As I mentioned in my last blog, microbusinesses are evolving in response to the influx of Gen Z. In this one, let us discuss some unique characteristics and also challenges.

Earlier, small businesses operated with limited data and mostly offline feedback. Decisions were slow, changes rare. Gen Z, however, thrives on analytics and quick iterations.

For example, if a social media campaign isn’t performing, they tweak the copy. If a product is not selling, they run a poll on Instagram or Facebook stories to understand why. If customer reviews are mixed, they respond in DMs with personalised attention. This habit of testing and learning — native to digital platforms — is now entering the microbusiness world through the influence of Gen Z.

However, we need to understand that this approach may be limited to digitally savvy consumers only. Ignoring the rest can sometimes give very skewed insights.

Another defining trait of Gen Z is their DIY approach to learning. They don’t wait for a course or certificate. They watch tutorials on YouTube, follow entrepreneur-influencers on Instagram, and learn finance from memes and reels. This democratized knowledge is enabling first-generation micro-entrepreneurs to learn everything from digital marketing and inventory management to logo design and payment integration — without ever stepping into a classroom.

This also means that those who run microbusinesses today (often Gen Z’s parents or elders) are learning from them in reverse. A teenager teaching his mother how to create a QR code for UPI payments is no longer a rare sight.

But we need to be cautious of the influencers or content creators from whom we are learning. Everything said on digital platforms may not reflect the ground truth. A content creator may not be a subject matter expert, but rather a skilled orator or actor who appears on camera to garner views and engagement for their own monetisation. We need to verify the credibility of the content by cross-checking it against at least a few credible sources.

However, the Gen Z microbusiness equation isn’t without its hurdles. Many ideas still lack funding, business discipline, or market alignment. Additionally, while they may excel at digital marketing, Gen Z entrepreneurs often struggle with regulatory compliance, taxation, and long-term business planning. Their focus on rapid growth and trends can sometimes lead to poor financial management or burnout.

Another key challenge is credibility — customers and suppliers may hesitate to trust very young business owners. Additionally, infrastructure gaps such as patchy internet, inadequate storage, and poor delivery logistics in rural India can slow down operations.

The ‘instant gratification’ mindset can clash with the patience entrepreneurship demands. And while digital helps scale, it also exposes small businesses to intense competition and customer scrutiny.

Balancing innovation with real-world demands remains a tough act. Without mentorship and ecosystem support, many Gen Z-led microbusinesses risk fading out before they can scale or stabilise.

But these are not insurmountable problems. With mentorship, support networks, and government- or CSR-driven skilling programs, the Gen Z wave can be harnessed as a powerful force for inclusive economic growth.