There is a big difference between a Micro Business, defined as less than five employees and a Small Business, typically defined as a business with less than 500 employees.
Micro businesses face numerous challenges, capital typically being number one! I am still amazed at the number of websites that insinuate that there are “government grants” to help fund small businesses. While the SBA website has a tab for Loans & Grants, you will soon discover that the SBA programs consist of low-interest loans and venture capital. These are difficult to get and include a lot of red tape.
So, that said, let’s talk venture capital. What is it? Venture capital is a type of financing that helps fund entrepreneurs and is typically provided from high net worth individuals, sometimes referred to as Angel Investors or Venture capital firms. These investors usually require a high rate of return, board representation and more. Beware...you can’t simply pick up the phone and make an appointment with a Venture Capitalist or an Angel Investor. These investors seem to be part of an exclusive, hidden club and most likely, you will need a direct connection to even be considered for this type of funding.
Be aware that there are a number of organizations (government and private) that promote themselves as advocates for “small business” and, most have membership fees associated with them. While they are advocates for Small Businesses, they may or may not be advocates for Micro-Businesses.
It is important to recognize that starting a business is tough. You must understand that you will, most likely, be funding your own start-up, your hours will be long, and your nerves will be strained. There is a reason that statistics state that 50% of all new businesses survive five years (that means 50% fail); and only 1/3 survive for 10 years or more.
Why am I saying all of this? Because it is easy to make mistakes and yes, I made mistakes! The mistakes I made taught me valuable lessons and my hope is that this information will serve to empower you with ways to avoid some of the pitfalls.
Starting any business, particularly a micro-business, isn't a decision that should be made lightly. Be aware that there are very real risks and few guarantees.