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Business school takes its shoes off

It's tough to run a tailoring business without a sewing machine. But it can be just as hard for someone without a business plan.

Microlending, a rapidly growing tool of economic development, can address the first problem, providing financial support to someone looking to start or expand a small business — and the Barefoot MBA, co-created by former Herald editor Katherine Boas '02, is tackling the second.

Microfinance provides small loans to individuals whom traditional banks consider too poor or too risky an investment.

But microloans are only part of the solution, Boas said. Because of the practice's increasing popularity, "there's a lot of financial capital floating around," Boas said, "but there's not a lot of intellectual capital ... to help people make better business decisions."

Boas is trying to change that. In 2007, she and business school classmate Scott Raymond traveled to rural Thailand, meeting with NGO leaders who emphasized the need for business literacy programs. The trip inspired the duo to create the Barefoot MBA, a tool that uses stories to teach these skills to microloan recipients. 

Now the Capital Good Fund, a Providence-based microfinance organization, is bringing the adaptable curriculum to Rhode Island. Andy Posner MA'09, the fund's co-founder and director, said people coming to them for loans lacked the "basic skills" required to run a business.

"Some of them are already up and running, but they don't really know how to go about it, so they're not really turning a profit," he said.

Posner turned to Alan Harlam, director of social entrepreneurship at the Swearer Center, who connected him with the Barefoot MBA.

The Capital Good Fund plans to pilot a series of workshops this fall with prospective loan recipients. While the workshops will be required for certain potential loan recipients, they will also be open to the public, Posner said.

While the Barefoot MBA's curriculum was originally designed for use in the developing world, "ultimately these fundamentals are the basis for any business anywhere," said Jill Lambiase '10, who is modifying the curriculum for the Capital Good Fund.

Boas said she designed the tool to be "adaptable" to various settings, using a "Mad Libs model where 90 percent of the work is changing nouns and verbs" to conform to the learners' cultural setting. One version used in Guatemala uses corn farmers Lorenzo and Aurelio to explain the importance of saving. Lambiase's version teaches the same lesson using the example of caterers Sofia and Tiffany.

The program, which  does not require participants to be literate, uses a collection of 16 oral lessons that each include a pair of contrasting stories. Each story's protagonists are placed in the same situation, but one character knows the skill being taught ­— ultimately leading to greater financial success.

The Capital Good Fund plans to adapt the stories into a series of five workshops beginning this October. The first workshops will be taught in Spanish to a group of 30 to 40 low-income women in Olneyville, most of whom are immigrants.

"The language barrier is one reason why a lot of these people aren't able to get loans from traditional banks," said Lambiase, a Rhode Island native. "They can't communicate effectively with these banks."

According to Posner, many of the women already have existing businesses but would like to run them more effectively, while others are hoping to build new businesses from the ground up. The types of businesses they run vary widely, he said. They include sewing and cleaning services, as well as a home-grown, homemade, one-woman salsa operation.

To make the workshop relevant to its participants, Lambiase is incorporating details from their specific businesses into the curriculum.

The Capital Good Fund has an environmental focus, so Lambiase has also been integrating these concepts into the curriculum. For example, she said, her story on cost-benefit analysis demonstrates that purchasing a more expensive but energy-efficient appliance can save money over time — helping the environment and the bottom line.

"Starting a business is not necessarily contradictory to being environmentally sustainable," she said. "We don't want to make it seem like they're two separate ideas."

Such support for microloan recipients is "essential," Harlam said. "There's a huge correlation between success in business and skills in business."

Lambiase, an economics concentrator, agreed with the need for business education. Much microfinance in the United States has had "mixed results," she said.

"We feel it hasn't really been implemented properly," she said, because the classes accompanying loans have stressed empowerment but failed to teach basic business skills.

"Empowerment is obviously important," she said, but the fact that the loan recipients are at the lessons "means they're ready to learn more."


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