Welcome to the Performance Information section of our Website. Here you will find information on our impact on clients and the Vermont economy.
      
Outcome Study:

We are pleased to present the results of the Outcome Study carried out by University of Vermont’s Center for Rural Studies.

Full results can be downloaded here:

(zipped Word .doc - 260k) MBDPReport03doc.zip
(zipped .PDF - 452k) MBDPReport03pdf.zip

Executive summary can be downloaded here:

(zipped Word .doc - 66k) MBDPExecuSummary03doc.zip
(zipped .PDF -170k) MBDPExecuSummary03pdf.zip

      Accomplishments Highlights

    Micro Business Development Works!: Outcomes from Vermonters


Micro Business Development Works!: Outcomes for Vermonters

Vermont Community Action Agencies' Micro Business Development Program (MBDP) focuses on business generation among low to moderate income Vermonters who have little access to traditional economic development resources; and, in the process creates a new group of entrepreneurs and a set of businesses that most likely would not exist otherwise. These businesses often provide products and services (e.g. from computer to taxidermy services, from bakeries to small retail stores, from cleaning to agricultural hauling services) to disenfranchised populations in their neighborhoods and villages.

It is easy to understand skepticism about the potential of MBDP to have meaningful impact on the lives and incomes of low to moderate income Vemonters. The competitiveness and complexity of our economy raises questions about the effectiveness of microenterprise development as an economic development and poverty alleviation tool.

MBDP positively impacts Vermonters and our success has many faces. For some, success is defined as the survival of their business and the realization of a dream; some are able to get off of public assistance and build assets; some learn that self-employment is not for them and in the process learn how to be more employable.

What follows is an analysis of MBDP's impact in conjunction with a number of studies; namely the Vermont Job Start 1999 Borrower Survey (JSBS), the Vermont Microenterprise Survey (VMS) carried out by the Vermont Microenterprise Task Force and the Self-Employment Learning Project (SELP). SELP provide assessments and data presently beyond the budgetary means of the MBDP. It is reasonable to assume that SELP's findings would parallel MBDP clients' situations and outcomes. In addition, Microenterprise Fact Sheet Number Six produced by FIELD, The Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination, at the Aspen Institute in collaboration with the Association of Enterprise Opportunity (AEO) provided background information and a survey of many studies providing important analysis and data.

Vermont's Microenterprise Sector and MBDP Clients

Knowing about the people that MBDP serves, Vermont microentrepreneurs, in general, and their businesses helps in understanding the outcomes they attain. MBDP targets entrepreneurs with challenges that include poverty and low assets, dependence on government assistance, disability or economic setbacks caused by illness, job loss, divorce or other unfortunate circumstances.

 

Profiles of Vermont Microenterprises
People with the vision, discipline and drive to pursue self-employment often lack business basics. Even experienced business owners may struggle in certain areas of business management. It is important that resources are available to help them learn necessary skills. Our classroom training, counseling, and workshops provide a foundation for their success.
 

Financial Outcomes

In measuring the impact of microenterprise development and MBDP in particular, the first question is whether a client starts, enhances, or expands a business.

MBDP Outcomes:

During the fiscal year 10/1/99 - 9/30/00 MBDP showed these results:
Total Number of Participants: 810
Total Number of Clients (1): 304
Business Starts: 81
Expansions: 18
Enhancements: 46
Total number of assisted businesses: 145
Jobs Created: 91.5
Business Starts/Number of Clients: 26%
Businesses Assisted/Number of Clients: 47%

47 percent of the clients, that we provide 10 or more hours of service to, start, expand or enhance their businesses.

Microbusinesses demonstrate tenacity with survival rates of 56 - 90 percent

Survival rates compare very favorably to the general population of small businesses. The U.S. Small Business Administration estimates that 47 percent of small businesses are still operating after four years.(2) Corresponding survival rates for microenterprise program clients are:

  • 64 percent of MBDP client businesses started since 10/1/98 were still in business as of February 2001
  • 84 percent of Job Start borrowers were still in business at the time of the survey and 28 percent of them had been operating them for more then five years
  • 57 percent of businesses of SELP respondents survived after 5 years

(1) Defined as clients receiving 10 or more hours of one-on-one business counseling or 10 or more hours of classroom training

(2) From FIELD Microenterprise Fact Sheet No. Six http://www.microenterpriseworks.org/microdevelopment/factsheets/factsheetsindex.htm

 

Microbusinesses contribute to personal and household income

75 percent of Job Start Borrowers are able to draw a wage from their business and 48 percent report household income increases. Of those reporting increases, 69 percent have realized an increase of more than $5,000 annually, and in fact 34 percent of the increases contributed to more than $15,000 annually in household income. During the five years of the SELP study 57 percent of the entrepreneurs increased their household income.
In FIELD's analysis of microenterprise development programs' financial outcomes they found outcomes for those identified as poor (according to federally established benchmarks such as poverty levels or median area income) are stronger than for the nonpoor. This link between microenterprise development and poverty alleviation merits a closer look.

Progress out of Poverty

The path out of poverty is a rocky one. Progress is followed by steps back, tough tumbles and occasional leaps ahead. MBDP clients and Job Start borrowers are no exception. MBDP staff help clients overcome obstacles including health crises, transportation issues, family emergencies, and others as they work towards economic self-sufficiency. Box 2 highlights the gains made by poor entrepreneurs in the SELP study.

Microbusinesses help provide a living income

In Vermont's rural, service-sector dominated economy, self-employment is an important strategy in achieving a living income. As is true of many households, Vermonters rely on more than one source of income. JSBS showed that Borrowers patched self-employment with outside employment and a variety of other sources. The VMS reported an average of 64% of business owners' household income comes from the business. Other sources of income include: 34% spouse/partner income, 12% outside employment, 9% investments, 4% pension, and 2% public assistance.

Patching together employment with self-employment provides protection from seasonal or unstable employment, flexibility to care for children, elderly or disabled relatives, or access to critical benefits such as health insurance. SELP data (Box 3) show that microbusinesses provide more than just extra pocket money; they are important components of household income.

Economic Impact Of Vermont's Microenterprise Sector

The microenterprise sector often benefits communities by providing local services responding to local needs. Many microenterprises may not grow and survive beyond the entrepreneurs' involvement, but in the meantime the business has significantly benefited the entrepreneur, their families and communities and the economy. The Job Start Borrower survey showed that 23 percent of the businesses were within the retail industry. Retail sales averaged $68,318 per business, which generates averages sales tax revenue of $3,416 per business. JSBS estimates an average hourly wage (full and part-time) of $10.33. Box 4 shows key economic impact findings of the Vermont Microenterprise Survey

Non-financial Benefits

Success of course takes many forms. For example, MBDP has helped many clients, who choose not to pursue self-employment, gain skills that make them more employable, and better employees. In addition, many clients report fulfilling a dream, improving their self-esteem and sense of security, and finding support networks.

Cost Effectiveness

Microenterprise development shows clear benefits. However, microenterprise does not create jobs at the same rate as other economic development strategies. With the many tough budgetary challenges facing legislators and policy-makers, it is natural to ask: Is microenterprise development cost effective? Costs are high for microbusiness development and as training and technical assistance services are emphasized, these costs are increasing. Nevertheless, studies indicate that costs per client, costs per assisted business and cost per job compare favorably with other employment and training, job creation and business assistance strategies. (3)

Conclusion

Vermont Community Action Agencies' statewide Micro Business Development Program is doing much good, but it is not a panacea. We are helping low-to-moderate Vermonters, create viable businesses and in the process helping them earn livable incomes and build assets. For our target population there are many educational, medical or social challenges, in addition to the challenges of operating and growing a business. Low to moderate-income microentrepreneurs need services including savings tools (e.g. IDAs), that help build financial security, and specialized managerial, marketing and legal assistance. MBDP is proud to be providing innovative and effective services that assist Vermonters gain business skills, improve self-esteem and position themselves for long term economic success.

(3) Servon, Lisa, Microenterprise Development as an Economic Adjustment Strategy, 1998

Resources

1999 Vermont Job Start Annual Report. Montpelier, VT: Vermont Economic Development Authority, 1999.

Clark, Peggy and Amy Kays. Microenterprise and the Poor. Washington D.C.: The Aspen Institute, 1999

Miller, Mary, et al. Overview Vermont Microenterprise Survey. Montpelier, VT: Microenterprise Task Force, 2000.

Nelson, Candance. Microenterprise Development Works!: Outcomes for Clients. Washington D.C.: FIELD, 2001

Servon, Lisa. Microenterprise Development as an Economic Adjustment Strategy, New Brunswick, NJ: Rutgers University, 1998.