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TRAINING—Public Dole to Private Dough

WELFARE RECIPIENTS GET mONEY, tRAINING TO LAUNCH THEIR OWN bUSINESSES Carl Jones applied for publicity jobs at most of the major film studios and entertainment companies when he got out of prison, but prospective employers never called back. Now, Jones is about to launch his own company as one of 12 students in the first graduating class of a pilot program designed to turn welfare recipients into entrepreneurs. Funded through the state’s Welfare-to-Work initiative, which tapped the Valley Economic Development Center Inc. to provide the training, the program teaches welfare recipients how to market and manage a small company. It also pays for the cost of a business license and, for those deemed creditworthy, even provides small loans to cover the cost of startup and supplies. The businesses being launched by graduates of the first program are small, one-person operations run from home. But by helping welfare recipients to set up independent businesses instead of entering the traditional workplace, job-development officials hope the participants can increase their earning potential beyond the minimum wage jobs they may otherwise be limited to. “They may be able to cook or work in a restaurant because maybe they’re making tamales at home, but the difference is putting them in a job that will pay $5.75 an hour as opposed to teaching them how to turn their skill making tamales into a business that would be more beneficial than the $5.75 an hour job,” said Cheryl D. Walters, manager of the program at the VEDC. Consider Gwendolyn Valle, a young mother who has been receiving public assistance since being laid off from her job at Vallarta Supermarkets. Born in Los Angeles, Valle lived most of her life in Mexico, and has only a limited command of English. What she does have is a family recipe handed down from her grandmother and a talent for artistic design. For years, Valle has been baking confections made of gelatin, shaping them into fruits, cartoon characters and other designs for her family and friends. Now, with her newly learned business skills and a small loan to purchase molds, she is launching World of Gelatin making desserts and gift baskets. “I’m going to give it a try, step by step,” said Valle. “I’m going to make it work, and have an income and not be dependent on anybody.” The first training program has also turned out a hairstyling business, house-and pool-cleaning services, a walkie-talkie rental company and a decorative silk-flower manufacturer, among others. The students came to the program with skills or experience in their chosen field, and the VEDC provided training to help them devise a business plan, project sales, set prices, market and manage the company. “It really took you from the concept of having a job to the concept of doing business,” said Jones. “Even though I was thinking on that level, this really clarified it.” Off the dole When the California Welfare Reform Act was passed in 1997, the philosophy was to get recipients off the state dole and into the workforce, but that focus leaves many stuck in low-paying, entry-level jobs. Many don’t have the skills required by employers to advance in the traditional, wage-earning marketplace. “This program says, well, you know what? There are a lot of people that will not go to work because they don’t possess any marketable skills that employers are looking for, but they do have skills they have used that will afford them the same opportunity,” said Walters. Welfare workers have long known that many recipients are engaged in informal businesses as a way to augment their meager public-assistance incomes. Last year, hoping to channel those informal efforts into bona fide businesses, the Community Development Department tapped the VEDC to offer formal training in running a business, allocating $275,000 for a one-year pilot. In addition, the VEDC made available loans ranging from $500 to $2,500 to those graduates who meet the agency’s lending criteria. Students are referred through Greater Avenues for Independence, the same agency that helps find jobs for welfare recipients. The students must have a focused business idea that can be implemented on a small scale at low cost. Many will still have to hold down part-time or even full-time jobs while their companies get off the ground. “We had probably as many as 40 people apply,” said Walters. “Some were turned down because they were not committed enough. Some won’t come to the next class because their schedule or child-care situation didn’t allow them to start now. Some needed a little more work developing their idea.” Shaunna Griffith, who is receiving public assistance as a result of a divorce that left her without child support, got her idea for Close Range Communications, a walkie-talkie rental service, from her personal experience as a mother of four children and because, in her part-time job as a character escort at Universal Studios Hollywood, she often deals with lost children. “I deal with the parents on one end and the children on the other end, and we always find them, but it breaks your heart,” Griffith said. Griffith said she browsed the Internet until she found a supplier who could provide walkie-talkies that double as cell phones, and took the idea to Universal, but they proceeded without her. “I submitted it in May or June and the next thing I know come September they had my walkie-talkie renting them in one of their stores,” Griffith said. (Universal did not return calls about the situation.) With a $1,000 loan from the VEDC, Griffith is trying to set up the rental outposts in neighboring hotels. “If I get one client, I’ll be OK,” she said. “But I still have to work my regular job and take care of my kids and get out there in my spare time. So it’s definitely a challenge, but I know it’s going to be a better life.” Overcoming the stigma Because of their financial histories, many of the recipients were unable to land loans, and will have the added burden of financing their businesses. Merlene Yelding, who worked as a hair stylist for 10 years in Ohio before coming to Los Angeles just under a year ago, always wanted to own her own business by the time she was 30. She thought she would be receiving a grant to get her business going, but because she did not qualify for a loan, she will have to settle for plying her trade in her clients’ homes. Yelding is worried about her ability to make a go of her business without a shop to work from, but she said she plans to pursue it anyway. “That was the biggest disappointment,” Yelding said. “If we had the money (to open a business) we wouldn’t be on welfare in the first place.” The survival rates for small businesses are not promising; most fail in the first two years. But experts say that’s because many small-business owners lack training. “Probably the most flagrant example is the man who pumped gasoline for years and became positive he knew everything about running a gas station,” said Charles Bearchell, emeritus professor of business at Cal State Northridge and author of “Retailing, A Professional Approach.” “The fact is that you do need training and you need to wear six or seven hats. That’s one of the advantages of being sponsored by the VEDC or the Small Business Administration,” Bearchell said. And what of the stigma of their backgrounds as welfare recipients? Will the students be able to secure the clients and vendors they need to make their businesses work? “I’ve asked myself that several times, even before I took the position of being program manager,” Walters said. “Then I thought about it, and you know what? The people making the decisions now in corporate America are mostly the baby boomers. We’re the ones who know that the lives we lived were not picture perfect, and we have become the people we’ve become because we were persistent and we believed we could. And now, in our heart of hearts, we’re willing to give somebody else a chance.”

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