Micro-enterprise
Encyclopedia
A micro-enterprise is a type of small business, often registered, having five or fewer employees and requiring seed capital of not more than $35,000. The term is often used in Australia
to refer to a business with a single owner-operator, and having up to 20 employees. The European Union
EU defines micro-enterprises as those that meet 2 of the following 3 criteria and have not failed to do so for at least 10 years:
The term microenterprise connotes different entities and sectors depending on the country.
Generally speaking,
Microenterprises add value to a country's economy by creating jobs, enhancing income, strengthening purchasing power, lowering costs and adding business convenience.
Because microenterprises typically have little to no access to the commercial banking sector, they often rely on "micro-loans" or microcredit
in order to be financed. Microfinance
institutions often finance these small loans, particularly in the Third World
. Those who found microenterprises are usually referred to as entrepreneur
s.
The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit
the term microenterprise is used. Similarly when referring to a small, usually legal business that isn't financed by microcredit, the term microbusiness is used.
.http://neon.neded.org/mbrd/intro.html In Europe
a business with less than ten employees may be officially considered a micro-business http://www.staff.ncl.ac.uk/jeremy.phillipson/rmb.html.
Generally speaking, governments tend to define small- and micro-businesses more broadly than colloquial uses of those terms. This article discusses micro-business in the colloquial sense.
Microenterprise gives persons whom have a disability
flexibility to attend doctor’s appointments or treatments that normally occur in the 9–5 time frame of the day and would eventually conflict with the norm of most typical work environments.
Microenterprise presents persons with a disability, business
networking avenues into the community that differ greatly from the medical or treatment mode that they may have become confined to.
Persons with a disability who own their own business
often report an increased feeling of worth or an emotional equity that becomes an enhancement to their present treatment.
is a program offered by the United States Social Security Administration
(or SSA) to encourage persons that are Supplemental Security Income
(or SSI) eligible who are disabled to set aside moneys for various reasons: training, schooling and funding microenterprise as a Work Goal.
The NEIS (New Enterprise Initiative Scheme) is a government program in Australia, which assists unemployed people to start their own businesses. Although it is not specifically for micro-businesses, many if not most businesses started in this program are micro-businesses (in the senses of having limited capital, and only one person involved in the business).
.
, The Association of Enterprise Opportunity AEO, have defined a microenterprise as a business with five or fewer employees. Many of these businesses have no employees other than the self-employed owners. Additionally, such microenterprises generally need less than $35,000 in loan capital and do not have access to the conventional commercial banking sector. Most organizations in the field also focus their services on those microentrepreneurs who, as defined by federal government standards, are low-to-moderate income. By definition, most of these entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce their ability to access traditional credit
and other services.
The microenterprise field has a twenty-year history in the United States. While the term “microenterprise” was in common use internationally by the late 1970s, it came into domestic use about a decade later. Traditionally, the business sector had been categorized into three groups: large, medium, and small. The U.S. Small Business Administration (SBA) defines a small business as having up to 500 employees. In 1991, the SBA recognized microenterprise as a separate or distinct category of business.
During the 1990s, the microenterprise field grew rapidly in the United States. Starting with a small number of non-profit organizations testing developing country models, the field now has service providers in every state, a national trade association (AEO), a growing number of state-level associations and financing intermediaries, and several research and policy organizations. The Aspen Institute and FIELD (Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination) has collected data on the organizations in the field since 1992. The first directory, in 1992, listed 108 organizations that identified themselves as working in the field. By 2002 this number had grown to 650 organizations. Of these, 554 are organizations that provide direct services and 96 are support organizations that offer funding, training and technical assistance to these practitioner organizations.
Community Development Financial Institutions (CDFI's), particularly Community Development Loan Funds frequently offer loan capital for microenterprises in the United States.
Paper to Pearls
is an example of a micro-enterprise, one that is based in the US and works with women northern Uganda.
The International Fund for Agricultural Development (IFAD) Vietnam
country programme supports operations in 11 poor provinces. Between 2002 and 2010 around 1,000 saving and credit groups (SCGs) were formed, with over 17,000 members; these SCGs increased their access to microcredit
for taking up small-scale farm activities.
, a nationwide survey conducted in 1992 revealed that 330,000 micro and small enterprises created employment for 26 percent of the economically active population. Furthermore, a significant portion of this is represented by women (38 percent).
It is argued that the households of women are benefitted more by microenterprises because women tend to devote this income, proportionately, more to their households than do men. Therefore, it is recommended that microenterprise training programs be less gender-neutral and should be diversified to address the central challenges of women's businesses.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
to refer to a business with a single owner-operator, and having up to 20 employees. The European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
EU defines micro-enterprises as those that meet 2 of the following 3 criteria and have not failed to do so for at least 10 years:
- fewer than 20 employees
- balance sheet total below $800,000 US
- turnover below 800000 US.
The term microenterprise connotes different entities and sectors depending on the country.
Generally speaking,
- in developed countries, microenterprises comprise the smallest end (by size) of the small business sector, whereas
- in developing countries, microenterprises comprise the vast majority of the small business sector—a result of the relative lack of formal sector jobs available for the poor. These microentrepreneurs operate microenterprises not by choice, but out of necessity.
Microenterprises add value to a country's economy by creating jobs, enhancing income, strengthening purchasing power, lowering costs and adding business convenience.
Because microenterprises typically have little to no access to the commercial banking sector, they often rely on "micro-loans" or microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
in order to be financed. Microfinance
Microfinance
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....
institutions often finance these small loans, particularly in the Third World
Third World
The term Third World arose during the Cold War to define countries that remained non-aligned with either capitalism and NATO , or communism and the Soviet Union...
. Those who found microenterprises are usually referred to as entrepreneur
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
s.
The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
the term microenterprise is used. Similarly when referring to a small, usually legal business that isn't financed by microcredit, the term microbusiness is used.
Overview
Micro and Home Business Network http://www.globalbusinessidea.com, an Australian organization, defines a micro-business as one with five or less employees http://www.mbn.com.au. This definition is often used in the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.http://neon.neded.org/mbrd/intro.html In Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
a business with less than ten employees may be officially considered a micro-business http://www.staff.ncl.ac.uk/jeremy.phillipson/rmb.html.
Generally speaking, governments tend to define small- and micro-businesses more broadly than colloquial uses of those terms. This article discusses micro-business in the colloquial sense.
Concept in disability recovery
Utilized as a therapeutic tool within Person centered planning Microenterprise has become valuable to persons who for many reasons cannot efficiently participate in typically rigid work environments, i.e. 9 to 5 / 40 hours per week.Microenterprise gives persons whom have a disability
Disability
A disability may be physical, cognitive, mental, sensory, emotional, developmental or some combination of these.Many people would rather be referred to as a person with a disability instead of handicapped...
flexibility to attend doctor’s appointments or treatments that normally occur in the 9–5 time frame of the day and would eventually conflict with the norm of most typical work environments.
Microenterprise presents persons with a disability, business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
networking avenues into the community that differ greatly from the medical or treatment mode that they may have become confined to.
Persons with a disability who own their own business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
often report an increased feeling of worth or an emotional equity that becomes an enhancement to their present treatment.
Government programs
Plan for Achieving Self SupportPlan for Achieving Self Support
Plan to Achieve Self Support, also known as a "PASS", is a program offered to the US citizens by the Social Security Administration for disabled or blind individuals who receive or could qualify for Supplemental Security Income . A PASS can help an individual achieve an employment goal or start a...
is a program offered by the United States Social Security Administration
Social Security Administration
The United States Social Security Administration is an independent agency of the United States federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits...
(or SSA) to encourage persons that are Supplemental Security Income
Supplemental Security Income
Supplemental Security Income is a United States government program that provides stipends to low-income people who are either aged , blind, or disabled. Although administered by the Social Security Administration, SSI is funded from the U.S. Treasury general funds, not the Social Security trust fund...
(or SSI) eligible who are disabled to set aside moneys for various reasons: training, schooling and funding microenterprise as a Work Goal.
The NEIS (New Enterprise Initiative Scheme) is a government program in Australia, which assists unemployed people to start their own businesses. Although it is not specifically for micro-businesses, many if not most businesses started in this program are micro-businesses (in the senses of having limited capital, and only one person involved in the business).
Micro-loans
Micro-loans are a way for organizations and entrepreneurs to make small loans to those in poverty often in third world countries. The term "micro-loans" is more commonly referred to as MicrocreditMicrocredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
.
Microenterprises in the U.S.
In the United States, the microenterprise development field and its trade associationTrade association
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...
, The Association of Enterprise Opportunity AEO, have defined a microenterprise as a business with five or fewer employees. Many of these businesses have no employees other than the self-employed owners. Additionally, such microenterprises generally need less than $35,000 in loan capital and do not have access to the conventional commercial banking sector. Most organizations in the field also focus their services on those microentrepreneurs who, as defined by federal government standards, are low-to-moderate income. By definition, most of these entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce their ability to access traditional credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
and other services.
The microenterprise field has a twenty-year history in the United States. While the term “microenterprise” was in common use internationally by the late 1970s, it came into domestic use about a decade later. Traditionally, the business sector had been categorized into three groups: large, medium, and small. The U.S. Small Business Administration (SBA) defines a small business as having up to 500 employees. In 1991, the SBA recognized microenterprise as a separate or distinct category of business.
During the 1990s, the microenterprise field grew rapidly in the United States. Starting with a small number of non-profit organizations testing developing country models, the field now has service providers in every state, a national trade association (AEO), a growing number of state-level associations and financing intermediaries, and several research and policy organizations. The Aspen Institute and FIELD (Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination) has collected data on the organizations in the field since 1992. The first directory, in 1992, listed 108 organizations that identified themselves as working in the field. By 2002 this number had grown to 650 organizations. Of these, 554 are organizations that provide direct services and 96 are support organizations that offer funding, training and technical assistance to these practitioner organizations.
Community Development Financial Institutions (CDFI's), particularly Community Development Loan Funds frequently offer loan capital for microenterprises in the United States.
Microenterprises in developing countries
In developing countries, microenterprises comprise the vast majority of the small business sector—a result of the relative lack of formal sector jobs available for the poor. Microenterprises in developing countries, then, tend to be the most frequent form/size of business. As explained by Aneel Karnani in the Stanford Social Innovation Review (summer 2007), "Microfinance Misses Its Mark":
Most microcredit clients are not microentrepreneurs by choice. They would gladly take a factory job at reasonable wages if it were available. We should not romanticize the idea of the “poor as entrepreneurs.” The International Labour Organization (ILO) uses a more appropriate term for these people: “own-account workers.”
Paper to Pearls
Paper to Pearls
Paper to Pearls is a micro-enterprise initiative of Voices for Global Change, a 501 non-profit based in Alexandria, VA. Paper to Pearls works with women in the Internally Displaced Persons camps in northern Uganda...
is an example of a micro-enterprise, one that is based in the US and works with women northern Uganda.
The International Fund for Agricultural Development (IFAD) Vietnam
IFAD Vietnam
The International Fund for Agricultural Development is an international financial institution and a specialized agency of the United Nations dedicated to eradicating rural poverty in Vietnam and other developing countries...
country programme supports operations in 11 poor provinces. Between 2002 and 2010 around 1,000 saving and credit groups (SCGs) were formed, with over 17,000 members; these SCGs increased their access to microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
for taking up small-scale farm activities.
Microenterprises and women in the Dominican Republic
In the Dominican RepublicDominican Republic
The Dominican Republic is a nation on the island of La Hispaniola, part of the Greater Antilles archipelago in the Caribbean region. The western third of the island is occupied by the nation of Haiti, making Hispaniola one of two Caribbean islands that are shared by two countries...
, a nationwide survey conducted in 1992 revealed that 330,000 micro and small enterprises created employment for 26 percent of the economically active population. Furthermore, a significant portion of this is represented by women (38 percent).
It is argued that the households of women are benefitted more by microenterprises because women tend to devote this income, proportionately, more to their households than do men. Therefore, it is recommended that microenterprise training programs be less gender-neutral and should be diversified to address the central challenges of women's businesses.