By Nicole Keller
Editor’s note: The writer of this article is the first-prize winner in the 2005 IDBAmérica Scholarship Competition. She studies journalism at the Pontífica Universidad Catolica de Chile.
Sometimes it takes Mónica Civilo several hours to find the perfect shade of red. She mixes the paints, looks at them carefully and tries them out many times before she decides to put brush to wood.
Mónica paints and designs toys that her husband makes in the workshop in their modest home in the La Florida district of Santiago. Inside the house the air seems to smell of Christmas: wooden puzzles, palitroques , stands that hold books or music, and even tricycles are part of the decoration. The Civilo’s three children, who have just returned from school, are helping their mother sort and pack the toys in special bags.
The Civilos’ story is a one of success through entrepreneurship, a classic example of how far people can go when they set their minds to it. But nothing came easily to them. They had to overcome the barriers faced by all middle- and lower-class people in Chile: lack of credit, limited support and above all the lack of training in how to run and grow a small business.
Obstacles to microenterprise. Chile has 1.2 million microenterprises that provide work for nearly 3 million people. Unfortunately, despite their number, these businesses only represent 13 percent of Chile’s total sales and barely 1 percent of exports. Such figures are meaningless unless they are associated with a person who has specific aspirations and particular goals. Two million families are able to survive thanks to microenterprise, either as owners or as employees. And in a country where unemployment is still above 7 percent, the meaning of this contribution to people in Chile should not be underestimated.
Microenterprise has enormous potential but receives little support. When Mónica Civilo decided to start her own business, she felt disadvantaged because she had no access to financing. (Banks generally require businesses to be up and running, or at least to put up collateral for a loan.) Once she did manage to get the money together, the family toymaker found herself in a complicated situation. “We were able to create our product, but we had no idea how to run the business,” Mónica recalls. “We didn’t know how to keep the books, set prices or how to learn .”
A parallel project is born. Aníbal Pinto, who was in his last year of law school, thought he could help raise people out of poverty by training potential microentrepreneurs to manage their businesses. His first aspirations were modest. He recruited four friends and asked local officials to put him in touch with people who needed technical assistance. “It was fun,” remembers Pablo Narváez, one of the first instructors. “They let us use the canteen after it closed. We would move the chairs and tables, and make a kind of classroom setup.”
The initiative was a success, and both the microentrepreneurs and the officials were surprised at the results. Pinto began expanding the area covered by the program by having more friends participate, until one day he decided to form an association called “Acción Emprendedora” . Its goal was to support people who wanted to start businesses or who had ideas but did not know how to make them happen. Today, what began as a project among friends has more than 100 volunteers and has helped more than 550 microentrepreneurs throughout Chile.
Perfecting the model. With time, the method for helping microentrepreneurs has been polished in order to adjust to the students’ needs. “The way we put together the classes has been evolving,” explains Narváez, who is currently the president of the association. “We realized it was not very efficient to give one course for all the students, because their levels of knowledge were different.” That led to developing two types of courses: the basic course for beginners, and the advanced course, for people with more experience.
As the months went by, it became clear that some microentrepreneurs needed more direct assistance in detecting the strengths and weaknesses of their business ideas. The “tutor” program was created in response to that need. It pairs students who are in their last year of the management program at the university with a microentrepreneur for one semester. During weekly meetings, both the student tutor and the microentrepreneur analyze the business’s progress and refine new ideas to stimulate growth. “You put everything you’ve learned in the university into practice by serving people who need that knowledge,” explains Gonzalo Russi, who was a tutor in 2005. “That way, the experience helps the entrepreneur as much as it helps me.”
Although many microenterprises can become more profitable thanks to the knowledge their owners acquire through classes and tutoring, an initial investment is often necessary to develop these ideas. Because it is hard for people who don’t have guarantees or who haven’t been in business before to get loans, Acción Emprendedora arranges microloans with institutions that specialize in microenterprise lending.
The value of personal contact. “At Acción Emprendedora, they teach you to value what you do, to feel that you’re important, to really believe that you make your destiny,” says Mónica Civilo. Besides what she has learned about numbers and marketing, Mónica points to the contact she has with the association’s volunteers. “Each one of the members values us as human beings, they’re really concerned about us. They call me, they ask how I’m doing, how things have been going with the toys,” she explains. She also tells how program staffers helped her family after her husband had a serious accident.
“What makes us different from other similar organizations is that we try to give people knowledge and faith in themselves, so they’ll dare to make their ideas happen,” says Acción Emprendedora creator Aníbal Pinto. By staying in close touch with microentrepreneurs, it tries to give them confidence and security, so they value themselves and understand that they have been trained to make progress, and that they have the skills they need to succeed with their projects.
Improving quality of life. While Cecilia Mora decorates her homemade alfajores with white chocolate, she talks about the important role her tutor played in launching her candy shop. “The fact that someone had a vision of what my small business could be helped me change in such an important way… I knew my products were delicious, but I didn’t know anything else,” explains Cecilia, pointing to the bombones she makes in her own home.
Acción Emprendedora’s ultimate goal is to overcome poverty by training microentrepreneurs, which means that the organization measures each microentrepreneur’s tangible successes. Eighty-six percent of the participants in Acción Emprendedora’s courses say the courses helped boost their productivity, and 40 percent say their new knowledge has increased their income by between 40 to 80 percent.
Besides benefiting the participants directly, the classes and tutoring sessions help create local employment. Thirty-six percent of the microentrepreneurs hired another worker after finishing the Acción Emprendedora training course. “Now I have two people from the neighborhood working in my store,” says José Pinto, who opened a shop that sells nuts and dried fruit in July. “I think I can contribute to my community by doing this.”
In four years, Acción Emprendedora has expanded throughout Santiago, and every year it trains more microentrepreneurs. Its success has motivated its members to believe that this kind of association could be set up in other parts of the country, to help and teach people who want to make their dreams come true, by making Chile a nation of entrepreneurs.