The Rise of Micro Companies

A cross posting from the Business Studies blog because this development is too important to miss! Here’s a term that ought to find itself into the next editions of the economics textbooks - micro-companies. Of course, it won’t (maybe in 2020) but it should. Because in the last five years there has been an increase of over 250,000 in their number in Britain.

This Telegraph article is well worth printing out and handing out to students. Lots of great insights here into how the nature of business organisation is changing in the UK (and more than likely in other developed economies too).

A micro-company is defined as a one or two-person company. Not a sole trader or partnership, but a limited company owned and operated by one or two people. Typically these micro-companies are formed to offer service-sector activities, but not exclusively so. Some key points I picked up from the article include:

- Micro-companies have fared relatively well during the recession (often based at home or shared offices; low overheads; financed through personal funds)
- Much lower chance of business failure compared with larger, better established companies
- Can these companies extend beyond their 1-2 person structure to become bigger businesses? Do the owners typically want this to happen?

The rise of the micro-company is closely linked to the phenomenon of the 5-9ers - a trend wonderfully described by Emma Jones over at Enterprise Nation. These are small businesses started by entrepreneurs at the same time as holding down the day-job.

That’s how we started tutor2u back in 2002 and its amazing how many people we meet (or contact us) doing exactly the same.

The textbooks will take years to reflect this change but I am busy amending our own study companions to include them when they are next updated!