Women's Initiative: Where Dreams Become Thriving Businesses

The recession has hit

I believe we can finally admit that we are in an economic recession. This morning on NPR I heard that the US job market has shrunk for the fifth month in a row, bringing the unemployment rate from 5 to 5.5 percent in the month of May.

What does this mean for microentrepreneurs and small business?

It means we need you more than ever!

Microenterprise and small business represent a huge portion of our domestic economy. Recent small business statistics published online by New Ground Publications (http://newgroundpublications.com) tell us that small business makes up 39% of the GNP, is responsible for 52% of sales and employs over 54 million people in the US!

Microenterprises have been able to create jobs during economically rough times. According to AEO microenterprise statistics (http://www.microenterpriseworks.org) microentrepreneurs in California generated more than 377, 000 new jobs and almost 80% of the job growth in the state during the last recession.

Women’s Initiative graduates are providing jobs for themselves and others. Nearly half (48%) of the graduates who start a business employ another person in addition to themselves.  The question isn’t really how microentrepreneurs will make it through the recession but how microentrepreneurs will help us all get through!

Going for Broke: Microentrepreneurs and bankruptcy

In “Going for Broke” (New Yorker, April 7, 2008) James Surowieki writes about how the 2005 change in bankruptcy law made it more difficult and expensive for Americans to write off their debts. Generally, I’d say that people should be encouraged to pay off their debts but, according to Surowieki, stricter bankruptcy laws may have a negative impact on self-employment.

What do these changes in bankruptcy law mean for microentrepreneurs who typically do not qualify for credit with attractive terms and often have no health insurance? How can microentrepreneurs protect themselves and their families from A) accumulating excessive debt and B) losing their businesses and other hard earned assets to predatory lenders or because of medical debt.

There are five main ways that we must protect microentrepreneurs from the risk of bankruptcy:

• Microentrepreneurs must have access to credit with fair terms.
• Microentrepreneurs should be given the opportunity to build up their financial safety nets through less restrictive eligibility requirements for IDA programs.
• Affordable heath insurance must be made available to microentrepreneurs (fifty percent of personal bankruptcies in the US are due to medical debt).
• Microentrepreneurs must be able to adequately protect their business equity from personal bankruptcy and their personal assets from their business debt.
• Interest rates and fees must be justly regulated to discourage abuse and predatory lending.

Good News for the Unbanked

Seventeen percent of our clients do not have bank accounts two years after training. Although this is slightly better than the statewide average, where one in five people are unbanked (as high as 50% of African American and Latinos), this means our clients are most likely wasting hundreds of dollars a year on check cashing fees and money orders. Predatory check cashing business are highly concentrated in low-income areas such as in the Mission District in San Francisco where our main office is located. In addition to having to pay much more for basic banking services, studies have shown that the unbanked are less likely to save and build assets.  At Women's Initiative we found out that following training, 44% more had business than they did before the program.

But there is more good news for our unbanked clients in San Francisco. The City has partnered with local bank and credit union branches to make banking accessible to all San Franciscans. Thanks to Treasurer Cisneros, the Federal Reserve Bank of San Francisco, the non-profit EARN and the New America Foundation, nearly all bank and credit union branches in San Francisco have committed to offering low- or no-cost accounts to unbanked individuals, even those with a history of bounced checks. In addition, Mexican and Guatemalan Consular IDs are now being accepted as proof of identification.

Governor Schwarzenneger has announced that the program will soon include Oakland, Fresno, San Jose,and Los Angeles.

For more information on the program or opening an account visit: www.bankonsf.org

Gender Issues Aren't Just About Women

I found this post by Kathy Marshack on American Chronicle from our linkblog last month a little ... fluffy?

Marshack dicusses why "Women Business Owners Are Not Always Taken Seriously."

Women are not always taken seriously when it comes to running a business. I don't think that people are discriminating because of gender necessarily. It's probably more because they don't know how to relate to women business owners. Women have different values and these values are showing up in how women design their businesses.

I found the post a little hard to respond to because it had no focus in respect to issues and prescriptions. In addition, I felt a little annoyed by the lack of anything more substantial than anecdotal evidence.

It did make me wonder in a (disappointed) way, however, why the mainstream dialog on gender issues continues to focus on women. I don’t see how we can expect any real social change until we realize that gender inequality isn’t just women’s problem.

-- Elizabeth de Renzy, Women's Initiative Researcher and Data Analyst