In Reaching for Economies of Scale we discussed how small businesses might band together and share resources to cut costs and maximize profits. But in order for a system of small businesses to thrive each one must first begin. It’s old news that about 80 percent of small businesses fail. Less often do we hear about the microfinance options that may have helped them stay afloat.
Developing countries have been helped tremendously by systems of microfinance. Communities of men, and more often women, can lend each other money and resources in order to get their various small enterprises going. As they pay each other back and make profit, they can take their profits to the bank. Savings allows a measure of financial security and stability previously unknown to such impoverished comnunities. Virginia’s own Virginia Tech created a game in 2013 that teaches illiterate or semiliterate women how to cooperate in a microfinance community. [Read more…]