What small scale business can I start online is a great question if you don’t want a big business.

Big businesses come with a big burden. And I’m not talking about the money or debt involved. I’m talking about the number of humans involved. If you’ve worked in a corporation as I have, you’ll agree that the complexity of the human system is immense.

If you’ve not worked in a big corporation (lucky you), watch the Netflix documentary – American Factory – you’ll get an idea as to how culture, management, unions, safety, HR, finance, PR and every other nuance in between begins to form as a company grows.

And as much as most people set out to stay small, the word growth creeps into the conversation. This is interesting because if you’re a publically listed company – sure, this makes sense. You haven’t much choice but to grow to satisfy your shareholders.

But what if you’re not publically listed. How big is big enough. Is it satisfactory enough to stay small?

What is a small scale business?

Firstly a precise definition – a small business is:

According to the UK’s Companies Act 2006, a small company is defined as one that does not have a turnover of more than £6.5million, a balance sheet total of more than £3.26 million and does not have more than 50 employees. A medium-sized company is defined as having less than 250 employees and a turnover of under £12.9 million.

This size of business, even though it’s classified as small for most, will be overwhelming. Sure, £6.5mill top-end turnover sounds great, but 50 employees. Ummm! Maybe not.

So secondly, let’s look at an even smaller business, which is called a micro business. The common definition is:

• The number of employees in a micro business must be ten employees or fewer
• The annual turnover of a micro business is under €2million

This is closer to the reality of what people imagine when they think – small business.

Finally, any smaller than a micro business, and we’re now falling out of common definitions. For example, a – lifestyle business, or a solo-entrepreneurial business, consulting and freelancing. All are just as valid as a personal goal.

These businesses typically will have you as the core of the business and a few additional human resources. They probably won’t be fully-fledged employees. Instead, they will be independent contractors. The annual turnover you can expect will be under £1million.

Now you have the context to the different sizes of businesses when we think of – small business. It’s worthwhile checking into which one aligns with your goals.

Your goals

It’s important to understand your goals better rather than get sucked in by a big revenue number. Mainly because revenue doesn’t equal profit.

Secondly, your goal should be orientated around why you want to start the business.

For example, is it to:

• Create a secondary income stream
• Replace your current income
• Solve a problem a small group of people have
• Solve your own problem and, in the process, turn it into a business

By clarifying what you’re setting out to achieve, you will better understand – what small scale business can I start online?

What small scale business can I start online?

Now you understand what size business you’ll actually be creating and why you want to create it.

Plus wanting to avoid having 50 employees.

This leads us to the core question at hand – what small scale business to start online?

Any business, whether online or offline, exists to solve a person problem. Another way to describe this is – you must bring value to the market place.

If we take this thinking and apply it to online business and apply a few staff parameters, we can narrow it down.

We won’t focus on creating physical products or products that require large amounts of budget to fulfil, for example, car parts or a movie production studio.

Instead, we’ll focus on what we can create once that is scaleable and has a large enough demand.

We’ll narrow our focus here because, by default, if you have to produce something once, it doesn’t require the heavy human resource ongoing. Occasionally it will require heavy human resource upfront.

And scalability means that your costs, operations, logistics, and fulfilment don’t increase for every additional item you sell.

Large enough demand means you can build a business online that produces enough revenue to be viable. Small enough, so it’s real, but not big enough that you’re classified as a small business. (Avoiding employees at all cost).

Example: Digital Product

For example, you could create and sell a comprehensive educational video course on how to write the perfect blog article for Google quickly to pick it up and rank it (when you release it, let me know I’ll be your first customer).

In the example above, we’ve got:

• a video course (create once)
• that can be purchased 100’s of times and consumed digitally (scaleable)
• and helps people write better blog posts (large enough demand).

Note, however, my demand is very much illustrative. Yes, we know many people love blogging, but we’d need to complete stage one of our BATON framework to identify if a true (data-driven) market exists. That’s, however, for another time.

For now, focus on starting a business that is:

• Create a product once which you can use again and again
• It is scalable through digital distribution
• Has a large enough demand

Want to learn more about creating digital products? Read another post here.