximising this opportunity – for partners and, of course, the micro-business owners who they support around the world.
Helping minimise the failure rate of microbusinesses
There are around 400 million small businesses around the world and if you consider that 70% of small companies fail within 10 years of start-up, that’s a lot of entrepreneurial spirit which is falling through the net.
We believe that there are three main things that these businesses owners – particularly of microbusinesses – are looking for: time, control and financial independence. It therefore makes sense that the reasons behind these business failures are rooted around these factors.
And it’s certainly true that lack of cashflow, ineffective management, inflexibility, poor location or bad business planning, alongside a lack of demand from the market, are the common factors which see businesses falling by the wayside.
Assuming that the need for the product or service is there, all of the other reasons for failure that I have mentioned above can be tackled by good tech. Even geography ceases to be an issue when the penny drops that modern businesses is increasingly done in a global marketplace.
Freedom and a spirit of openness
The challenge for tech providers in this space is to capture these opportunities to support entrepreneurs in the growth of their companies. That’s one reason why collaboration with other like-minded companies is really important, as it enables cross-referral of business.
It’s not about disrupting the market, rather about creating growth in a sector which has great potential. For us, this global community of microbusiness owners will often be accessed via major companies who support large numbers of businesses with white-labelled or branded digital software to engage and empower their customers.
It may offer low return per sale, but the incredibly high volume of potential customers surely makes this an enticing prospect for the likes of hosting companies, telecoms firms, banks and other resellers.