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Wall St. and Business Wednesdays: Microenterprise Loans Lift Women Out Of Poverty And Create Jobs by Becca MacLaren


A born entrepreneur, Shoshana Frumkin saw a niche in the market and knew just how to fill it. But there was a catch: she had neither savings nor credit and not a lick of experience.

So how did she, in just six years, move off welfare to become head of a thriving massage business? She took out a small loan and launched a microenterprise, called On the Spot Massage, which now provides chair massage services in retail stores around the Bay Area.

Frumkin is just one of hundreds of women who have moved out of poverty by launching a microenterprise, which is defined as a business that employs fewer than five employees and requires no more than $35,000 in start-up capital.

Microenterprise businesses have been growing rapidly in California and accounted for 77 percent of all new job growth from 1999 to 2003, according to the California Association for Microenterprise Opportunity (CAMEO). From 2000 to 2001, when nearly 200,000 jobs were lost to the largest employers in California, micro entrepreneurs created more than 62,000 new ones.

"People think of these businesses as small and not very powerful," said Heather Gray, a CAMEO program manager. "But collectively, they make a huge difference."

One San Francisco non-profit, the Women's Initiative for Self-Employment, estimated that for every $1 it invested in business training for low-income women, its clients generated $23 for the local economy within 18 months. They did this by going off public assistance, creating new jobs, and paying taxes.

State and city legislators are starting to take notice.

Assemblyman Leland Yee (D-San Francisco/Daly City) recently sponsored a bill to provide $5 million for grants to microenterprise development programs. Though the bill was unsuccessful, Yee plans to reintroduce it again next year.

The city of San Francisco has also stepped up, setting aside $500,000 for grants to programs that support women's microenterprise.

Microenterprise businesses are proving particularly effective for low-income, minority and immigrant women, who often face limitations in the workplace as a result of poverty, limited education, and care giving responsibilities. In California, wage jobs for women pay 79 cents on the dollar earned by a man.

Microenterprise offers a solution. With a small loan, women can go into business for themselves and—all at once—earn a living, care for dependents, create new jobs and give back to their communities.

It's multi-tasking of the highest order.

Frumkin, 50, has come a long way from the 14 years she spent on welfare.

"I don't worry so much about making it to the end of the month and having food on the table," she said.

To patch together enough money to support her child, she started an informal housecleaning business in the late 1980s.

A certified organic farmer, nutrition consultant and birthing coach, Frumkin had one of her "perpetual ideas" after completing a massage course.

She convinced several of her housecleaning clients to let her visit their corporate offices to offer 10-20 minute chair massages. Lugging a heavy drummer's stool and pillows across the city, she knew she was onto something.

"If I was going to choose, it [massage] was the thing that could be a duplicable business," she said.

About a year later, the massage chair was invented.

In 1998, she took out a $10,000 loan from the Women's Initiative, which allowed her to establish a line of credit with the Small Business Administration.

Today, On the Spot Massage employs 50 independent contractors who offer chair massages at a handful of Bay Area retail stores like Whole Foods and on-site to clients like Amtrak and the Discovery Channel.

"Little by little, I'm casting my net out," said Frumkin. She hired a full-time office manager and plans to take on a sales campaign manager.

Frumkin recently started renting out a storefront space at Crocker Galleria in the heart of San Francisco's financial district.

"We create a great environment where busy working people can get out of rat race for a minute," she said.

Eventually, she wants to make On the Spot "the household name of chair massage."

"I'm pushing to create a bigger team to allow other women to play the game," said Frumkin.

Community-minded businesses with well-paid, flexible jobs are the norm for women's microenterprise. On average, women micro entrepreneurs pay their employees $14.49 per hour, or more than double the state's minimum wage, according to Women's Initiative.

They are also generous. Seventy-five percent of the women surveyed in the Women's Initiative study reported donating money or in-kind services last year.

Linda Jones-Mixon, 58, opened Waddle and Swaddle, a store for new mothers in Berkeley, to provide empathy, resources and information.

The store on Shattuck Avenue has pale yellow-colored walls and neatly stacked piles of baby clothes. There are strollers parked near the door alongside a rack filled with pamphlets and other resources. In the back room, customers find a comfortable spot for breastfeeding or changing diapers.

"New mothers are so cut off," said Jones-Mixon, who has been a doula, or birthing coach, for nearly 20 years. "Women come in [the store] and tell me, ‘It feels so good here,'" she said. "That makes my heart sing."

In 2000, as she prepared to open Waddle and Swaddle, Jones-Mixon had a referral-based clientele from her doula business and a keen sense of what new mothers wanted and needed.

She took a Women's Initiative course on writing a business plan that helped her fill in the blanks.

Jones-Mixon now has three part-time employees, two of whom bring their babies to work.

A sign posted above the cash register alerts shoppers that the baby in the crib is "not (usually) for sale."

"It's hard work and long hours…but I love it," she said.

Connie Rivera, 35, expressed a similar enthusiasm.

"I always encourage women who are scared. I tell them they can do it too," said Rivera, who opened Mixcoatl Arts and Crafts, a store in San Francisco's Mission District, in 2004.

For immigrant women like Rivera, a microenterprise loan is one of the only ways to establish credit. "You feel all the doors are closed to you," she said of her experience seeking traditional bank loans.

More than 40 percent of the Women's Initiative's clients are Latina and their 20-session training program is offered in both English and Spanish. Twenty-eight percent of their clients are African-American and 95 percent are extremely low or very low-income.

These are the women who have the most to gain—and to offer.

"Low income women are hardworking and creative," said Julie Castro Abrams, CEO of the Women's Initiative for Self Employment. "They'll do anything to make a better life for their families."

This article was published by The North Gate News Online (NGNO). Click here to send an email to the author, Becca MacLaren.


Becca MacLaren

Wednesday, December 13, 2006

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