Goldman lends a (small) helping hand
A $500 million program headed by Goldman Sachs and Warren Buffett aims to support small businesses. But it goes only so far.
By Elizabeth Blackwell, TheStreet.com
Financial powerhouse Goldman Sachs operates in a completely different universe than does the average small business.
For Goldman, 2009 is turning out to be a banner year with record profits. The company has already set aside almost $17 billion for employee compensation, which works out to an average bonus of $700,000 per worker.
Meanwhile, small businesses are struggling and bonuses are nonexistent. There's only one arena where mom-and-pop operations have an advantage over Goldman: public opinion. Small businesses are praised by Democrats and Republicans alike as the economy's prime growth engine. No one scores any political points by sticking up for Goldman.
That might explain why the company recently announced a $500 million program to provide support services and financing for small businesses. With an advisory council chaired by billionaire investor Warren Buffett, Goldman Chief Executive Officer Lloyd Blankfein and Harvard Business School professor Michael Porter, it's a high-profile project that immediately captured headlines.
But will it help you? Most likely, no. The program plans to target 10,000 small businesses -- a tiny drop in a very large bucket, given that there are millions of potential beneficiaries across the country.
Even owners who do get chosen won't find the initiative a cure-all. Goldman isn't handing out cash to pay off debt or help hire back laid-off workers. The program focuses primarily on education, funding business and management classes at community colleges and universities, and providing scholarships for small-business owners to attend. The plan is to eventually extend into online classes as well.
Ideally, the program will lead to new networking opportunities, since small-business owners will be interacting with local academics and leaders of nonprofit associations that specialize in community development.
There's no question that mentoring and practical, skill-based training are worthy goals. Many small-business owners could use a hand with accounting, marketing and human-resources management -- all topics that will be part of the planned curriculum. But none of those subjects address the most pressing issues facing most owners today, like how to get financing in a tough credit market, or how to convince skittish consumers to increase their spending.
Whether you congratulate Goldman for stepping up or shrug it off as a PR stunt, the good news is that you can find similar services on your own. If you're looking for help with a particular discipline, try contacting SCORE, a nonprofit association that pairs small businesses with retired volunteer executives. The organization can set you up with a personal business coach, find you a local mentor and provide access to online advisers 24 hours a day. Workshops are available both online and at local chapter offices on topics such as marketing and financial management.
You can also get access to business-school advice by offering your company up as a case study for MBA students. At Columbia University's business school, for example, owners can submit specific projects they're working on, such as cost analysis or financial forecasts, and a student team will spend a semester working on solutions.
The upside is that it's free. The downside is that it's a bit like dating: You have to sell yourself and your company to students, who pick only the projects that sound most interesting. (There's even a "mixer" before the final decisions are made.)
At Temple University's Fox School of Business, the Small Business Development Center offers start-up and existing businesses free consulting and advertising design services, legal advice and access to market research. Seminars address topics such as business plans, and the Construction Management Certificate Series gives contractors the skills they need to run their own successful business.
Sure, it would be great to get your hands on some of that Goldman cash. But you can get some of the same benefits elsewhere. In the end, no one is going to reach out and rescue your business. It's ultimately up to you.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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