In most communities, especially low-income neighborhoods, people often run informal businesses to make money on the side. That might mean cutting hair in their living room or fixing neighbors' cars. "There is just this huge untapped resource," says Mihailo Temali, founder and chief executive officer of NDC.
It can be incredibly difficult for low-wealth entrepreneurs to start a formal business. Most importantly, they need capital. But when people don't have any assets, they can't invest in their business idea themselves and can't qualify for bank loans, either. Research cited by the Small Business Administration's Office of Advocacy also suggests that minority business owners are more likely to be denied credit than whites, even after controlling for credit scores, personal wealth, and business revenues.
Would-be entrepreneurs who don't have much education, don't have any small business owners in their family or friend groups, or are new to the United States can also be held back because they have no idea where to begin. Cultural and language barriers can make it more difficult to ask for help.
NDC addresses all these challenges, starting with education. Partner organizations — usually groups that serve a particular neighborhood or ethnic community — host classes and recruit students. NDC-trained instructors teach the courses, which last 20 weeks, cost low-income students $100, and are currently offered in five languages.
So far, NDC has trained more than 4,400 people. Almost all students earn much less than the area's median income, and most have either a high school or associate's degree. Eighty-four percent of alumni are nonwhite.
Wendy Hines, the trained accountant who taught Haiyen's class, walks students through the nuts and bolts of starting a business. She covers all the logistics, from picking a location to applying for a federal tax-identification number. She also dispenses advice: Try not to quit your day job until your new business is profitable. Only hire family and friends you'll be able to manage as employees.
About one in five students who complete NDC's training decide to take the next step. "A lot of people say they want to start a business, but they don't understand the work that's involved," Hines says. And not all alumni who do start a business are still operating a decade later.
But alumni who do want to proceed can also apply to NDC for a small business loan. NDC's lending team looks carefully at each applicant's finances and business plan, and also uses former instructors as character references. As Haiyen's instructor, Hines could tell her colleagues that Haiyen had worked hard in class, that she was committed to her idea, and that she and her husband had years of retail experience between them.
An NDC loan allowed the Vangs to open their first store near the south Minneapolis neighborhood where Haiyen grew up. Their initial plan was to offer a 3-for-$10 deal on clothing for the whole family. Haiyen filled the shelves with overstock items. Neeson worked the overnight shift at Wal-Mart so he could work in the store during the day. Often, the Vang's young children would spend the day in the store with them.