Jim and Georgia Thompson didn't go into business to get rich. They went into business because it looked better than working for someone else. "It's not exactly that we didn't like the people we were working for," explains Jim, 45. "But we were doing all the work and weren't getting any of the rewards."
So in June 2001, the father-daughter team started JJ&G Electric, a two-person electrical contracting company in Austin, Texas. Both were veteran electricians, and Georgia, 21, had experience running the office at the electrical contractor where they'd both formerly worked. But they quickly found that running a small business was different from wiring a building. "We had the electrical skills. We had the office skills. We also had the people skills," says Jim. "But we had little knowledge of the financial skills and skills of running a business."
In that sense, the Thompsons are typical microenterprise owners. These popular but little-recognized businesses, numbering an estimated 2 million, are generally categorized as those requiring less than $35,000 in start-up or early-stage financing. They usually have fewer than five employees, especially in the early years, and are often sole proprietorships. Microentrepreneurs face a special challenge, because few lenders will consider making such small loans, especially to start-ups that lack adequate collateral. Microenterprises are likewise challenged by the fact that they're often run by people who, while boasting excellent technical ability, don't know much about marketing, bookkeeping, cash management and other key business skills.
Fortunately, a range of organizations can help with both skills and capital. And coupled with microentrepreneurs' drive and determination, the microenterprise story is one that generally has a successful run and a happy ending. Why? One reason is that microbusiness owners typically come from low-paying jobs, unemployment, underemployment or public assistance programs. They often start as part-timers, moonlighters from day jobs or work-at-home moms. With powerful motivation and a modest growth plan, they more often than not get what they're after.
Take Angela Nicholas, for example. She started Bauer Triple D's Learning Complex Inc. in Pensacola, Florida, because she couldn't find a job in the public schools, after her husband, a Naval officer, was transferred to Pensacola. "I never planned to go this route," says Nicholas, 42. But when she looked at a plot of land near her home and envisioned children playing in a child-care center, she was inspired. After receiving business training from a local development agency, she successfully applied for a combination of bank loans and community development funding that allowed her to open a center. Today, she employs nine teachers.
Nicholas enjoys making her own decisions, something she was never able to do as a physical therapist and administrator in the public school system. And she feels she's building something for the future. "I'm not seeing the rewards immediately, but in another 10 or 15 years, when I'm finished paying off my mortgage, I'll see them," she says.
Most microentrepreneurs cite similar benefits of independence and potential for building wealth, says Dawn Rivers Baker, editor of The MicroEnterprise Monthly, a microbusiness journal in Sidney, New York. "Most of them are earning $20,000 to $50,000 a year, though there's a nice chunk of them who are earning over $100,000," she says. "But if people were to do this for financial reasons, nobody would do it. They do it because they like it."