Microenterprises trace back to the late 1970s in Bangladesh, which started to provide the unprivileged a way to financially and economically sustain themselves. In 1976, Muhammad Yunus founded the Grameen Bank to provide microloans to impoverished people, most of whom were women. The fundamental principle behind the Grameen Bank is human rights, and the model is highly appreciated and followed by many nations worldwide.
Did You Know? Microenterprises are financed by a unique credit facility and have no collateral credit history or employment.
Overview On Micro Enterprise
Micro-enterprise revolves around micro or small businesses with less than 10 employees and requires a relatively low investment. Micro-enterprise contributes towards overall economic development. The same level of preparation, commitment, and labour go into micro-organizations as it does for larger enterprises. It is also essential that the training needs of these enterprises should be looked into from time to time to make them successful ventures.
Micro enterprises act as a trademark for developing countries and their economy. There is a shortage of jobs in the formal sector, and micro enterprises that aim to fill in the gap. They help the economy by not only creating jobs but also lowering production costs, increase of purchasing power and providing convenience.
Also Read: Understand Things That Are Important For Business Goals
Main Purpose Of Micro Enterprise
Micro-enterprises play a significant role in a nation's economy and are the most prevalent business model in many nations. In India, they serve as the largest employers. They are simple and affordable to start as they require very little funding and easy documentation. They open up prospects for income generation for business owners from all backgrounds.
Features Of Micro-Enterprise
- Micro-Enterprise solves the problem of unemployment, especially in areas which have low-income generations. They allow unemployed people to set up small ventures without much fuss.
- Micro Enterprise fundings helps to cut production costs by producing goods locally at a lesser cost. They boost purchasing power by generating more income and giving purchasing power to the hands of poor people from economically backward regions.
- These small organisations help in the sustainable development of a country. They help set up local businesses with limited geographical reach and cater to the area around them, limiting the excessive need for transportation and promoting the use of local resources, especially human resources.
- Micro-Enterprise helps in the economic development of rural areas and in bridging the gap between towns and villages. They prevent the migration of labour from villages.
- Microenterprises start and function as any large enterprise would. In addition to creating jobs, they offer jobs in rural areas that help prevent labour migration to cities. Micro enterprises help in more equitable distribution of the national income, thus giving purchasing power to the poor.
Also Read: All You Need To Know About Lodging a Complaint to Police in India
Types Of Micro- Enterprises
In India, Micro-enterprises make up a sizeable section of the economy. Most microenterprise owners are primarily concerned with earning a living to support themselves and their families. They only expand the business when something in their lives changes and they need to earn more money.
A few business models that are regarded as micro-enterprises in India are
- Street Vendors
- Mechanics
- Grocers
- Computer Services
- Plumbers
- Accountants
- Home-based businesses
- small entrepreneurs
- Consultants
- Freelance artists
- Independent Contractors
- Distributors
- Shoemakers
- Landscaping Services
- Beauty Salons
- Small Toys makers
- Bakeries
Also Read: Rental Agreement Format, Registration, E-Stamping, Documentation
Micro-Enterprises: Contribution In Economy
The emergence of micro-businesses and small-scale industries has been crucial to our country's economic prosperity. Our nation's per capita income has significantly increased and aided in addressing the problem of poverty.
The importance of micro-enterprise firms may be seen from the fact that they are one of India's main sources of employment. Running a micro-enterprise in a community increases the money flow within that community. It raises the area's standard of living over time. Small first-time entrepreneurs are better able to improve the next generation's education and lifestyle. They also serve as role models for the younger generation who want to start their businesses. It starts a positive cycle of community development and upliftment.
The Indian government has already taken several steps to improve the ease of business for microenterprises. It generally requires numerous government services and approvals. It is better to take loans offered by Govt banks and other government micro-lending agencies rather than moneylenders.
Conclusion
Small- and large-scale enterprises are, in some ways, two legs of a country's industrialisation process. With the rise of advanced technologies, it is becoming more difficult for micro-enterprise businesses to maintain their reputation. Small-scale enterprises have played an important role in Indian planning since its inception for economic and ideological reasons. India now has the largest and oldest programmes for developing small businesses in any developing country.
Follow Khatabook for the latest updates, new blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.
