Very Small Biz Creates Jobs in Sac Bee

Creating small businesses is a key job-generating strategy
By Claudia Viek
Special to The Bee
Published: Tuesday, Jul. 26, 2011 – 12:00 am | Page 11A

The California state budget was passed with a 1 percent cut in the sales tax, with a hope for $8.3 billion in unexpected revenue growth and without Republican support. Assembly Speaker John A. Pérez, D-Los Angeles, said, “We will continue to press the case for new revenues.” Legislators should walk over to 19th and L, home to Ginger Elizabeth Chocolates, to learn one way that new revenues can be created that would receive bipartisan support.

Ginger Elizabeth Hahn always loved to cook and always wanted to be her own boss. When she was 16, she took a truffle class at Sacramento’s Learning Exchange and was hooked. She was trained by some of the best. When it came time to start her own chocolate shop, she needed a loan guarantee and the business training to secure a bank loan. She found both with local microlender California Capital. She opened in 2008 and employs four full-time people in addition to supporting herself and her husband.

Strengthening very small businesses is a key job-generating strategy. While these businesses might be great at dishing up a meal or fixing your car, they might need help with a business plan or a loan guarantee if they are to grow and prosper.

The micro-business generally has fewer than five employees and less than $50,000 in start-up capital. They are everywhere you are – the organic tomato stand at the Saturday market, the home-based child care center, the technology service firm who fixes your crashed computer, your favorite neighborhood restaurant or food truck. These are local jobs that affect our local economies generally twice as much as a national chain.

In California, there are about 4 million very small businesses. If one out of every three businesses hired one employee, we would cut unemployment in half and our state’s economy would recover. With California’s unemployment rate hovering around 12 percent, supporting micro-enterprise is something we must do.

In 2009, members of the California Association for Micro Enterprise Opportunity, or CAMEO, served 21,000 businesses with training, technical assistance and loans. These firms, which were largely start-ups, brought 42,000 new jobs into California’s economy. The businesses created a total of $1.5 billion in economic activity – raising state revenues, decreasing demand for government services and putting more money into local economies.

Businesses are successful when they receive business coaching and assistance with writing a business plan, preparing a cash flow statement, market research and packaging a loan. Business owners that have gone through training programs and receive technical assistance have an 80 percent success rate vs. the 80 percent failure rate of small businesses that don’t seek help. Also, CAMEO member clients who start their own businesses on average create two jobs in addition to their own, over a three- to five-year period.

Providing technical assistance is the most cost-effective way to create a job. The “CAMEO” cost of creating a job averages $1,000 to $3,000 a job. That’s cheap when you consider that a public works infrastructure project costs $50,000 a job.

Recently, my organization along with our national colleagues managed to pull off a miracle in Congress. We were able to persuade a Republican-led Appropriations Committee to allocate twice as much federal money to business training and coaching to very small businesses than the president had requested.

Supporting small, homegrown businesses with technical assistance is a rare nonpartisan issue. It’s a proven job creator. We must make it integral to our state’s economic development policy. We believe that Gov. Jerry Brown also can receive needed bipartisan support if he focuses on supporting local small-business development. We invite Brown to take a trade junket in California, meet these business owners, and catch the entrepreneurial spirit that will reboot our economy.