• Microenterprise is being used a vehicle to move approximately two million people out of poverty in the United States alone. Since its inception, microenterprise development programs around the world have helped over 3 million low-income people change their lives by creating economic opportunities.
• A recent 5 year study conducted by the Aspen Institute tracked 405 microenterpreneurs in the U.S. The results show that the majority of them are women, minorities and that a large percentage of them (83%) had a high school diploma.
• Microenterprise in the U.S. has been proven to reduce or eliminate reliance on government assistance by 61% for people living in poverty (with household incomes less than 150 percent of federal poverty guidelines).
• The cost of health insurance is still prohibitive for many entrepreneurs, who are doing without it.
•More than 20 million people have taken advantage of the 7,000 microcredit opportunities that exist worldwide. Source: UNCTAD: The Virtual Microfinance Market
•70% of the 1.2 billion people who live on less than $1.00 a day are women. When microfinance programs are directed at women, the impact on the living standards of the entire family is increased because women invest their income in the well-being of the family
Poverty and Microbusiness Ownership
• In the U.S., the business survival rate for low-income microentrepreneurs who have been in business at least five years is 49% -- which is comparable to the survival rate of other businesses with similar characteristics, whose owners were not poor.
• 53% of the poor entrepreneurs tracked in a recent study by the Aspen Institute received enough income from their microbusiness that they moved out of poverty. For most households, this meant that their annual income nearly doubled and respresents an enormous economic impact
•Microenterprise development programs now operate in Asia, Africa and Latin America, reaching over 80 million clients, 55 million of whom were among the poorest (living on less than $1.00 per day) when they took their first loan
Microenterprise Programs that Help the Poor
• There are more than 500 programs in the U.S. to help low-income people who want to own their own business. More than 90 percent of these programs offer training or technical assistance that has been proven to have a direct impact on the long-term success of the business.
• Most of the more than 540,000 clients served by these programs have been low-income people.
• 62 percent of the clients were minorities, and 78 percent were women.
• The repayment rates of the programs that make loans to low-income entrepreneurs are consistent with the repayment rates of other economic development loan programs that made loans to nonpoor clients. Source: Small Steps Toward Big Dreams/1994 Update, published by and available through the Charles Stewart Mott Foundation
Why Training and Technical Assistance Is Vital:
• According to a study conducted by the Aspen Institute, 49 percent of the low-income people who received technical assistance or training started, stabilized and/or expanded their businesses within 18 months after receiving the training
• Low-income entrepreneurs were most successful when they had access to: training, technical assistance, mentoring, and personal support systems. Other factors for success included having prior experience in the business industry, and knowing other business owners
•Understanding basic financial skills makes a difference. The most successful microentrepreneurs are those who understand -- and use -- key financial skills such as cash flow projections, break-even analysis and pricing, and budgeting.
• Microentrepreneurs who received training (using adult learning techniques) were 20 percent more likely to complete the training, 32 percent more likely to write a business plan and 5 percent more likely to open their business within eight months of finishing the training, according to a study completed by the Aspen Institute.
• The most successful low-income entrepreneurs received additional on-going technical assistance during the critical start-up and growth stages of business development. Having continual opportunities to learn new information and gain new skills resulted in a 30 percent increase in business revenues.
