Collectively, I think you will agree these stories weave a fabric of promise and fulfillment, laced with inspiration and possibilities for your own future in business. As you read the lessons and stories in the book, I expect you will find yourself saying, over and over again, I can do that, too. You can! It’s really only a matter of deciding to do it.
From there, Start Small, Finish Big has something more to offer you. My real reason for writing this book, beyond giving people the confidence to start a business, even if they don’t have much money, is to support the microenterprise movement that’s underway not only in the United States, but in Asia, Africa, and Latin America. In these countries, people who have no business experience, and no collateral to borrow money, including the poorest of the poor, are able to get capital from several hundred organizations. It’s a relatively young movement that’s gaining momentum, and as it expands, it can potentially help tens of millions of people.
My introduction to microenterprise occurred in 1989 while watching a segment of 60 Minutes. That Sunday night, as I sat at home in front of my television, I learned about Muhammad Yunus, Ph.D., an American-trained economics professor who had become a giant among impoverished people in Bangladesh, a country which 60 Minutes described as “the world’s graveyard of good intentions.” Dr. Yunus was loaning small sums of money to poor people, who in turn changed their lives for the better. Interestingly, the improvements initiated by Dr. Yunus contradicted the economic theories that he taught in his classrooms. In fact, he told 60 Minutes those theories—which he learned in America—did not work in Bangladesh. In spite of what he taught his students, economic progress did not occur the way the textbooks promised. Instead of things getting better, they only grew worse.
That’s when Dr. Yunus took matters into his own hands. He believed in a bottom-up, rather than a top-down, approach to helping people. If given an opportunity, Yunus surmised that people could do more for themselves than any government could do. So he left the classroom in 1976 and walked into the villages to really study economics. Soon thereafter, he was granting small loans to impoverished people. At the time of the 60 Minutes report, Dr. Yunus had loaned $100 million to 500,000 people in Bangladesh. The only prerequisites to qualify for a loan were impoverishment and the desire to work hard. The average loan amount was $60. Many borrowers received consecutive loans, renewed annually. (Today, Dr. Yunus’s organization has loaned more than $2.7 billion to 2.5 million people. The average loan amount is approximately $180.)
To many people who watched the 60 Minutes report, this story may not have made much sense. How could it? What kind of business could you start with $60? Could it become a business of any significance?
Yes! Even in the United States, as you’ll soon read, significant businesses have been started with $60 or less. In Bangladesh, $60 is a lot of money. A stool maker, for example, turned a $6 loan into a daily profit of $1.25, up from earnings of just 2 cents a day prior to the loan. With $30, another borrower purchased a loom and eventually earned $1,500 a year—enough money to afford a house and to educate several children. The 60 Minutes report abounded with these amazing stories of success.
While others looked upon Bangladesh as a classic case study in poverty—people were poor because they did not want to work—Professor Yunus saw something remarkably different. People were poor because they lacked resources. They had no money to do anything for themselves. Those who had access to resources were forced to pay outrageous interest rates on a daily basis to local traders. Consequently, people remained impoverished one generation after another. Provide the resources, as well as hope and encouragement, Dr. Yunus reasoned, and people could alleviate poverty on their own.
So he went to work to find money for poor people to help them start their own businesses. He didn’t want to provide aid to individuals, in spite of the fact that Bangladesh got plenty of international aid. He wanted to provide credit, which he believed was a fundamental human right. But when he contacted the community banks and suggested they loan money to poor people, who had no collateral, the lenders laughed at his idea. Of course, the reaction would have been the same from banks in the United States. Banks require collateral to make loans, and they rarely grant small loans. That’s one of the reasons I’m supporting microenterprise. By establishing microcredit lending groups across the United States, we can help people bootstrap their way into business.
After several banks rejected Dr. Yunus’s idea, he established a bank of his own. By soliciting loans and grants internationally, he founded the Grameen Bank, which in Bengali means the “rural bank.” Its sole purpose is to loan money to the “poorest of the poor.” Impoverishment is the only qualification a borrower needs to do business at the Grameen Bank.
Within a period of a few years, Muhammad Yunus had delivered more hope to crisis-ridden Bangladesh than any man or woman before him. By empowering people with tiny sums of money, and a few skills, he showed them how to help themselves. In so doing, he didn’t eradicate poverty, but he helped reduce the ravages of its horrible condition and he helped train legions of people who started grassroots businesses. Years later, President Bill Clinton would honor Muhammad Yunus in Washington, D.C., and state that he should be awarded a Nobel Prize.
While I sat fascinated by Dr. Yunus’s story, I couldn’t help but connect my own circumstances with the microenterprise movement that he inspired. I was not among the “poorest of the poor” when I started my business. But I had no money at the time, no collateral, and no business savvy. I was a seventeen-year-old kid who needed to find a way to pay for his college education. I needed resources. When a family friend offered me a small loan to start a business selling submarine sandwiches, it made all the difference in my life. As I sat there watching how Dr. Yunus changed the lives of people across Bangladesh, I understood how a small amount of money could change a person’s life forever. That’s when I decided that I would eventually help spread the gospel of microenterprise so that others could benefit from the movement, and perhaps contribute to it, too.
Third World countries were quick to copy Dr. Yunus’s somewhat controversial program, but several years passed before a Yunus-inspired organization arrived in the United States. (Other microenterprise groups already existed in the United States, however.) Critics, particularly in the U.S., have said the Grameen Bank doesn’t work, in spite of the fact that at least 95 percent of its loans are repaid on time!...in spite of the fact that its borrowers have saved more than $100 million, all of it on deposit at the Grameen Bank!...in spite of the fact that in nearly twenty-five years of development, the Grameen Bank has helped two and a half million people and spawned profit centers, including fisheries, and a cellular phone business...in spite of the fact that the Grameen Bank has demonstrated its ability to help people nourish their self-esteem, and provide for themselves and their families! “Poor people aren’t smart enough to start businesses,” say the critics. “If anything, they should be trained for employment. You need big businesses to really help people. Small businesses don’t amount to much.” Perhaps a few of the stories in this book would change their minds.
Fortunately, the critics have not discouraged Dr. Yunus, or his legion of admirers and supporters, who continue to help people start their own businesses. In recent years, the Grameen Bank, and organizations similar to it, have won favorable attention from major media, including the Wall Street Journal, the Washington Post, Forbes, U.S. News & World Report, and The Economist. Support for these various organizations has come from numerous groups and corporations, including Citicorp, Arthur Andersen, AT&T, NationsBank, Microsoft, Discover Card, the Ford Foundation, the Charles Stewart Mott Foundation, J. P. Morgan & Co., BP America, Rotary Clubs, and Kiwanis Clubs.
More support is needed, of course, if the microenterprise movement is to flourish in North America. Much of the support will have to come from individuals who are committed to the success of small enterprises. I committed the time to develop this book because I want to be counted among those individuals. I am proud to be donating 100% of the proceeds from this e- book to the Grammen Foundation so they can continue