Micro-enterprises not household names but can have big impact on job growth

Micro-enterprises not household names but can have big impact on job growth

Linda Goulart, owner of The Pampered Sole, changed professions when she realized she wanted to be more closely involved in helping people in her ca­reer.

She opened her business in 2006 with about $4,000 in savings after training as a massage
therapist at Greenville Technical Col­lege. She does recreational massage as well as thera­peutic healing massage.

“A time comes when you think about where your life is going,” she said. “I decid­ed I wanted to help people more” directly than she was doing as an electronics technician.

Goulart, whose office is inside another business, currently works with a varying number of contract employees, often only one or two. But “my goal is to make this a franchise some day,” she said.

She is one of the vast ma­jority of businesses in the state considered micro-en­terprises.

If every such business, ranging from sole proprie­tors to companies with up to four employees, were to add just one employee, South Carolina’s unemploy­ment rate could be cut by about 45
percent, accord­ing to Frank Knapp, presi­dent and chief executive of the state Small Business Chamber of Commerce.

The corporate names South Carolinians recog­nize are companies like BMW, Michelin, General Electric and Boeing — but the vast majority of compa­nies in South Carolina and the
nation are those whose names are known by few. But those small companies are vital to the state and na­tional economy.

Micro-enterprises, tiny businesses starting with $35,000 or less in initial funding, make up nearly 87 percent of the commercial community in South Caroli­na, Knapp said. And they can be found in every single county in South Carolina.

This type of business also is vital to the United States as a whole. Experts esti­mate that up to 10 million micro-entrepreneurs exist in the country today. These business owners from all walks of life want to start a business, supplement their income or continue to run a business. Theservices they offer range from car repair to day care, and the prod­ucts they make range from specialty
foods to clothing.

“Micro-enterprises are the key to our state’s and nation’s economic recovery and sustainable growth,” Knapp said. While many of them don’t want to grow to be huge, they often would like to add one or two addi­tional employees.

These businesses are of major importance to the state’s economy, said Rep. Kenneth Hodges, a Demo­crat from Colleton County and also a micro-business owner.

“I have been fascinated by micro-enterprise for a number of years,” he said, adding he saw the concept at work on mission trips to Africa. “I saw the tremendous impact they were making
in under-developed nations.” But they’re also part of developed nations. While South Carolina rural areas without much industry are a target, micro-businesses thrive in all areas, Hodges said. As the “buy local, buy small” drive becomes stronger, it is likely to support micro-businesses, which usually serve niche markets.

Knapp and Hodges said many micro-businesses want to grow. The difficulty, Knapp said, is the lack of access to capital and the need for technical assistance. It’s always been hard for a small business to borrow $15,000 or so, but in the past, they could use their house for collateral. Now that often isn’t allowed and even their credit cards are more restricted.

“It’s a very challenging situation in South Carolina,” said Dave Mueller, executive director of Appalachian Development Corp., a lender of gap funds and micro-loans primarily in the Upstate. “It has been for a number of years. It’s a niche area of lending.”

But if the state’s microbusinesses could be helped to hire one person each — with perhaps a refundable tax credit — that could create about 90,000 additional jobs, Knapp said in a recent blog. And that could drop to unemployment rate to about 5.4 percent from its current
level. Debra Wright, owner of Debra’s Hair Studio in Greenwood, said she has begun offering trichology services — help with hair and scalp disorders — as well as her stylist services. She is in the midst of trichology training and will complete the two-year course and become certified by the middle of 2012.

Because she has begun to offer some trichology services, she said she expects to hire a second person in her salon by October of this year.

Wright has been in business for herself for the past 14 years and has been a hair stylist for 24 years. She said she began renting space in a salon before going out on her own.

“This is what I would recommend to everyone,” she said, adding that opening a salon could easily take $20,000 to $25,000. Business owners also need to establish relationships with local bankers to have a chance of borrowing funds, she said.

Residents don’t realize how important the creation of a single job can be, Hodges said.

“Every time they create a job, that’s one more,” he said. “It’s much easier for 2,000
businesses to hire one person each than for one company to hire 2,000 people.”

This type of hiring, Knapp said, would be a help for the entire state — even the rural areas that have little hope of luring a major industry.

“All they have is their own small businesses,” Knapp said. “We should help them grow those businesses.”

That takes more than just money, Mueller said.

“Technical assistance is paramount to the successful micro-business,” he said. If a business comes to Appalachian Development for a loan and doesn’t have a couple of years of running the business profitably, loan officers check their entrepreneurial knowledge. If they need help, they recommend available resources — before any money changes hands.

“I want to get repaid and lend that money to the next company,” he said.

To raise awareness of the micro-businesses, the General Assembly passed Hodges-introduced legislation that makes June Micro- enterprise Month, to “shine the spotlight” on these businesses, their impact and their needs.

Also, he introduced legislation that set up a study committee that is looking at the micro-businesses in the state, their economic impact, the available resources and ways to make it easier for the businesses to tap the resources out there. A study report is due in January.

Goulart said she expects to move out on her own to a location near the Swamp Rabbit Trail within the next four or five years.

Massage therapy is “a growing business,” she said, adding that “Greenville is a great spot for small businesses.” When she decided to change professions and become a business owner, she decided she would do it without borrowing money.

“The money I make, I put back in the business,” she said, adding that growth is slower but she doesn’t have to fear debt. “It’s really not the money. It’s what you love.”