A primary problem throughout the developing world is the lack of a formal, developed economy.

In the Philippines, El Salvador, Peru, Mexico and Guatemala, a majority of the working population can only find work in the informal sector. In other words, most working adults cannot count on a paycheck every month. They must fend for themselves and their families, doing whatever they can to earn a few pennies.

As the name suggests, micro-enterprise includes such economic activities and informal businesses as street vending, variety stores, independent basket weaving, sewing, and stands selling artisan souvenirs. With no other options for income, people engaging in such have turned to business for survival.

Two basic factors have limited the ability of these micro-entrepreneurs to improve the productivity of their tiny businesses: 1) access to capital, and 2) an understanding of basic business principles and skills.

For decades, these business owners have been excluded from accessing mainstream business services because of the small scale in which they work and the nonexistence of collateral. Without access to affordable capital, the poor must deal with exorbitant moneylenders in order to grow their businesses. Forced to pay annual interest rates in the thousands, poor entrepreneurs are locked in a cycle of debt payments, leaving nothing to better their businesses or improve their families' well-being.

In an effort to provide financial services to poor entrepreneurs, the micro-finance initiative has become a worldwide movement, with more than 66.6 million families participating and a surprisingly high rate of repayment, often exceeding 95 percent.

More importantly, numerous studies have shown that the recipients of micro-finance services not only improve their businesses, but children are fed and begin to attend school, women are empowered and families' entire socioeconomic standing improves.

The second limiting factor, the understanding and application of basic business principles and skills, is only recently being addressed on a large scale. Having become entrepreneurs by default, poor, often illiterate entrepreneurs are usually ill-equipped to start, manage and expand their businesses. Even the most rudimentary understanding of principles, such as the importance of savings, sales, customer service, bookkeeping and planning are entirely new concepts to the poor. Thus, organizations are increasingly beginning to provide business training and consulting in addition to their micro-finance services.

Mentors International has found that addressing these two factors efficiently is the way to ultimately give "a hand up, not a hand out."