The Case for Microfinancing in the U.S.
I just returned home from moderating a panel at the Microfinance USA 2010 conference in San Francisco. It was so energizing to see what is happening with microfinance in this country. For several years now, it has been a fashionable buzz word in international circles, but many people believed that it was “not needed” or “not the right strategy” for U.S. entrepreneurs. Well, there are several great organizations that are proving that a combination of training, mentoring and micro-loans do make a difference and several prominent people who are starting to notice. Maria Shriver was the keynote speaker at the conference which was put on by the Opportunity Fund, Kiva.org and Accion USA. The First Lady of California has personally gotten very involved in the issue. I didn’t realize, but Maria is an entrepreneur herself with a gourmet ice cream business called Lovin’ Scoopful. She is the one who convinced Kiva.org, which had developed a successful website linking donors with entrepreneurs looking for microloans around the world, to launch their service in the U.S.
While I was in San Francisco, I spent a few days with the team from the Women’s Initiative, visiting women-owned businesses in the Bay Area, that had benefitted from their training and funding. Women’s Initiative is one of the most impressive groups that I’ve seen doing work in this area. They have been around for over 20 years in the Bay Area, providing training courses, mentoring and loans to high potential low income women who want to start or expand their businesses. Their results are amazing. According to their stats:
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The training program generates a return of $30 to the local economy for every $1 invested.
The training program generates a return of $30 to the local economy for every $1 invested. •Annual household income for participants entering the business training program is just $14,000. Two years after training, it leaps to over $37,000.
Annual household income for participants entering the business training program is just $14,000. Two years after training, it leaps to over $37,000. Their graduates are creating jobs for themselves and others:
•57% of participants reported employing others or self-employment for themselves
57% of participants reported employing others or self-employment for themselves •The average Women's Initiative client business pays $16.45 an hour in wages, over double the minimum wage in California. This wage is especially impressive given that many client businesses operate in sectors such as housekeeping and food service that traditionally pay close to minimum wage.
The average Women's Initiative client business pays $16.45 an hour in wages, over double the minimum wage in California. This wage is especially impressive given that many client businesses operate in sectors such as housekeeping and food service that traditionally pay close to minimum wage. I took a walk around the Mission District and downtown Oakland to see some of their graduates. Connie Rivera opened her shop, Mixcoatl, after graduating from the Women’s Initiative business training program in 2005. She came to the U.S. 24 years ago, from Toluca Mexico with a high school education and worked her way through a series of jobs in the U.S as a babysitter, coffee shop worker, and then housekeeper for 15 years. She got married and had a daughter. In 2005, Connie went through the Women’s Initiative training program which taught her how to run a business in a formal way, how to write a business plan, where to get permits, and more. Two months after finishing the program, she opened Mixcoatl a shop selling handmade jewelry and arts & crafts from Mexico.
Over in Oakland, in a neighborhood going through a transformation, Teena Johnson opened Catered to You, a local takeout shop and catering business. Teena had been in food services for years working for high end golf clubs, but got laid off and couldn’t find another job. So, she went through the Women’s Initiative Program and started her own business. She is working 24/7, literally standing over a hot grill, doing her own marketing, buying supplies and dealing with the ups and downs of owning your own business. But, she’s doing it!
Bakesale Betty’s is a real success story. An Australian chef was trained at Chez Panisse, quit to sell her baked goods at the local flea market, realized she couldn’t make a living doing only that especially in the winter so went through the WI training program and opened a takeout shop that specializes in the most delicious fried chicken sandwich, cookies and strawberry shortcake. With no place to sit and lines around the block, she brought out old ironing boards for people to set up on the street outside her shop to eat their food. She just opened her second location in Oakland and is on many “top lists” for the best fried chicken sandwich in San Francisco.
I know I’m focusing on food—there are so many other businesses being supported by the Women’s Initiative and other local groups, but these stood out on my quick tour (and you know how much I love to eat!). So, I’ll tell you about one more-- Kika’s Treats. They are another success story that came out of the Women’s Initiative and a wonderful shared kitchen called “La Cocina” which is an incubator designed to help entrepreneurs get a start on their food businesses without worrying about overhead. They provide commercial kitchen space and technical assistance to low-income entrepreneurs who are launching or growing their food businesses. Kika’s Treat’s chocolate covered graham cracker stands out—it’s available online and now at Dean and De Luca’s in NY.
There was a lot of discussion at the conference about what the right formula is for U.S. microlending: What should the combination be of savings and loans?; What about the very high interest rates that have gotten a lot of attention lately?; How much “technical assistance” do entrepreneurs need?; What size loans are needed here?
This is going to be an on-going discussion, but the good news is that people are talking and entrepreneurs who would not otherwise have access to capital or the confidence to start their business are benefitting from it.
Launchpad is heard live every Monday at 12:40 pm. on WOR News Talk Radio 710 AM.
"Serial entrepreneur" Liz Hamburg and her mother Joan Hamburg bring you inspiring stories from small business owners and entrepreneurs. Launchpad also offers expert advice on how to finance your business, how to market it, how to deal with employees, health insurance and lots of other important topics. Winner 2009 New York SBA Small Business Journalist of the Year.
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Liz Hamburg
Liz Hamburg is a “serial entrepreneur” with extensive experience as an entrepreneur, angel investor and mentor to entrepreneurs and small businesses. She is the founder and President of Upstart Ventures, where she has consulted to and incubated many start-ups including her latest venture, ApplyWise, an online college admissions counseling company.
She is the co-host on WOR radio (WOR 710AM) of “New York Uncovered” and “Launchpad”. She also blogs about small business for the Huffington Post. She is New York’s SBA Small Business Journalist of the Year.
Liz was one of the founding managers and Director of the Board of Vimpel Communications (NYSE:VIP), the leading cellular company in Russia. She has launched new products for Reuters Tokyo and Fujisankei Communications, where she worked on the first international television home shopping show and played a leading role in the introduction of Fuji’s Nintendo game software into the U.S.
Liz received an MBA from Northwestern’s Kellogg Graduate School of Management and a B.A. from Brown University. She is a Director of the Board of Safe Space www.safespacenyc.org; the President of the Advisory Board of the Brown University Entrepreneurs Program, a member of the New York advisory board of Astia (www.astia.org) and a member of the Advisory Panel of the Columbia Business School's Eugene Lang Entrepreneur Initiative Fund. She is a frequent lecturer on topics concerning entrepreneurs and women-owned businesses.
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