Jonathan over at Smart Wealthy Rich wrote a post recently that received a great deal of positive feedback, questions, and pushback. His post, Don’t Buy Me A Beer, Use That Money For Something Else instead talked about the benefits of donating to organizations like Kiva that offer a hand UP to budding entrepreneurs throughout the world through microloans that are funded by the public in $25 increments.

Some background on microloans aka, microcredit from Wikipedia:

Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not considered bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit.

While most readers were supportive of Jonathan’s post, some offered questions, concerns and criticism about the idea of lending money to poor people in countries other than their own.

These are valid points that I’d like to address further based on my own experience with donating to Kiva.

Question: Would it really help poor?

You can certainly donate money to someone with great intentions who had no idea how to use it. However, the entrepreneurs listed on Kiva have already proven successful in starting a business and now need money to grow their business. Each person has been through a review process.

Kiva works with field partners like MIFEX, a savings and loan corporation that offers special services and business growth educational programs for the poor.

Question: What if they’re ignorant of these loans?

I’m assuming this means, ‘what if they don’t know how to spend this money wisely?’ Each person Kiva profiles knows exactly how they will spend their money in order to grow their business.

For example, one person that I sponsored, Lidys Fajardo from Ecuador, needed the $600 loan to purchase new supplies for the salon that pays for the education of her 5 children.

Lidys runs a hair salon where she styles and cuts hair. She has been in this line of work for over 15 years. After working in the beauty salon of a family member, Lidy’s decided to start her own operation with $50 of capital. She opens her salon at 9 in the morning and works until about 8 p.m. She needs the loan in order to buy better equipment for her operation. She needs new scissors, a blow dryer and a hair iron.

Lidys is a 34 year old mother of 5 children. All of her kids are in school thanks to the income she generates from her own salon. She hopes to continue to improve her services and attract a larger amount of clients.

Question: How long before they repay?

If you were to take out a loan that would greatly improve your business, how long do you assume the terms of the repayment would be? Most “small” loans in the US are paid back over 3-5 years. However, I’m seeing a much faster rate of payback with Kiva.

I donated $25 to Lidys back in December and now 7 months later she has repaid 75% of her $600 loan.

Another entrepreneur that I donated $25 to in December named Akouvi Adry has repaid 50% of the $800 loan she needed to “strengthen her clothing trade and will allow her to add to her shoes and bags for ladies inventory.”

Question: I think the idea of sponsoring a budding entrepreneur is a great idea. But, what about sponsoring one near home?

Good point. I suppose that this depends on where you consider “home” and where you draw the line between “us” and “them.” Where is close to home? Is it your neighborhood, your state, your country, or your world? There are lots of ways to support companies closer to home by choosing to spend your money at small businesses in your neighborhood or buying products online from smaller companies instead of Amazon.

Kiva allows you to help entrepreneurs in impoverished countries that you would have no access to otherwise.

Would you spend $25 to fund the business dream of someone in another country that you’d never met and probably never will? Why or why not?

Tags: Start Up by Adam - 6 Comments »

In case you missed it, someone recently commented that there are not many 40+ year old bloggers (I resemble that remark and so does Fred), but we bring a lot of life experience along with those 40 plus years. FYI, Christine is in her early 30’s (how cool it would be to be 30ish again).

If you are thinking about starting an online business or even an offline business, try to avoid using your credit card(s) or other forms of debt to fund it and don’t deplete your savings. What? “If that’s the case, I’d better give up now.” No you shouldn’t! You’ll never regret the long term benefits of having a debt free business. If what you are thinking about doing requires a BIG upfront investment, you may want to re-consider it.

Fred and I started our business debt free with virtually no money, are still debt free and plan to stay debt free. Yes, at times, cash flow goes on a roller coaster ride, but we can both sleep better at night with no debt. We’re not single guys either and my wife, Brenda, works in the business with us.

So, how do you start debt free, stay debt free and actually make money?

The list below is not in any particular order and this is by no means a complete list. It’s more of a fast start list. (Don’t forget proper business set up with your state which I am not covering here.)

1) Get online by starting with what you know: In Fred’s case, he’s a programmer and I’m a marketer. We can put up a website or blog internally for next to nothing. But, in your case, if you don’t have the ability to put up a site yourself, you can barter (trade services) with someone, build a blog on BLOGGER (which is great for newbies) or do like I did years before Fred… build a $20 per month website myself online.

2) Network online and off. If you network offline (and you should), you should get $20 worth of business cards from your local printer or office supply store or try GOT PRINT. DO NOT get free business cards online or print poorly done ones yourself. Drop the $20 and get something that at least makes you appear that you are in business.

You can network offline by getting involved with the local chamber and business groups like BNI or maybe your city has a less expensive version like this one. If a local chamber membership it too expensive, you can usually attend breakfast or lunch events as a non-member for about $15. I did this with one chamber and made $795 off of someone on my first visit.

To network online, you can join Fast Pitch Networking for FREE or consider their $14.95 paid membership which comes with some nice perks. You can also post legitimate comments on blogs and get to know the folks behind the blog to help build your online network. Forums are another great place to get the word out. I have spent thousands with a guy that I found on a forum. It’s been a great working relationship for both of us. Finally, tap into the power of Craigs List. Explore ways that Craigs List can help your business grow.

3) Keep your day job or consider getting a night job. What? If you have a good day job, let it support your moonlighting at nights and on the weekend until you build up your business. On the other hand, if your day job is so so, you may want to consider waiting tables at night and working your new business during the day. Wannibee actors wait tables, I’ve waited tables and delivered pizza, it might work for you. Just a thought.

4) Teach a class. In 1999, I started with ZIP, 0, NADA in the teaching arena. I had knowledge but that’s it. I contacted the North Carolina Community College Small Business Centers, local parks and recreation centers offering classes, etc. Now, in 2007, I’m exclusive to NC Small Business Centers and should do about 75 paid workshops by the end of the year. They do all the promotion. I just show up and give a quality 3 hour class which I have built a great reputation doing. Can you teach a class in your local community and get paid to do it?

5) For ongoing knowledge…Get RSS feeds. If you are new to RSS, here’s a tutorial. RSS will save you time. RSS will keep you educated and up to date about areas that you are interested in. By getting numerous feeds, you’ll gain knowledge, get tips and grow your business by staying informed.

DO NOT DO THESE THINGS… Spend big money on phone book advertising, do expensive direct mail or newspaper ads in the early stages of your business and fall for virtually every other sales pitch out there about how if you’ll just spend $500 with us then you’ll have all the business you want. You can find better ways to spend that $500 and many are mentioned above. If you network yourself right online and off, you will be amazed at the results.

The things above are just a few of the many things that I have done in the past to help my (now our) business grow. I have generated six figures ( not bragging just being honest with what low cost tactics can do for your business) many times over just using what I have mentioned in this post. It takes consistent action and determination, but you can do it to. Make a commitment to start debt free, stay debt free. If you are already in debt with your business, you can make a new commitment to minimize future debt. You’ll never regret it.

Tags: Start Up, General Business Issues, Business Networking by David - 1 Comment »