What is a Microenterprise?

Typically, they are small, often home-based businesses that are started by individuals looking for a way to earn a living or generate additional income. Generally, microenterprises have less than five employees, require less than $35,000 in capital to start up or expand their businesses and generate less than $50,000 in annual sales. Many are operated by entrepreneurs who have limited access to capital and business development resources. Usually, they start their business in the informal economy to get organized and move to the formal economy as they grow.

For many entrepreneurs, self-employment is their only or best means for achieving their dreams, enhancing their family's standard of living, yielding an income greater than available wage earnings, supplementing household income, or making money in ways that are consistent with their faith, lifestyle preferences, and personal constraints.

General Characteristics of a Microenterprise:

• Requires less than $35,000 in capital to start up or expand.

• Generally generates less than $50,000 in annual sales.

• Usually employs less than five people and, typically, the employees are family members.

• Mostly operated out of homes rather than in an otherwise owned or rented space.

Challenges of Microenterprises:

• Microenterprises function outside of the business and banking mainstream with little or no access to capital, credit-building or repair opportunities, business development services, peer-support, market expansion, and networking support.

• Microenterprises are an integral part of our community's economic fabric, but their business needs are not addressed. Their credit needs are considered too small for major banks and the business training requirements are too intensive and time-consuming for most economic development programs.

Characteristics of PDP's Microenterprise Owners:

• 99% minority

• In addition to running their own business, the majority hold down full or part-time jobs

• 60% living in households with low to moderate incomes, with 36% of household incomes ranging between $12,001 and $24,999

• Six out of ten entrepreneurs are women; most are between the ages of 35-49

• 40% are just starting a business; 60% are operating an existing business

Types of microenterprises include:

Childcare providers
Transportation services
Janitorial services
Business communication services
Food manufacturers
Promotional Products
Graphic designers
Caterers
Tailors and dressmakers
Massage therapists
Specialty gift item retailers