Entrepreneurship program is a way off welfare for some

IN BUSINESS FOR THEMSELVES

August 16, 1992|By Kim Clark | Kim Clark,Staff Writer

Through the dusty, broken windows of a failed radio shop in Hampden, Carolyn Earls envisions a bustling crafts-supply store. People buy yarn, pine cones, glue guns. They drop money in a cash register. Her cash register. In a few years she could have a chain of bustling craft shops in neighborhoods like this. . . .

It is a glorious dream of economic independence for the unemployed mother of two.

Glorious. And risky.

More than half of all new businesses fail within four years. But Ms. Earls, who graduated Friday from a government-funded training and loan program designed to turn unemployed workers and welfare recipients into entrepreneurs, is determined to open her shop.

"I've made my mind up," the 35-year-old Baltimore native said. "I'm getting off welfare."

And state welfare officials are determined to help Ms. Earls and others like her pursue their business dreams.

The recession that wiped out millions of jobs -- and the riots in Los Angeles that drew attention to the apparent hopelessness of the poor -- have convinced many that welfare and job-training programs aren't working. An increasingly popular alternative is to help the poor start businesses, ideally helping people revitalize their lives, provide jobs for neighbors and rejuvenate troubled communities.

Not everyone agrees with that approach. Critics say entrepreneurshipprograms are expensive and ineffective because only a tiny percentage of those trained are likely to succeed. "Most people on welfare are not exactly entrepreneurs. What they need is training and a job," says Sar Levitan, head of George Washington University's Center for Social Policy.

Nevertheless, governments are embracing the entrepreneurship idea. There are more than 250 business start-up programs nationwide, compared with a half-dozen in the mid-1980s. And Maryland's program is part of a nationwide test of the entrepreneurship approach.

Thus, the future of the fledgling programs depends on the fate of people such as Ms. Earls.

Matching skills to opportunities

Although each community entrepreneurship programs is different, most offer the same three services: training, loans and continuing advice. And Maryland's Business Ownership Startup Services (BOSS) program is, in many ways, typical.

Six hours a day, five days a week for the last 12 weeks, Ms. Earls and her classmates studied accounting, marketing and management. They were mostly poor single mothers from Baltimore, since the program is designed for recipients of welfare or unemployment insurance, and for residents of public housing. But there were a few men, and some came from as far away as Montgomery County.

Together, they listed their hobbies and skills and tried to figure out how they could turn them into businesses.

Gloria Holt, who had once run a downtown Baltimore flower cart and has worked in flower shops, decided to capitalize on her love of flowers.

She researched her idea and discovered that, despite the recession, flower sales are rising. "People need flowers, especially in a recession," she says. "They have a soothing effect. . . . If nothing in your life is beautiful, you should make something beautiful."

The single mother of two, now on welfare, plans to open a flower shop in downtown Baltimore.

She and the 29 who graduated (three others dropped out) finished the program with new confidence -- and business plans complete with market analyses and three-year cash-flow projections.

Six of the graduates plan to start child-care businesses. Others want to set up catering, heating-repair, bookkeeping or computer-related businesses.

Each graduate will have a chance to borrow a few thousand dollars from a loan fund overseen by the Council for Economic and Business Opportunity (CEBO) to help start a business. The $125,000 revolving loan fund was set up by the Abell Foundation and the state Department of Economic and Employment Development.

To ease them into the business world, the federal government will allow the BOSS graduates to receive welfare payments and health insurance for their first year in business, as long as they pour all profits back into the business.

And, in coming years, BOSS trainers will help them keep track of their finances and will offer marketing and management advice.

BOSS, a division of CEBO, does all of that for about 100 students a year for $350,000, which comes from federal, state, Baltimore and Baltimore County funds.

Revitalizing neighborhoods

In theory, the program is great for the students and their communities, says Robert Friedman, president of Washington-based Corporation for Enterprise Development and the prime mover behind the entrepreneurship pilot programs.

Students learn business skills, build self-confidence and earn their way out of poverty, he says.

Since most of the businesses are started in troubled communities, the program helps neighborhoods. And when the businesses start hiring, they bring new jobs, potentially taking even more people off the unemployment rolls, he says.

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