Training for microenterprise creation: the case of the center for women and enterprise.

• Author: Dumas, Colette
• Position: Report

Abstract

Women-owned firms are one of the hottest growing sectors in the American economy. Many of these businesses are home-based microenterprises. To support these new entrepreneurs, there are now training programs designed to help women entrepreneurs. The author conducted a follow-up study of 16 women who participated in such a training program at the Center For Women and Enterprise in Boston. Participants were interviewed to determine whether they were progressing toward the goal of becoming economically self-sufficient through entrepreneurship. An analysis of the results of these interviews reveals the program to be very successful thus far in enabling participants to start their own businesses and to acquire the skills necessary to do so. Implications for future practice and research are addressed as well.

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Women and Entrepreneurship

In this decade, women entrepreneurs have launched new ventures faster than any other segment of our society. Women-owned firms are being created at twice the rate of all businesses. According to the National Foundation of Women Business Owners (NFWBO) women own 8 million firms, a 78% increase since 1987. Women-owned businesses comprise about one-third of all U.S. companies and generate $2.3 trillion annually. These businesses employ 18.5 million people or 27% of all U.S. employees (NFWBO, 1997). By a ratio of 2 to 1, women entrepreneurs are taking on more workers than is the average employer in nearly every major industry. In doing so, women-owned businesses have become one of the hottest growth sectors in the American economy (Mallory, 1996). Minority women-owned businesses have grown at triple the rate of overall business growth. According to NFWBO, the number of minority women-owned firms increased by 153%, employment grew by 276%, and revenues rose by 318% between 1987 and 1996 (NFWBO, 1997). During this nine-year period, the number of Hispanic women-owned businesses more than tripled (206%), the number of Asian/American Indian/Alaska Native women-owned firms more than doubled (138%), and the number of Black women-owned firms more than doubled (135%). Women are clearly embracing entrepreneurship as a viable career alternative.

Micro-enterprises and Home-Based Businesses

Women-owned businesses range from full corporations to micro-enterprises. Micro-enterprises are small, often home-based businesses that can mean self-sufficiency to those traditionally left out of the economic mainstream. Women own a total of 3.5 million of the 15 million home-based businesses in the United States, providing 14 million full- and part-time jobs. Most home-based businesses owned by women, (52% of home-based businesses), are service-related, ranging from computer consulting to desktop publishing to public relations. Only about 17% of women's home-based businesses produce goods.

Numbers of home businesses owned by women are increasing, possibly due to corporate downsizing (Stern, 1996). In addition, technology now makes it possible to open a business anywhere. Computers, faxes, modems, on-line information services, and the ability to conduct business by telephone, enable entrepreneurs to link up with clients from home and, in many cases, to open their businesses with an initial investment of less than $10,000 (NFWBO, 1997). Contrary to popular belief, women do not choose to create a home-based business for the purpose of taking care of their children. Of the 1,435 women surveyed in the NFWBO study (1997), only 32 percent had children at home. Instead, women cite an assortment of reasons for starting microenterprises at home, such as: corporate downsizing, the glass ceiling, the fact that many corporations are not family friendly, the desire for greater flexibility, and refusing to work 60 or 70 hours a week.

In addition to these challenges, women often encounter the following barriers to business ownership: lack of socialization to entrepreneurship in the home, school, and society; exclusion from traditional business networks; lack of access to capital and information; discriminatory attitudes of lenders; gender stereotypes and expectations, such as the attitude that women entrepreneurs are amateurs or hobbyists; socialized ambivalence about competition and profit and lack of self-confidence (Gould and Parzen, 1990). Low-income women, seeking self-sufficiency through business ownership, run up against barriers in the system. For example, the following make it extremely difficult to start a business: restrictions on the amount that recipients of government aid can save; the hours they can work; the amount of health care and other assistance they receive, as well as regulations that do not distinguish between personal and business assets. These barriers make it very hard for low-income women to become self-supporting (Goldoftas, 1992; Gould, 1992). These women need support through programs and training to start their microenterprises.

Microenterprise Programs

To help these women entrepreneurs, the field of microenterprise assistance has grown from only a few programs to more than three hundred in 46 states and the District of Columbia (Economic Opportunities Program, 1997). Twenty three percent of these programs were started between 1995 and 1997. These include programs which provide loans and/or technical assistance and training directly to microentrepreneurs, as well as access to regional networks, trade associations, research organizations, and credit services. Together, these programs have served over 200,000 people and loaned over $44 million (Clark, Huston and Meister, 1994). The majority of the programs target low-income individuals as part of their mission. Ninety-two percent of the practitioner programs either target low-income individuals, or have assisted them directly. Three quarters of the programs have a client base made up of 50% women or more. Twelve of the programs (5%) serve only women.

The philosophy of microenterprise assistance in the U.S. and the developing world has been described as recognizing "the fundamental ability of people to apply their individual talents, creativity and hard work to better their lives" (Edgcomb, Klein, and Clark, 1996: p. 1). Microenterprise programs are designed to support these individual efforts in business development and start-up by providing business assistance and small amounts of credit. Such programs often function from a philosophy of affirmation and transformation by starting with the skills, abilities, interests and experience that the client currently possesses. In this context, the term "credit" takes on its root meaning "credo" "to believe," in appreciation for the potential of participants (Edgcomb, Klein, and Clark, 1996).

The results of a research study called the Self-Employment Learning Project (Economic Opportunities Program, 1997; Edgcomb, Klein, and Clark, 1996) revealed the following about microenterprise training programs:

--There is considerable demand for non-credit training and technical assistance services--almost all programs have large numbers of non-borrowing clients;

--Appropriate methods for assessing the effectiveness of microenterprise training and technical assistance are being developed and refined over time as the importance of this component of program methodology becomes clear;

--Microenterprise programs effectively reach large numbers of female clients--78% of the clients are women ;

--Microentrepreneurs are relatively well-educated--83% are high school graduates, 58% have some education past highschool, 19% have 4-year college degrees, 8% have graduate degrees;

--Large numbers of microentrepreneurs patch together more than one earnings source to make ends meet;

--Microenterprise programs serve a diverse group of clients, including large numbers of low-income people;

--A typical microenterprise is a sole proprietorship that has been in operation for two or more years, with sales of less than $12,000 per year. Most microbusinesses are in wholesale or retail trade or services, with some manufacturing and construction firms;

--Over time, microbusinesses show high survival rates (78%), gains in net worth, and employment generation. Profitability over time fluctuates;

--The majority of poor microentrepreneurs show income gains over time (55%), and 25% had income gains large enough to move out of poverty.

Results of qualitative interviews with clients from the Self-Employment Learning Project (Economic Opportunities Program, 1997) also reveal that participants see such programs as helping them fulfill their earning potential, as well as their human potential as productive and active members of families and communities. Clients defined their success in self-employment not only in financial terms, but also for the sense of pride, control over their own lives, and the self-realization self-employment gave them.

In a study of microenterprise in the U.S., Edgcomb, Klein and Clark (1996) identified three principal program strategies defined by the service delivery package offered by microenterprise programs: credit-led individual loan programs, group lending programs, and training-led strategies. Nine programs in their study utilize training-led strategies, which are pertinent to the case described...