What is behind Australia’s microbusiness boom?

Australia’s GDP is worth a staggering $1.7 trillion; and while a good proportion of that is made up of large-scale enterprises, exports, resource extraction and manufacturing, our country also has a booming small business sector. Many regular Australians run their own businesses, from retail to trades and everything in between. What’s more, the country has seen a recent boom in microbusinesses (14 per cent in four years in fact), with many emerging and filling different niches. Some of the people running these have completed an MBA online, but many budding entrepreneurs are self-starters, too, without formal qualifications. But what exactly is behind this boom? We’ll explore it in this article, so continue reading to learn more.

What is a microbusiness?

If you’ve never heard this term before, you might think of a business so small you may struggle to notice it. But microbusinesses are everywhere, and you’ve probably shopped at one before. Think about a coffee van or small cafe you grab a drink from on the way to work or that online Etsy store where you bought a gift from. Both of these are excellent examples of a microbusiness. 

A microbusiness typically differs from a small business in a few ways. Small businesses tend to have some employees - usually up to 15. Australian taxation law defines a small business as a company with an average annual turnover of less than $10 million. While a microbusiness falls under the small business category, they are typically the smallest of the small businesses. For instance, a microbusiness tends to be run by a single proprietor or has only a handful of employees. A small florist with a few staff might construe a microbusiness, or a shoe shine stand in the city run by a single person or a sole trader, handyperson or painter.

What drives this boom?

There are a few factors behind Australia’s microbusiness boom. One is that many people are driven to work for themselves when it comes to earning a living instead of taking a job with a wage or salary. Why? Well, some people want to follow their passion and turn a hobby or craft into a viable business. Others simply struggle to thrive in the corporate environment or work as a staff member for someone else’s company. Some other people have inherited family microbusinesses, such as a child whose parents have handed down a small retail store, trade business or another microbusiness. 

Another driver behind the boom is consumer behaviour, with many people preferring to shop locally rather than buy from large companies. Survey data from March 2022 revealed that over two-thirds of Australian consumers prefer to buy prefer to buy their fruit and veg at a family-owned greengrocer store or buy crafts and art from a local maker. Many people vote with their wallets and eschew the large grocery chains or giant e-commerce retailers like Amazon or Catch that continue to dominate the market. 

The COVID-19 pandemic shake-up

Funnily enough, another driving factor was the COVID-19 pandemic. Throughout 2019-21, there was a close to 40 per cent increase in business registrations. Those who lost their jobs due to the economic downturn launched their own microbusinesses or used the time spent in lockdown to create a business plan and ended up leaving their jobs to pursue a passion project. The pandemic also saw a boom in online shopping, which was a boon for micro e-commerce businesses selling goods online to Australian shoppers. 

Food vans and coffee trucks

Another excellent example of the microbusiness boom has been the advent of food vans and coffee trucks. A relatively new phenomenon emerging within the last decade, these mobile hospitality microbusinesses have revolutionised the sector. Usually run by sole traders, coffee vans have significantly lower overheads than a brick-and-mortar location, having to pay for a permit to operate in a specific location instead of paying thousands of dollars of commercial real estate rent. Operating costs are lower, too, in terms of power and staffing if it's just a sole trader with their van.

Food trucks are slightly different. They usually require a few staff to operate successfully, so they have slightly higher overheads, but they still fall under the microbusiness category. They can make a tidy profit operating at a food van pop-up location or hiring themselves out to events such as weddings, birthday parties, and high school formals. So it’s no surprise this type of microbusiness has gained particular momentum in Australia’s (unofficial) foodie capital: Melbourne. According to recent data from FoodTrader, an online government registration portal for mobile food businesses, the number of applications in Victoria has steadily increased over the past five years. 

Women and microbusiness

Another defining feature of the microbusiness boom in Australia is the role of women. The low barrier to entry to launching a microbusiness provides women, especially those who are middle-aged or have caring responsibilities, with economic opportunities that staff labour markets often do not. For instance, a woman with children to care for can work in a microbusiness during school hours, allowing time for drop-off and pick-up. 

In Australia, the amount of businesses owned by women has increased in recent years. Figure Women-owned businesses as a share of total businesses in Australia has risen from around 31 per cent in the early 2000s to over 35 per cent in 2022. This is a small but telling sign of the role women play in the microbusiness boom in this country.

To wrap it up, Australia’s microbusiness boom is like a quirky mix of entrepreneurial zest, shoppers ditching the big guys for the little guys, and the pandemic forcing us all to get creative. Think coffee vans and food trucks taking over, and more women rocking their own businesses. It’s a blend of passion projects, a touch of rebellion, and a lot of good old Aussie ingenuity, showing we love a bit of flexibility and keeping things local