Microenterprise Practices and Implications on Unemployment

Cole Keller, University of Louisville, Brown Fellows Class of 2014

Background• Summer 2011: Studied abroad in Berlin, Germany. Career

interests in both international business and the field of microfinance were developed during this time.

• Fall 2012: Interest in microfinance was intensified through a combination of academic coursework and individual research on the field, as well as through interactions with professors in the College of Business.

• Spring 2012: Explored opportunities within Louisville to advocate for financial literacy and microfinance on a smaller scale, including collaborating with the Louisville Habitat for Humanity chapter to plan budgeting workshops.

• Summer 2012: Although the project was cut short in Ghana, I was able to return to Louisville and pursue an opportunity to Volunteer with the Navigate Enterprise Center, a part of the Jewish Family and Career Services (JFCS) organization.

Project Goals

Berlin 2011

• A junior studying finance and economics in the College of Business, the motivation for this project comes from an interest in microfinance and its ability to foster both individual and economic development and instill sustainable improvement in unemployment levels.

• Intrigued by the opportunity to provide personal assistance that is business oriented, the ability to apply basic business knowledge to real-world businesses on a smaller scale was the primary goal.

• The opportunity to utilize critical thinking applications to provide consultation for existing businesses was seen as a challenge that would require applying knowledge attained from previous coursework.

Ghana 2012

Enrichment Project Synopsis

Criteria for Microenterprises: 1. Sole Proprietorship, partnership, or family business with

five or fewer employees.2. Small enough to benefit from loans of less than $25,0003. Too small to access commercial banking services.

At its core, microfinance is about empowering low-income people, through access to small-scale financial products and business services, to improve their financial condition. Microenterprise requires assets in the form of human capital

(education, experience, and entrepreneurship), financial capital (loans or savings), and social capital (networks and personal support). By definition, people of modest means have fewer of these assets, and will need support in order to succeed.

Microenterprise Statistics: • If one in three microenterprises in the United States hired just one

employee, the U.S. economy would reach full employment. • 60% of microenterprises come from minority ethic or racial groups.• 43% have household incomes below poverty levels.

Tasks and Responsibilities: 1. Reviewed submitted business plans and financial statements of

existing companies attempting to acquire federal grant money, identifying strengths, weaknesses, and opportunities for the businesses.

2. Sat in on meetings between the grant committee and the grant applicants, where the applicants presented their business plans and fielded questions. Provided insight and opinion when appropriate. A total of $25,000 was awarded to the business plans that I reviewed.

3. Tutored a newly relocated Iranian immigrant that was looking to construct a business plan for his business of selling his artwork. Helped devise a plan from scratch, encompassing all relevant research and information necessary to apply for funding.

4. Assisted in a campaign to gauge how many clients had business directed to them through the JFCS website.

5. Participated in a marketing initiative to provide visual media of the microenterprise owners (those previously associated with the Navigate Enterprise Center) working. Pictures will be posted to the website in order to provide client information and background.

Project Conclusions Beginning the project, the primary goal was to achieve quantifiable results through volunteering in the area of microfinance/financial literacy. A plethora of conclusions arose from such a hands-on experience, but the most important are as follows:• The ability to apply concepts discussed in various courses

was invigorating. The applicability of theory and utilization of critical thinking skills became very real, as unique solutions were sought out to situations that were anything but typical.

• Working to strengthen struggling businesses through individual consultation and education was difficult, especially when those individuals face a foreign set of problems that hinder business thought processes.

• Microenterprise as a whole is a relatively new field, where opportunity exists to make a significant difference on a large scale. Microenterprise creates jobs, builds neighborhoods, and transforms lives and development of this industry has the potential to make a substantial positive impact on the economy and produce a high return on investment.

Future PlansThe experience gained from working with the Navigate Enterprise Center was invaluable, and correspondence with them will continue throughout the upcoming academic year with plans in progress to volunteer on a part-time basis when available. Next summer’s plans are still subject to change, but the goal is to pursue the field of microfinance with an focus on microenterprise. Many opportunities exist both in microenterprise research and application, and the ideal scenario would include a collaboration of both. An annual microenterprise conference is held in Washington D.C., so establishing plans to attend the conference are the next step. Also, a goal is to establish interest in microenterprise within the student body at UofL in order to maximize the collective potential of our campus. Through established connections with JFCS, it is viable to set up a long-term, mutually beneficial relationship between UofL and the Navigate Enterprise Center.