1. Telework Forum May 15 & 16, 2009 Conference Presenters: Kathy Gilman Washington Assistive Technology Foundation Patti Lind The Abilities Fund Welthy Soni-Myers Virginia Microenterprise Network

2. Overview of Microenterprise Organizations Kathy Gilman

3. Defining Microenterprise Range of Services –Microenterprise Development Organizations (MDOs) provide a range of services, depending upon their mission, philosophy, and funding –Core services may include Training, Technical Assistance (TA), and Credit

4. Range of Training Services Training services include personal effectiveness, economic literacy, and business training Delivery includes classes and group work, one-on-one, webinars, and self- study Services may be provided in house or through partner organizations

5. Range of TA Services Provided to individuals or groups by staff, consultants and mentors Based upon the needs of the business Can be basic or specialized Before and/or after loan disbursement

6. Credit Service Range Loan Size ranges from $500 - $35,000 Delivery Methods include peer lending, individual loans, credit builder loans, and lines of credit Underwriting requirements vary depending upon policies and loan size

7. Range of Client Demographics Entrepreneurial Demographics – startup vs. existing businesses, income level (TANF recipients, low/mod income, working poor), minorities, women, youth, people with disabilities, immigrants Geographic Regions – urban, suburban, rural, inner-city, state-wide, economically depressed areas –Community Development Financial Institutions (CDFIs) Business Sectors – child care, food sector, etc.

8. Program Operations Some MDOs are independent non- profits Some MDOs are housed within another organization that serves their demographic –Community Action Programs (CAPs), YWCA’s, and Economic Development agencies

9. Program Operations Networking and Partnerships –Networking is essential in recruiting volunteers, recruiting participants, providing comprehensive services, and obtaining the necessary funds to run the program Partnership examples

10. Program Operations MIS Systems Financial Outcomes Tracking Loan Servicing/Tracking Needs vary depending upon partnerships and services provided in house

11. Program Operations Funding Plan Public Sector funding comes from all levels of government - federal, state, county, and local. Examples include CDFI, CDBG, JOLI, SBA Private sector funding is obtained from individuals, foundations, and corporations

12. MDO supports AEO www.microenterpriseworks.org State Microenterpise Associations FIELD (Aspen Institute) www.fieldus.org

13. Key Success Factors A focus on the specific needs of the customer/community Organizational capacity, including qualified staff Commitment to entrepreneurship, excellence, efficiency, responsiveness, and assessment

14. Comparative Profiles Rural Pennsylvania Gulf Coast of Mississippi Washington Assistive Technology Foundation

15. Training & Technical Assistance Led MDOs Welthy Soni-Myers

16. Defining Training & Technical Assistance Why Training and TA? What are key differences? What kind of delivery system?

17. Why Training and Technical Assistance? Driven by demand and necessity Home based businesses often isolated Self-confidence important Basic business knowledge How to access networks and technologies

18. Key Differences: Training and Technical Assistance Training most often in group setting Deals with business basics Usually delivered prior to business start-up or in early stage of business Technical Assistance individual Deals with problems specific to individual business

19. Business Training Usually a pre-requisite to receiving a loan – not always Training varies widely in terms of hours, subject matter, ‘homework’ requirements, etc Group setting most desirable Some organizations trying distance learning

20. Core Curriculum Broadly addresses three subject areas: –Personal Effectiveness –Economic Literacy –Business Training

21. Personal Effectiveness Self-confidence Commitment Flexibility Communication skills Self-discipline Problem solving Planning and goal setting

22. Economic Literacy Extremely important! De-mystifying the ‘language of money’ Greatest pitfall if start up businesses – and big corporations as well (as recent history illustrates)

23. Business Training A written business plan often the goal of training Many curriculums available Curriculum should take into account each individual’s needs, readiness to learn, learning styles Group setting most productive

24. Business Training Basic elements very similar: –Vision and mission –Well defined product or service –Target market –Competition –Pricing strategy –Marketing strategy

25. Business Training: Financial Record Keeping Business Costs and Pricing The Profit and Loss Projections Cash Flow Projections Break-even Analysis Understanding Basic Financial Statements

26. Training Delivery Highly individualized from program to program: –In House Staff or Consultants –Partner Organizations –Local Community Colleges –Distance Learning- webinars/teleconference –Self-paced Electronic Models

27. Technical Assistance Always provided individually Usually specific issues related to specific business Delivery varies Based on needs of individual business

28. Management Trinity Principles developed by Ernesto Sirolli – Ripples From the Zambezi –Technical Skills –Marketing Skills –Financial Management Skills

29. Business Mentors MicroMentor – National program –Connects emerging entrepreneurs with volunteers in mentoring relationships –www.micromentor.org Model possible for other organizations

30. Specialized TA Access to Markets –Many Variations –Marketing Assistance –Program Becomes Sales Rep. –Program Helps Entrepreneurs Work Together to Find Markets

31. Specialized TA E-marketing and e-commerce “Guerilla” marketing techniques Designing ‘social’ cause marketing Niche business TA

32. Delivery Methods Periodic personal contact Peer/affinity groups meet with experts Web-based consultations/Commerce Café’s Email, fax, mail Video training

33. Key Success Factors: Training Entrepreneur must be motivated and want to build a business Training is critical, can be delivered in small groups Training helps entrepreneur think through all elements of business

34. Key Success Factors: TA Technical Assistance provided individually or in very small affinity groups TA provider must have basic knowledge of specific business field

35. Key Success Factors: Meeting Needs Partners are critical No program can meet all the needs of all the clients Start identifying those partners now

36. Credit Led Organizations Patti Lind

37. Micro-loans Culture Surrounding US Micro-lending Defining Microloans –Roles of participants Underwriting Credit Products 37

38. Micro-credit Grameen Bank model –Dr. Muhammad Yunus –Helping poor people achieve economic independence with microcredit “I made a list of people who needed just a little bit of money. And when the list was complete, there were 42 names. The total amount of money they needed was $27. I was shocked.”

39. Micro-credit Microcredit Organizations Develop –Individual loans –Peer Group Lending Creating a global economy of the most unlikely entrepreneurs “Today, if you look at financial systems around the globe, more than half the population of the world - out of six billion people, more than three billion - do not qualify to take out a loan from a bank. This is a shame.”

40. US Micro-lending Began in early 1980’s with the efforts of women’s organizations –Using business ownership to improve economic situations –Training & TA based (training led orgs) Need for capital typically accompanies business start-up –US Micro-lending models established

41. US Micro-lending Micro-loan size ranges from $500 - $35,000 Delivery Methods/credit products include – Direct loans Grants to leverage direct loan = Equity Grant (VR) – Credit builder loans – Lines of credit – Peer lending – Guaranteed loans Underwriting requirements vary depending upon policies and loan size

42. Micro-loans Entrepreneur is often unable to fully capitalize business using traditional resources –Thin credit file or no credit –Poor credit Business start-ups are always considered high risk

43. Roles of Participants in Micro-lending MDO –Training, TA, Mentoring MDO/Microlender –Capitalization –On-going capital infusions Bank –SBA Guarantee to bank VR –Equity grants to leverage financing

44. Microloans vs Consumer Loans Microloans –Documentation requires comprehensive business plan –Underwriting includes review of BP but may not base repayment on it –Character weighs heavy Business planning Consumer Loans –Documentation requires personal payment data –Underwriting bases repayment on discretionary income/funds –Character weighs somewhat into decisioning

45. Underwriting Philosophical Underwriting Tests – Does the Loan: –Meet the organizational mission? –Provide benefit to the borrower? –Conform with funder requirements? –Meet risk guidelines?

46. Underwriting Evaluating risk: –Current Financial Position Assets & Liabilities Regular monthly income/inflow Regular monthly expenses Reflect monthly debt payments –Debt:Income Ratio –Cash Flow: Monthly Discretionary Income –Financial Assessment Can individual make payments without considering projected income?

47. Evaluating Business Risk Is the plan logical –Individual is experienced/technically sound –Adequately capitalized for start-up Does Payment Rely on Business Performance –Timing Management of Resources –PASS & Other Work Incentives –SSI, SSDI

48. Evaluating Business Risk Collateral –Securing loans with critical equipment? Adequate supports during loan repayment period? –Training & TA Is our credit product well matched to the individual’s needs

49. Micro-loan Products Individual/Direct Loans –Consumer loans made to individuals for business purposes –Organization in control of lending environment Underwriting Loan Terms –Interest Rate –Length of Amortization –Technical Assistance

50. Micro-loan Products Credit Builder Loans –Tight terms Short Amortization Period Required Financial Counseling Lines of Credit –Drawn down as needed Peer Lending –Specific geographic areas Guaranteed loans –The Abilities Fund

51. Integrating Microenterprise into Telework Profiling an integrated Telework Program Identifying further TA needs Sharing Resources