Originally published on CrainsDetroit.com (hyperlink this text to: http://www.crainsdetroit.com/article/20170207/CUSTOM01/170209856/entreprene…)
By Leslie D. Green
Tim Costello lost his day job like thousands of others in 2008, and his side job as a stand-up comedian wasn’t going well. Knowing how much he and his wife loved beer, the couple hatched a plan.
Costello would complete his entrepreneurship degree program at Eastern Michigan University and then he and his wife, Brigid Beaubien, a former Detroit Public Schools teacher and professor at EMU, would open their own craft beer store.
In 2011, their dream came true. They opened 8 Degrees Plato Beer Co. in Ferndale and eventually hired two part-time employees. Business wasn’t bad; so they wanted to grow and open a store in Detroit.
“We were really thinking about what we needed to go from a mom-and-pop establishment to an actual business,” Beaubien said. “We knew we had some of the skills needed but were missing most of them.”
That’s when Costello and Beaubien applied for the Goldman Sachs 10,000 Small Businesses initiative, one many programs in the state helping second-stage entrepreneurs expand their businesses.
In Southeast Michigan, governmental organizations, such as the Michigan Economic Development Corp., Small Business Administration and Michigan Works! agencies; venture capital firms like the Detroit Development Fund and Invest Detroit; business accelerators, such as Automation Alley, TechTown Detroit and Spark; nonprofits like the Kresge Foundation and the W.K. Kellogg Foundation; as well as colleges and universities all are working toward the success of small businesses.
“Every company starts as a small business and then takes off, and 60-80 percent of jobs come from small businesses,” said Anthony Racka, professor of business administration at Oakland Community College. “Goldman Sachs is making a commitment through the philanthropic arm to help 10,000 businesses across American because they realize that’s where the jobs are created.
“We’re not going to have thriving cities without small businesses.”
$20 million for five years of Detroit business programming
Launched in 2014, Goldman Sachs committed $500 million to 16 small business programs across the country; of that, $20 million was dedicated to a five-year program in the Detroit area.
A consortium of schools, including Oakland Community College, Macomb Community College, Wayne State University and Babson College in Massachusetts, operates the program for stage-two businesses poised for growth that have revenue of more than $100,000, have been in business for two years and have at least two employees. Business owners are united for 11 full-day sessions and four three-hour clinics over four months.
“I have seats for 40 businesses and run three cohorts a year,” said Camille Walker Banks, executive director of Detroit’s 10,000 Small Businesses initiative, which has so far served 250 businesses. “The beauty of the program is the diversity of size, community, age of the business owner and age of the business,” she said, also noting the gender and racial diversity of the business owners, who come from across Michigan.
The instructor is a facilitator, allowing participants to receive peer-to-peer instruction.
“That’s really where the magic happens. The business owner gets the opportunity to think strategically about challenges and triumphs, and they can be free and open because they aren’t sitting in the room with a bunch of competitors,” Walker Banks said.
“It was very reassuring,” Beaubien said of her participation in the program. “We could see how the problems we were having in a beer company could be problems someone was having in a production company. So much of the learning really took place within the cohort itself.”
The Goldman Sachs initiative uses 11 modules to teach every phase of business, from sales and marketing, to accounting, operations management and how to be bankable, said Racka. “Goldman Sachs is providing a practical substitute for an MBA degree by only providing the meat.”
The training is practical, Walker Banks said, allowing entrepreneurs to take what they learn on Friday, implement it on Monday and see results. Participants gain access to business support, resources and capital partners, such as Detroit Development Fund and Invest Detroit, and learn about various funding resources and establish relationships with people who run those resources.
“The secret sauce is the business advisors that are working with the business owners,” Walker Banks said. “I’ve heard it compared to an MBA on steroids. It’s a lot of work.”
Most importantly, though, is the confidence the business owners gain. “The economic downturn really did a job on the psyche of business owners, but we turn that around and focus on the positive,” she said. The first two sessions are focused on empowerment.
For two consecutive years, the Southeast Michigan program, held at Wayne State University, has had the highest percentage of business owners in the country increasing revenue and adding jobs within the first six months of graduating, Walker Banks said.
Racka said the program also helps participants network and leaves them with an actively engaged alumni community. “They are the living LinkedIn.”
As a result, 82 percent of the business owners either start doing business with or buying products from one another, Walker Banks said.
By the time Costello and Beaubien completed Goldman Sachs program in 2015, they had opened 8 Degrees Plato Beer in Detroit.
Beaubien said the most significant thing she and her husband learned was the importance of having “systems in place.”
The beer company now employs four full-time people and 11 to 16 part-timers. “We really thought through if this is our end product, what are the systems we need to have in place? How are we going to hire people that reflect our business values?
“If we have an issue, we know it’s because we don’t have a system in place.”