Goldman Sachs Helping 10,000 Small Business Owners

During the financial crisis of the past few years, Goldman Sachs and the other large Wall Street banks have been vilified as a major contributor to the down economy and like many of the large banks, they haven’t been able to lose their reputation as the black sheep of the American economy.

In 2009, Goldman Sachs attempted to repair their reputation by announcing that they were investing $500 million over the next 5 years to helping small businesses grow, especially those in areas where major headwinds to business growth existed.

First, they set up an advisory board consisting of investing giants like Warren Buffet and Harvard economics professor Michael Porter who is known for his research on inner city entrepreneurship. The board decided that the most important component to this program, even more important than funding, is education. If an entrepreneur doesn’t have the skills to use the funding in an efficient way, the money will largely go to waste.

They knew that they couldn’t reach all of the entrepreneurs who wanted to be part of the program so they set up some minimum criteria. The entrepreneur must run a company with at least four full time employees, have revenues of no less than $150,000 but no more than $4 million, and they must have been in business for at least two years before applying for the program.

The course is a 20 week course taken at a local community college every other Saturday which combines classes on negotiation skills, accounting, marketing, and other essential skills. Along with classes, Goldman Sachs partners with local institutions to provide funding for small business expansion growth as well.

What’s in it for Goldman?

Aside from the PR benefits of helping “the little guy”, Goldman admits that they don’t plan to lose any money. They cite the fact that small businesses employ 50% of the private sector workers in America as well as being the generator of 65% of all new jobs in the past 17 years but their real reason for the investing is growth potential.

Successful small business ran by knowledgeable entrepreneurs have a much larger growth potential than larger companies who have reached such a large size that their upside growth is limited. A small business could double in value with a relatively small amount growth compared to a much larger company.

Is it Working?

Yes! The average year over year growth of businesses who have owners that went through the program is 35% and the program continues to enter other markets throughout the United States. Goldman Sachs reports that they have only spent $60 million on the program as of January of 2011.

More information at: http://www2.goldmansachs.com/citizenship/10000-small-businesses/index.html