What is Micro Enterprise ?

A micro enterprise is a small business which sells goods and/or services to a local area or a local market. It employs less than 10 people generally and is geographically restricted. Typically a micro enterprise starts with some form of funding known as micro credit or micro finance.

Micro enterprises are usually a trademark of a developing country and economy, like India’s. There is a dearth of jobs in the formal sector and micro enterprises aim to fill in the gap. They help the economy by not only creating jobs but also lowering production costs, increasing purchasing power and providing convenience.

In fact, the government encourages micro enterprises, especially in low-income areas. It helps the business and economy grow. And such enterprises also show promise of sustainable development. They help fill a necessary niche in developing economies.

For example, the local tailor shop in your area may be called a micro enterprise. He may take a small loan (micro credit) to set up his shop and buy materials. He or she employees a few workers and assistants. And they provide their goods and services in a limited area, i.e. they do not have a wide distribution network.

Objectives of Micro Enterprise

  • Micro enterprises aim to create large-scale employment in the economy, separate from the formal sector. And they can achieve this target with very limited finances and investment.
  • Another objective is to spread industries and trade in an economically backward area. This helps in the development of the overall economy.
  • The objective is to bring the backward areas into the plan for national development. So they aim to promote regional development.
  • Micro enterprises also aim to improve the mobilization of the abundance of natural resources in our country.
  • Also to improve the living conditions of all the citizens of the country, irrespective of where they live and work.

Three broad categories of economic activities under Micro Enterprise


The poor may be involved in agricultural or non-agricultural activities. Agricultural activities include farming, cattle rearing, poultry rearing and fisheries. Non-agricultural production can include a lot many activities ranging from food processing to producing different handicrafts and household items like pots, mats, cloth, etc.


It includes shop keeping, tiny business, and selling of specific items like vegetables, fish, etc.


This includes barbers, florists, cobblers, rickshaws, boats, or motor vehicles used as taxis etc.

Growth in microenterprises is important because it is an important source for employment generation and growth of poor countries. Limited employment opportunities clubbed with high population in the agricultural sector and the modern manufacturing sectors leaves a vast mass of the labor without any productive employment. Microenterprises play an important role in employing the surplus labor force productively. 

Micro-Entrepreneurs Definition

In this particular entrepreneurship type, the value of independence and autonomy is equal to that of the financial drivers. A large number of business owners prefer keeping the scale of their business low to ensure that the entire process can be managed without help from any third party.

This has given birth to micro-enterprises and hundreds of thousands of micro-entrepreneurs around the globe, especially in the developing nations of Africa and Asia.

Micro-Entrepreneurship in Developing Nations

These small businesses have had a strong impact on the quality of life of people living in developing nations. People in these countries get loans via micro-finance schemes, which have provided them with the much-needed capital for setting up businesses. These schemes have allowed families or individuals to begin businesses of their own. This kind of self-employment has started to benefit the entire community of business owners.