2008 nalcab annual conference, san francisco, ca – september 4, 2008 wealth building for the...
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2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Wealth Building for the Spanish-Speaking Microentrepreneur and Self-
Employed: The Primer Paso Curriculum
Bernardo Ramirez- Hispanic Economic Development Corp, Kansas City, MO
2008 NCLR Annual Conference, San Diego, CA – July 15, 2008
Entrepreneurial Activity in US
• In 2007, .30% of the adult population (300 out of every 100,000 adults) created a new business each month
• 495,000 new businesses were created each month in 2007
• 27.8 million businesses in US
*Information provided by Kauffman Index of Entrepreneurial Activity andAssociation for Enterprise Opportunity
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise Definition
• Five or fewer employees, often just one• Start-up costs of $35,000 or less• Generally do not meet the credit and/or
collateral requirements to access conventional financial services
• Owner often represents an under-served population
* Information provided by the Association for Enterprise Opportunity
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Small Business Definition
• Depends on industry• Average of less than 500 employees or $12
million in average annual receipts• Range of employees (max) 100 – 1500• Range of receipts (max) $6 million – $28.5
million
* Source: U.S. Small Business Administration
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise Development
Microenterprise development is an income generating strategy that helps poor, low- to moderate-income, and
other disadvantaged or under-served individuals start or expand
microenterprises.
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise Client Profile
• 78% women• 62% racial or ethnic minorities• 60% low- to moderate-income• 30% below poverty line, 11% TANF
recipients• 83% HS grads, 58% some post HS
* Information compiled by Aspen Institute and AEO
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise as Part of the Economy
• 24.5 million microenterprises
• 87% of all businesses
• 31.3 million employees
• 18% of all private employment (nearly 1 in 5)
* Information compiled by AEO using data from Census Bureau and Department of Commerce
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Why Microenterprise?
• Changes in the safety net that seek to require and/or support work
• The need for working parents – particularly working women – to balance their working and caregiving roles
• Growth in immigration
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Why Microenterprise?
• The move to downsize major corporations by outsourcing jobs and relying more heavily on contingent and temporary workers
• The loss of well-paying, secure “middle class” jobs
• The aging of the population
* Aspen Institute
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise Works!
• Increases in median household income – 91% in a five-year study– 78% in two-year study of welfare recipients
• 36% moved out of poverty after two years, 53% after five years
• Receipt of TANF dollars declined from 94% at intake to 25% after 18 to 24 months
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Microenterprise Works!
• 57% of microenterprises still in business five years after start of longitudinal study
• Average net worth grew 34%• Homeownership increased from 14% to 22%• 37% reported increased savings one year
after program services
* Compiled by AEO using studies by Aspen Institute and Ms. Foundation
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Common Characteristics of the Microentrepreneur• Start part-time
• Income-patching
• Industry experience
• Little or no business experience• Business survival rates compare
favorably to other small businesses
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Trends in Latino-owned Businesses• The entrepreneurial activity rate among
Latinos increased from .33% in 2006 to .40% in 2007
• Largest increase for any major ethnic or racial group
• Immigrant entrepreneurial activity rate increased from .37% in 2006 to .46% in 2007
• Native-born rate constant at .27%
*Information provided by Kauffman Index of Entrepreneurial Activity
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Common Characteristics of the Latino Microentrepreneur
• Independent
• Motivated by others
• Energetic (spirit)
• Resourceful
• Observant (attentive)
• Family
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Hispanic Economic Development Corporation (HEDC)
• The only CDC in Missouri engaged in the creation of economic development initiatives for the Latino community.
• Developed a continuum of services that are not only unique but also vital to the Greater Kansas City’s Latino community.
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Hispanic Economic Development Corporation - Programs
• Business Development (current and aspiring entrepreneurs)– Business Planning– Finance/Accounting – Licensing/Permits – Location/Real Estate – Marketing– Preparation for loan packaging – MBE/WBE Certification assistance– Primer Paso FastTrac
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Hispanic Economic Development Corporation - Programs
• Real Estate Development and Reinvestment Program– assisting neighborhoods by developing
blighted and/or underdeveloped properties– attracting public and private resources that
will encourage real estate development
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Primer Paso FastTrac
• 36-hour, 12-week business training course • Designed to introduce business concepts to
aspiring and existing entrepreneurs who have little or no business experience
• Employs an experimental “how-to” hands on approach where students complete a feasibility plan for their business concept
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Course Overview
• Class 1: Introduction to Primer Paso FastTrac
• Class 2: Communicating the Business Concept
• Class 3: Gathering Information for Feasibility
• Class 4: Product and Service
• Class 5: Market Analysis - Industry and Competition
• Class 6: Market Analysis - Market Segments and Strategies
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Course Overview
• Class 7: Price and Profitability - Pricing and Product/Service Cost
• Class 8: Price and Profitability - Profits
• Class 9: Price and Profitability - Cash Flow
• Class 10: Plan for Further Action - Resources for Success
• Class 11: Plan for Further Action - Next Steps
• Class 12: Feasibility Plan/Graduation
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Statistics To Date
• Five courses offered (as of 2007)
• 60 participants– 33% female, 67% male– 57% KS, 43% MO
• 9 businesses started
• 15 jobs created
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Lessons Learned Facilitating Primer Paso FastTrac
• Location
• Expectations
• Student-to-instructor ratio
• Strengths of the business coach and the needs of the participants
• Reputation (guest speakers)
• Stage of business – integrating current and aspiring entrepreneurs
• Explain feasibility plan incentives
• Program fee
• Evaluations of the program
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Partnerships are Critical
• Microenterprise Development Organizations
• Community Development Corporation
• Educational Institutions
• Chambers of Commerce
• Social Service Organizations
• Media
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Partnering Tips
• Recognize that it takes time• Figure out how a collaboration would benefit
the other party – give before you get• Meet on their territory• Determine mutual allies• Have clear, consistent goals• Model from other successful collaborations• Ask for suggestions of other potential
partners
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Partnering Tips
• Emphasize the “Win-Win”• Be willing to share the praise with partners• Be willing to share results• Be willing to share resources• Be flexible• Don’t give up, be persistent
• Contracts/written agreements reduce confusion
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Funding Sources
• Philanthropic donors interested in– particular under-served populations– workforce development– unique economic development strategies– offering hand-up versus hand out resulting
in a hand shake!
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Funding Sources
• Corporate– Banks– Accounting firms– Attorneys– Local small businesses
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Funding Sources
• Federal government– SBA Microloan, WBC’s, and PRIME– CDFI (Dept. of Treasury) – Community Development Block Grants (HUD)– Job Opportunities for Low-income Individuals
(ACF, OCS)– Office of Refugee Resettlement (ACF)– Rural Development through USDA
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Funding Sources
• Regional, state, and locals governments– CDBG (entitlement and non-entitlement)– General fund revenues appropriated by
state legislatures
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Funding Sources
• Partner sources– Workforce Development Boards– SBDC’s, WBC’s, Microloan Programs (SBA)– Community Development Corporations– Community Action Agencies– Economic Development Corporations– Individual Development Account Programs
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Resources• ACCION USA
– www.accionusa.org• Association for Enterprise Opportunity
– www.microenterpriseworks.org• CFED
– www.cfed.org
• Ewing Marion Kauffman Foundation– www.kauffman.org
• FIELD through the Aspen Institute– www.fieldus.org
• First Step FastTrac– www.firststepfasttrac.org
2008 NALCAB Annual Conference, San Francisco, CA – September 4, 2008
Resources
• National Association for Latino Community Asset Builders– www.nalcab.org
• National Council of La Raza – www.nclr.org
• Small Business Administration (www.sba.gov) – Women’s Business Centers– Small Business Development Centers– Microloan Programs