Smallest Businesses Lead California’s Economic Growth

Not all small businesses are created equal. A few start with a leg up—with venture capital and high-powered advisors. But most start on a shoestring, using credit cards, borrowing from the in-laws, and hoping for the best. These are the businesses we see every day: our barber, gardener, day care provider, and that new restaurant on the corner. In fact, most people have either tried self-employment at one time or know someone who has. These smallest of businesses, microenterprises, make up 88 percent of all California’s businesses. Shouldn’t we care if they succeed or fail? The new business down the street could become the next Hewlett-Packard or Microsoft. After all, these powerful and successful companies both started out as garage-based microenterprises.

So how do microenterprises become multinational companies, or at least successful small businesses that create jobs and generate revenues for their owners? Most entrepreneurs initiate a business with an idea based on a skill or a product. But very few have the background and experience to operate a business, particularly in the complicated regulatory environment of California. New business owners can get into a lot of trouble in a hurry if they don’t have basic business knowledge under their belts.

Contributing to the success of many small businesses in California are microenterprise development programs: nonprofit agencies that specialize in business management training, business consulting, and other services such as microloans. With the help of microenterprise development programs, future entrepreneurs can figure out if their business ideas are feasible, new start-ups can put their business plans together, and established businesses can connect with resources such as expansion loans and workshops on managing employees. Microenterprise programs fill the information gap and help entrepreneurs connect with the resources they’ll need throughout their business life.

October has been declared California Microenterprise Development Month, with a resolution introduced by Assembly Speaker Pro Tem Leland Yee of San Francisco and passed by the California legislature. During October, microenterprise development programs throughout California are hosting special events and rolling out new programs and services to benefit small business development. They are raising awareness that healthy microenterprises create jobs, generate tax revenue, and infuse communities with vitality. To accomplish this, microenterprise nonprofits need access to economic development and workforce development funds that have traditionally been allocated for attracting businesses from elsewhere. More and more, communities are choosing to support the development of homegrown businesses with their public dollars. Your City Council, Board of Supervisors, or Workforce Investment Board can make it a priority to include microenterprise development in an economic development plan, and access federal funds for that purpose. The next time you, your neighbor, or your children want to start a business, where can you turn for help? If your community has a microenterprise program, the chances are much better that your business will succeed.