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How We Arrived at the Seven Categories of Microbusinesses

Microbusinesses play a vital role in the world of small businesses. These businesses, typically with a single owner, fewer than 10 employees, and earning under $500,000 annually, are the backbone of many economies. However, categorizing these diverse ventures can be challenging. We have identified seven broad categories encompassing most microbusinesses to simplify this process for working professionals and entrepreneurs. Here’s how we arrived at these categories, step by step.

Step 1: Identifying Core Business Types

The first step in our process was to identify the core types of microbusinesses based on their primary functions. This involved recognizing the different ways in which these businesses serve their customers and generate revenue. We initially identified several broad types:

  1. Service-Based Businesses
  2. Product-Based Businesses
  3. Creative/Artistic Businesses
  4. Technology-Based Businesses
  5. Hospitality/Food Businesses
  6. Professional Services
  7. Trade/Skilled Services

Step 2: Grouping Similar Functions

We grouped businesses with similar functions or market focuses to streamline our categories. This helped us reduce the number of categories while ensuring each group remained meaningful and distinct. Here’s how we grouped them:

  1. Service-Based Businesses:
    • Personal Services (e.g., cleaning, personal training, pet grooming)
    • Business Services (e.g., virtual assistants, consulting, marketing services)
    • Health & Wellness Services (e.g., massage therapy, counseling)
  2. Product-Based Businesses:
    • Retail (e.g., boutiques, online stores)
    • Manufacturing/Crafting (e.g., handmade goods, small-scale production)
  3. Creative/Artistic Businesses:
    • Creative Services (e.g., graphic design, photography, video production)
    • Arts & Crafts (e.g., artists, artisans selling handmade items)
  4. Technology-Based Businesses:
    • IT Services (e.g., computer repair, tech support)
    • Software/Development (e.g., app development, web development)
  5. Hospitality/Food Businesses:
    • Food Services (e.g., small cafes, food trucks, catering)
    • Accommodation (e.g., bed and breakfasts, short-term rentals)
  6. Professional Services:
    • Legal Services (e.g., solo attorneys)
    • Financial Services (e.g., bookkeeping, tax preparation)
    • Educational Services (e.g., tutoring, online courses)
  7. Trade/Skilled Services:
    • Home Improvement (e.g., carpenters, electricians, plumbers)
    • Auto Services (e.g., small auto repair shops)
    • Landscaping (e.g., gardeners, landscapers)

Step 3: Consolidating Overlapping Categories

To further minimize the number of categories, we consolidated overlapping areas. This step ensured that each category was broad enough to cover various microbusiness types without losing specificity. Here are the consolidated categories:

  1. General Services: This category includes personal and business services that do not fall into other specific categories.
  2. Health & Wellness Services: Focused on physical and mental health support services.
  3. Retail and Crafts: Encompasses both retail stores and handmade goods.
  4. Creative and Arts Services: Covers graphic design, photography, and artistic creations.
  5. IT and Software Services: All technology-related services, from tech support to software development.
  6. Food and Accommodation Services: Includes all food-related businesses and small accommodation providers.
  7. Professional Services: Legal, financial, and educational services provided by professionals.
  8. Home and Auto Services: Skilled trades focusing on home improvement, auto repair, and landscaping.

Final Categories

After careful consideration, we concluded that eight categories were optimal for encompassing the diversity of microbusinesses. However, upon further review and feedback, we refined this to seven categories, merging “General Services” with similar categories to streamline further. Here are the final seven categories:

  1. Health & Wellness Services: Includes businesses focused on physical and mental health, such as massage therapy and counseling.
  2. Retail and Crafts: Covers retail stores and handmade goods, from boutiques to artisan products.
  3. Creative and Arts Services: Encompasses creative services like graphic design and photography, along with artistic creations.
  4. IT and Software Services: All tech-related services, including computer repair, tech support, and software development.
  5. Food and Accommodation Services: Includes food services like cafes and food trucks, as well as accommodation providers like bed and breakfasts.
  6. Professional Services: Legal, financial, and educational services provided by professionals, such as solo attorneys, bookkeepers, and tutors.
  7. Home and Auto Services: Skilled trades focusing on home improvement, auto repair, and landscaping.

Conclusion

Categorizing microbusinesses into these seven broad categories helps simplify the landscape for working professionals and entrepreneurs. By understanding where different types of businesses fit, you can better navigate the world of microbusinesses, whether you’re starting your own, looking to support local businesses, or simply trying to comprehend this vital sector of the economy.

These categories not only help in organizing the diverse range of microbusinesses but also aid in better targeting for marketing, support programs, and networking opportunities. Whether you are a business owner, a professional looking to start a side hustle, or someone interested in the dynamics of microbusinesses, these categories provide a clear and structured way to understand and engage with the microbusiness community