Does Microfinance Really Work?

An August 2006 article titled "Fortune at the Bottom of the Pyramid: A Mirage" by Michigan professor of business strategy Aneel Karnani takes the field of microfinance to task for being, in the end, ineffective.

This fervor suggests that microcredit really must help the poor. And many have made grand claims to this effect, including Yunus, who said, “We will make Bangladesh free from poverty by 2030.”⁴ Somewhat less ambitiously, the State of the Microcredit Summit Campaign Report 2006 states that “microcredit is one of the most powerful tools to address global poverty.”

Yet my analysis of the macroeconomic data suggests that although microcredit yields some noneconomic benefits, it does not significantly alleviate poverty. Indeed, in some instances microcredit makes life at the bottom of the pyramid worse. Contrary to the hype about microcredit, the best way to eradicate poverty is to create jobs and to increase worker productivity.

Women's Initiative Business Trainer Nika Quirk thinks Karnani's analysis too one-sided. She comments:

Enjoyable article showing how the modern world gets stuck on singular solutions to complex issues--especially trendy solutions.

The complexity of economy-work-family-community is not honored by either a singular focus on microlending or on increased labor opportunities with large organizations. As we continue to see in the U.S., employment opportunities without accessible/affordable child care and flexible work-family policies are not a total solution for ending women’s poverty.

This work-family dilemma can also be exported to other countries as they move to a Western-style economy.

How about funding a healthy blend of labor employers, small entrepreneurs and worker collectives? Diversity is key in the health of any ecology.

For example, I think many of our clients would benefit from working as a collective in some way, perhaps forming buying clubs to enjoy economies of scale in purchasing supplies, materials, inventory; sharing the cost of services such as a bookkeeper; or sharing facilities like office or storefronts. Saving on these costs could create capacity to spend on labor to increase production. It also extends our model of working as a community.

Capitalism focused on large organizations (as it does in the U.S.) inhibits both small business and collectives (especially since they are still often viewed as socialistic).
-- Nika Quirk

Here's an overview of the debate between Karnani and his colleague, C.K. Prahalad, whose book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, called forth Karnani's disparaging response. And here are some other, varied perspectives on Karnani's piece.

Radio Annoucements Help You Reach Your Audience

Sometimes publicizing an event is an afterthought to planning the event itself. But I’ve found that publicity is equally important, especially if you don’t want to have dreams the week before where no one shows up and there are empty seats and only a handful of staff to soak up the words of your guest speaker.

Public Service Announcements (PSA) can help with getting people to your event. A PSA is no substitute for an individual phone call inviting your circle of supporters to an event, but it can help to cultivate new people and remind people to come to your celebration.

Often Bay Area businesses partner with a not-for-profit to do an event. If you are a small business owner, how many times have you donated something for a silent auction or provided food or services ... and not received visibility for doing it? Write a PSA and see if it will get picked up by a radio station…you’ll be doing yourself and the nonprofit a favor.
Getting a PSA aired can be hit or miss. Here are a few things to keep in mind so that your PSA won’t get overlooked:

1. Know who the public affairs director is at a station and address the PSA to them
2. Write 15 second and 30 second versions of your PSA and practice it out loud to make sure it falls in that time range
3. Once you send the PSA, usually 4-6 weeks before the event, follow up with the public affairs director on the phone

Last week Women's Initiative had a PSA aired on La Raza for our Fruitvale Grand Opening today. La Raza was a natural pick to pitch a PSA to because we have already done some paid advertising with them and they are going to come out to the grand opening and help us celebrate with the La Raza van.
LISTEN NOW

Sharing Green Secrets with Competitors

By: Karuna Jaggar

While I'm on the subject of the Business Alliance for Local Living Economies (BALLE) Conference ...

I was inspired by many of the business owners I met at the BALLE conference, but two in particular stood out for their lesson in the ways that sharing and openness with the competition actually benefit the business.

Judy Wicks, of Philadelphia's White Dog Café developed an entirely organic, local, cruelty-free menu for her restaurant and bar.

Judy defines her mission in four parts: serving our customers, serving our community, serving the earth, and serving each other. Click here for more information on her vision.

Don Shaffer, of San Francisco's Comet Skateboards introduced new environmentally-friendly adhesives and other materials into his line of skateboards.

The website states, "We are working with companies and universities worldwide to assist in developing "Green" BIO BASED epoxies, reinforcements, and coatings for the future." Click here for a rundown of the elements of Comet's manufacturing process, and a list of links to companies they work with and organizations they support.

Both might easily have decided that this was part of their niche, their unique appeal. Instead, both decided to go out and educate other business owners, to share their ‘secrets’ and sources with their competition. Not only did this mean that there is more of a good thing, but it meant that rather than losing market share---as traditional business theory might expect---they were in fact rallying other business owners to help them grow the market!

"Local Living Economies" and Our "Green" Graduates

By: Karuna Jaggar

I was very energized to participate in the 5^th Annual Business Alliance for Local Living Economies (BALLE) Conference last week. BALLE’s vision is to build a sustainable global economy which consists of Local Living Economies, which create long-term prosperity and economic empowerment. The three pillars of this model are

• local business ownership
• economic justice
• environmental stewardship.

The parallels with our work are obvious. At Women’s Initiative we use business ownership as a tool in building economic independence, and in turn social and political empowerment. While environmentally--and socially--responsible businesses have not historically been an integral part of our training model, in fact we find that they are very much part of our clients’ visions.

Clients come to us because they are not thriving in the wage labor market. They also come because they don’t like how traditional business is done and want to do business according to their values. As women who have struggled on the margins of the economy, their values include paying a living wage and creating quality, family-friendly jobs.

Their values also include environmental stewardship, and a majority of clients report making environmentally-friendly choices in their businesses. That is: they go above and beyond simple recycling to make conscious decisions about product and materials sourcing, waste and packaging reduction, pollution, and energy consumption.

Despite clients’ willingness to spend more money on materials, products, etc. in order to uphold their environmental values, they often represent these as individual, personal choices, not as business decisions.

I do think that there can be something overwhelming about identifying one’s business as “green” in some undistinguished way, without acknowledging that the business owner has made headway in some areas and not necessarily in others. But I think we can do more to help clients identify the ways their businesses are already environmentally responsible and think about developing this niche in addition to stretching to become even “greener.”

Meet Julie Castro-Abrams

My name is Julie Castro Abrams. I am the CEO of Women's Initiative for Self Employment. I have worked in social justice and as an agent for change for 20 years. When I found Women's Initiative nearly 6 years ago, I felt like it was the convergence of everything I believed in, and I have felt even more inspired every day.
Women's Initiative is the most successful poverty alleviation strategy around. Across the globe, every major effort to impact health and economics is focused on women because there is a clear correlation to children's health and education. Women are more likely to be committed to every extra dollar going to feed and support their children. Women are also more likely to live in poverty. Working mothers are in fact the largest population using food banks and community kitchens.

Yes, that's right. They are working and doing everything we want them to do and they can't make ends meet. Minimum wage cannot meet the financial needs of a family, definitely not in the Bay Area. While it can take months or even longer to get up and running with a business, the long term financial gains for women are tremendous and far out pace working for someone else. Women build assets in addition to their income growth ... meaning they will be able to find long term financial health.
Owning a business can be a powerful option for women who are experiencing challenges such as a disability, family care responsibilities or even women recovering from domestic violence. You can set your own hours and be your own boss. I owned my own business when I had my first child for just this reason. And it worked really well for a few years ... except I didn't have the Women's Initiative training and didn't set it up correctly. Oh what I would give to have known then what I know now.

Julie Castro Abrams, CEO poses with Muhammad Yunus, 2005 Nobel Peace Prize winner, and Karen August (Women's Initiative business trainer) at the 2007 AEO conference in Kansas City.

I had the opportunity to meet Nobel Peace Prize winner Mohammad Yunus twice this year. He has inspired and perhaps even changed me each time. He is such a strategic and big thinker who is completely committed to ending poverty. He wants to see poverty in a museum, and therefore knows we must think and act BIG. We need to change the way business is done.

Yunus expresses that perhaps the model of business has been set up incorrectly… it only focuses on profits. In reality, we are so much more as human beings than just profit. He is championing a new stock market where the dividends are social impact. You can invest your money and the return is ending poverty in a region, curing a sickness. This is powerful thinking and I hope it inspires you as it has inspired me.
I love the community found at Women's Initiative. Everyone goes the extra mile. People work and live with integrity. It is an honor to be part of it. I hope you find something that brings you in as well.

Putting Coupons to Work for Your Business

Coupons may seem like a risky endeavor for an entrepreneur but there are great benefits to be considered and certain approaches that will make your promotions more successful. Here are a few things to think about when deciding if coupons will work for you:

1 - Have a clear goal for your promotion. What type of product are you creating the coupon for? Is it something that clients would consider buying if there were no promotion? You want the promotion to entice them to come back. What does the product do for your business? You don’t want to discount a high end product to the point where you would be losing money but at the same time you want the product to reflect the overall quality of your business. Be careful about what you are offering. While “FREE” always catches people’s attention, it might not be the attention you want. The word ‘free’ sometimes seems too good to be true and makes people wonder if there is a hidden incentive or specific reason why the product is free (i.e. is there something wrong with the product). It also can deflect attention because people get caught up in getting that specific product because it is free that they don’t take the time to look around to see what else you have to offer. In most cases, it is better to do a conditional or discount promotion rather than offering something simply for free.

2 - Seek out partnership opportunities. Networking has endless opportunities and that includes the realm of promotions. Doing a joint promotion with businesses nearby or with similar, complimentary products can be a business booster for everyone involved. For example: If your business rents out equipment for events you might consider doing a joint promotion with a local venue or an event planner. If they rent your equipment they get a discount on renting the venue and vise-versa. Contests such as a business card drop can encourage networking. Have a bowl for people to drop their business card into and once a month draw one for a small free gift. People might not remember dropping their card but following up with a small gift will no doubt refresh their memory. Networking is a great way to promote each other’s businesses and also establishes strong business relationships.

3 - Make it easy. You don’t have to have a fancy system in place to track coupons. Consider adding tracking codes to coupons to find out where people are getting the coupons and taking advantage of the offer. It is a way to analyze your marketing strategies and evaluate which ones are working better than others. For example: If you notice more coupons coming in from the internet rather than the local paper it might be possible that more people track your business through the internet. Knowing this is helpful in deciding where and how much energy and resources to put into each area of marketing. Knowing where to expose yourself is just as useful as knowing how to promote your business. Adding tracking codes can be as easy as putting a different phone number than your regular business line or adding a letter or color for each location to keep track of where the coupons are coming from.

4 - Have fun with your promotions. Coupons can help bring in business during slow times. If your business can take advantage of any holiday or local event, by all means give it a try. With Valentine’s Day and St. Patrick’s Day coming up be creative in your promotion and have fun with it.
If you still have concerns about whether coupons will work for your business, look around at other similar, local businesses and see how their promotions are working for them. Take advantage and learn from other business successes and failures. And remember to always put an expiration date, otherwise you will be honoring the coupon for the life of your business. Best of luck with your creative coupon strategies!

Information for this column was compiled from entrepreneur.com

- April Pagan

Living Your Brand

Successfully branding your business means that when people think of you, an image of strength and stability comes to mind. Big businesses often focus a lot of energy on branding, but as a business owner you can do things to enhance your brand for a bigger payoff. For those of you who didn’t attend the Build Your Brand SuccessLink event, here are some steps and key points to building your brand:

1 - Your vision, your values, your mission: think about the heart of your business. Why did you start in the first place, what was the market missing that you have to offer? What is your single most important attribute, what does your product mean to you and your customers? Answering these questions will help you stay focused on the quality characteristics of your business that distinguish it from the rest.

2 - Craft your logo carefully. What your logo looks like says a lot about your business so think about what you want it to say about your company. When drawing out your design keep it simple, direct and consistent. Your logo is placed on anything from a business card to a website to ads so it should be clean and uncomplicated, easily resized and look good in black and white or color. Colors play a huge role in memory recall, therefore choose a color that will set you apart yet works with your industry and image.

3 - Consistency is key. You want all of your promotion materials to be coordinated and professional so keep it consistent. You don’t want any confusion because of differences in colors, shapes or fonts so be sure to stay consistent once you have made a final decision.

4 - Don’t promise what you can’t deliver. Having a base of clients helps to ensure success, but name recognition alone is not enough. Your ability and efforts to establish rapport with customers will result in long term relationships. These are where those coveted referrals come from. The best way to do build these relationships is to live your brand at all times. Spend time now to hone in on what you can deliver and what you stand for to help grow your relationships.

A few do’s and don’ts to remember as you plan for your brand:

• Focus your message
• Consider creative options: invest in your identity, but don’t rely solely on advertising
• Do check out logos of your competitors in the industry and note what you like and don’t like
• Talk to customers and friends: seek opinions about what your identity is conveying
• Don’t expect the work to speak for itself. Even the most ingenious ideas must be sold
• Don’t go too extreme with your look, or too simple
• Places to find good examples of strong identities (from Nicole Bianchi’s seminar on Do’s and Don’ts of Branding):
• Find Great People International - simple and effective corporate ID at www.fgp.com
  Tazo Teas - richness in design and brand ID at www.tazo.com

Branding distinguishes your business (think Nike and McDonalds) and makes a powerful impact before you even walk in the door for a meeting, so be creative and have fun with it. Best of luck!

Information for this column was compiled from entrepreneur.com and allbusiness.com
-April Pagan

Welcome!

Hello, World! Welcome to our blog!

If you’re reading this—and you are—chances are that you do not come from a low-income community. Digital access, and the time to read and write blogs, tends to belong to those with higher incomes, or a stake in the new economy of the internet. Often, the digital divide separates us even more from the poorest of our neighbors. From our wired, new-millenium perspective, the cycles of poverty we see at home and abroad may seem like impossible problems.

But they’re not.

For the past thirty years, a growing number of organizations worldwide have been experimenting with microlending and microenterprise, a strategy of addressing poverty by making small loans and business training available to the very poor to help them start their own businesses. These businesses grow to the size needed to make the entrepreneur—and her family—self-sufficient, thus plucking them out of the cycle of poverty.

Recent interest in microenterprise may have made this strategy seem like a magic bullet. It’s not magic, but it is effective. And Women’s Initiative is one of the organizations at the forefront of the international microenterprise movement.

We focus on training low-income San Francisco Bay-Area women to run their own businesses. Then we give them many types of support, including loans, training, mentoring and access to new clients. On average, graduates of our training program increase their annual income by $10,000 within 18 months of leaving our program.

So … what does this program look like from the inside? What do the women who take our training think? How does it affect them? Does it really work for them?

And what does this look like from the inside of our organization? How do we come up with our ideas? What do we do when our ideas don’t work? What do we do when they do work, but nobody will listen to us? What do we talk about amongst ourselves?

We’ve created this blog to answer questions and fill in the blanks. You’ll hear from some of our program graduates, who are out on the front lines of economic independence, taking the courageous step of controlling their own futures. They’ll tell you what it’s really like trying to make it in an economic landscape designed to take advantage of the poor.

You’ll also hear from leaders in our organization, people who are experts in business training for low-income women, public policy, and international microenterprise. They’ll tell you how we’re doing, what we know, what we don’t know, and what we’re finding out.

Please talk back in the comments section of each post. We can’t wait to hear from you! Welcome to our blog!

Posted by clairelight on

Meet Quela Mikell

 This Blog is directed to anyone thinking of starting a business with little or no resources.

Hi my name is Quela Mikell and I am the owner of a retail business called Royal Jewelz Designs. I came up with this name because I love what I do, designing clothes. And when a client works with me I have gift of making that person feel they are my only client.
It is my goal from the beginning to create a garment so special, it will be my client's favorite piece of clothing. Also being skilled at what I do helps a lot too. So that's my motvation for doing what I do.

Now I have several questions for you Mr. or Ms. blog reader. What are you skilled at? What do you love to do? What is your dream business?

This is my story in short form. I always dreamed of having a business of my own, however did not believe little ole inadequate me, who always lived under the poverty line, could do it. Who would listen to me? Or take me serious?

Nonetheless I made a promise to myself to start and not give up midstream just because things get rough. Starting with no money--yes I said NO Money--and very little business skills, now here 5 years later I am at 80%--only 20% away from reaching my dream.

You might think is that all you done in all that time ? I'm proud to say yes because remember this is the short version. Sorry, you may have to wait for the book to get the whole story.
In the meantime some thoughts to ponder over. Thinking about what kind of business you should go in is like dating. Use your imagination, see your self doing the business. Then see what it is you like about it. DO you love what you're doing ? Are you passionate about the choice you have made? What can YOU do to make the business stand out from others that are doing the same business? And above all are you skilled and or knowledgeable about your business? Being resourceful does help however, you can and will learn to be if you intend to stay in business. That's just part of the relationship.

If you have these major components in place then jump in, get married, because it is just that strong of a commitment. Give it your all because there is nothing like having your own. Living well on the income you made for yourself and your family, contributing to the community and God love 'em paying taxes!

That's all for now. Talk to you soon.

Regards,

Quela

Posted by clairelight 

Meet Karuna Jaggar

Hi. I’m Karuna Jaggar and I lead and coordinate the research and public policy activities at Women’s Initiative.

I have been working in the microenterprise field for a dozen years, mostly internationally. I came to the field fresh out of college because of my belief that business ownership and financial independence is a powerful tool in the social and political empowerment of women. I feel very lucky to be part of Women’s Initiative, which I sincerely believe is doing some of the most innovative and high-quality work around.
I’m one of those people who doesn’t usually take someone else’s word for anything and I generally like to come to my own conclusions after examining the facts. Having the opportunity to really dig into our extensive outcome evaluation data shows me that my commitment to microenterprise and this agency is well founded: Yes, indeed, our clients incomes go up dramatically; They gain self-confidence and they grow assets; Just as importantly they re-shape their communities based on their values and their businesses reflect their commitment to improving the lives of others.

When I am not working I am empowering the next generation of women, raising with my partner our wonderful 2 year old daughter, Rylyn.