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A micro-enterprise (or microenterprise) is generally defined as a small business employing nine people or fewer, and having a balance sheet or turnover less than a certain amount (e.g. euro2 million or Philippine peso 3 million). The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit the term microenterprise is often used. Similarly, when referring to a small, usually legal business that is not financed by microcredit, the term microbusiness (or micro-business) is often used. Internationally, most microenterprises are family businesses employing one or two persons. Most microenterprise owners are primarily interested in earning a living to support themselves and their families. They only grow the business when something in their lives changes and they need to generate a larger income.
Micro-enterprise programs, therefore, are built around the philosophy that the unique ideas and skills of entrepreneurs and would-be entrepreneurs should be provided business assistance and small amounts of credit to support the development or start-up of a small business, primarily through the U.S. Small Business Administration. Most organizations in the field also focus their services on those microentrepreneurs who, as defined by federal government standards, are low-to-moderate income. By definition, most of these entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce their ability to access traditional credit and other services.
In developing countries, microenterprises constitute the vast majority of the small business sector as a result of the relative lack of formal sector jobs available for the poor. Microenterprises in developing countries, then, tend to be the most frequent form/size of business. As explained by Aneel Karnani:
Most microcredit clients are not microentrepreneurs by choice. They would gladly take a factory job at reasonable wages if it were available. We should not romanticize the idea of the "poor as entrepreneurs". The International Labour Organization (ILO) uses a more appropriate term for these people: "own-account workers".
Paper to Pearls is another example of a micro-enterprise program, which is based in the United States, but works with women in northern Uganda.
IFAD IFAD Vietnam country programme supports operations in 11 poor provinces. Between 2002 and 2010 around 1,000 saving and credit groups (SCGs) were formed, with over 17,000 members; these SCGs increased their access to microcredit for taking up small-scale farm activities.RIDP, PCR and Validation, 2010. In the Dominican Republic, a nationwide survey conducted in 1992 revealed that 330,000 micro and small enterprises created employment for 26 percent of the economically active population.Cabal,Miguel. 1992. Microempresasy pequenas empresase n la Repdblica Dominicana: Resultadados de una encuesta nacional. Santo Domingo: Fondomicro. Furthermore, a significant portion of this is represented by women (38 percent).
It is argued that the households of women are targeted more directly by microenterprise support services because women tend to devote more of their income to their households, than do men.Grasmuck, Sherri, and Rosario Espinal. 2000. Market Success or Female Autonomy? Income, Ideology, and Empowerment among Microentrepreneurs in the Dominican Republic. Gender and Society 14 (2):231–255. Therefore, it is recommended that microenterprise training programs be less gender-neutral and should be diversified to address the central challenges of women's businesses.Grasmuck, Sherri, and Rosario Espinal. 2000. Market Success or Female Autonomy? Income, Ideology, and Empowerment among Microentrepreneurs in the Dominican Republic. Gender and Society, 14(2):231–255.
The NEIS (New Enterprise Initiative Scheme) is a government program in Australia, which assists unemployed people to start their own businesses. Although it is not specifically for micro-businesses, many if not most businesses started in this program are micro-businesses (in the senses of having limited capital, and only one person involved in the business).
In the United Kingdom, the Office for National Statistics (ONS) aims to ensure that micro-enterprises are not repeatedly asked to participate in surveys which can be time-consuming for business owners. The "Osmotherly Guarantee", established in 1997, states that as a rule, businesses asked to take part in an ONS survey will be notified of the period during which they will be included, which should generally not exceeding 15 months, and they will be excluded from other statutory surveys during that period, and from further requirements to contribute to other statutory ONS postal surveys for a further three year period.European Commission, Report from the Expert Group on “Models to Reduce the Disproportionate Regulatory burden on SMEs”, May 2007, pp. 25-26
Ofgem, the UK's energy rRegulation, makes specific provision for protecting the rights of microbusinesses in relation to gas and electricity suppliers.Ofgem, Microbusiness customers to get better energy deals, published on 1 June 2021, accessed on 18 March 2025
In May 2013 David Young, Baron Young of Graham published a report for the government on supporting micro-business growth in the UK, " Growing your business: a report on growing micro businesses".
Microloans may be used for general business expenses such as, working capital and tangible assets, such as inventory, furniture, and equipment. They cannot be used to pay the microbusiness owner, to purchase real-estate, pay existing debt, or for non-qualifying not-for-profit entities.
During the 1990s, the microenterprise field grew rapidly in the United States. Starting with a small number of non-profit organizations testing developing country models, the field now has service providers in every state, a national trade association (AEO), a growing number of state-level associations and financing intermediaries, and several research and policy organizations. The Aspen Institute and FIELD (Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination) has collected data on the organizations in the field since 1992. The first directory, in 1992, listed 108 organizations that identified themselves as working in the field. By 2010 this number had grown to over 800 organizations that provide direct services to entrepreneurs—either microfinancing or business development services.
Community Development Financial Institutions (CDFI's), particularly Community Development Loan Funds frequently offer loan capital for microenterprises in the United States.
Anthony Hilb, author of Make Money with a Microbusiness, and founder of microbusinessowners.com stated, "Microbusinesses have existed since people first exchanged goods and services in their communities. Today, microbusinesses can have a much larger impact; products and services can be exchanged at previously unimagined volumes, distances, and speeds. Credit here is due to advancements in technology. With the internet, apps, and other technologies available (often for free), microbusinesses will continue to explode in popularity."
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