Developing Microbusinesses Strengthens Communities
Special thanks to Ellen Larmer, Director of the Community Action Development Corporation of Bethlehem, for this op-ed piece that was featured in the Morning Call.
Today, my father’s self-employment would be none too strange. Although small family businesses are not new, the nature of small firms, which politicians often correctly cite as the source for much job creation, has changed. Notably, there were 21.4 million firms without employees other than the owner in 2008. Additionally, women and people of color have increased their proportion of the self-employed over the past decade, with the largest gains coming from Latinos.
These businesses, including those with up to five employees, are defined as microbusinesses. Typically, microbusinesses serve individuals at the lower end of the labor market, where the building of assets, wealth and ownership opportunities is especially essential. The majority of businesses grown by microenterprise clients have been small-scale operations started by self-reliant people looking to make a decent living.
In the 1980s, the microenterprise field evolved in the United States to promote self-generated employment to those previously excluded from the economy. Rooted in the women’s movement, the first microenterprise success stories were women who developed businesses because they lacked opportunities to earn income outside of the home. The essence of microenterprise is putting people in charge of their own futures. What if everyone had encouragement and skill to supply a new product or service?
Unlike my father’s era, today’s self-employed frequently do so out of necessity. There are fewer jobs, many of which are temporary and do not support a family. Microenterprise provides options for people to earn supplemental income, with flexibility to balance work and family. Because microbusinesses are often located in our urban centers, they help energize these communities and keep businesses local.
To cultivate more microbusinesses in the Lehigh Valley, the Community Action Development Corporations of Allentown and Bethlehem provide quality training and technical assistance programs consistent with best practices in the field of microenterprise development. While many participants have relevant work experience, they often lack an array of skills essential to running a business. Research demonstrates that successful microbusiness owners are those who understand pricing and use break-even analyses and cash-flow projections regularly, both of which they learn through this training. By doing so, they have a much greater chance to close the gap between marginality and profitability.
Two years ago, the staff at Community Action Development Corp. of Bethlehem and students of the Martindale Center for the Study of Private Enterprise at Lehigh University organized the first Lehigh Valley Microenterprise Expo. We invited corporate and government purchasers to meet 50 microbusinesses, because when anchor institutions use microbusinesses, they link them to expanding sectors.
However, the outgrowth of the two previous Microenterprise Expos — the third was held Wednesday — has been development of business partnerships from networking, especially between typical microbusiness and traditional self-employed. Last year a couture pet clothing company met a manufacturer of LED-lighted fabric. The result was collaboration for new lines of business, including local manufacturing. A restaurant owner sought help from a designer to improve the restaurant interior. Another business owner sold equipment to a competitor. Such alliances enable businesses to increase their products or services, decrease their costs and reach more people.
As I think about these partnerships, my father once again comes to mind. He always supported local family businesses because he related to them — their entrepreneurial drive, their hard work and the hardships they endure. And, in an era in which capital is so fluid, when taking jobs offshore is so easy, that big-box stores are plunked down on former cornfields so quickly, perhaps it is these microenterprises that give us the opportunity to embrace the old neighbor-supporting-neighbor sustainable economy. Our region stands to benefit when we support each other. That’s what makes a community a community.