Goldman Sachs: The American bank giving British

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Goldman
Sachs: The
American bank
giving British
small business a
lift
Ian King Business & City Editor
Published at 12:01AM, April 23
2013
Gather a group of small business owners
in one room and what will they talk
about?
Any observer of the British economy
might reasonably assume that moans
about the lack of lending to SMEs by
Britain’s commercial banks will not be
far from the agenda.
And, sure enough, they are not. What is
more surprising, though, is the sheer
level of optimism, enthusiasm and
positivity on display.
This was the mood at the Fleet Street
offices of Goldman Sachs yesterday as
the investment banking group played
host to some of the entrepreneurs that
have participated in its “10,000 Small
Businesses” programme.
The scheme, launched in 2010 in
partnership with leading university
business schools in Oxford,
Birmingham, Leeds, Manchester and
London, seeks to identify and support
established small businesses that have
the potential to expand rapidly and create
jobs. Those participating attend modules
focused on different aspects of
developing a job, such as identifying
export opportunities, hiring the right
people, improving marketing and
obtaining finance to drive growth.
Crucially, though, it also brings together
small business owners, often from
completely unrelated sectors, to
exchange tips, opinions and ideas.
Rana Harvey, of the York-based online
retailer Monster Group, explained: “One
of the best things about the programme is
the network. Everyone is very positive
and every wants to talk about business.
“I have twice now been able to bring in
people who have helped me to interview
potential recruits. I have used people
who have helped to set up automated
processes for me. And there was
someone else who was excellent at
branding.”
Rupert Cruise, founder of the Londonbased Texchange, which designs and
makes control systems used in mining
and transport equipment, had a similar
experience. He said: “When you own
your own business, it can be lonely. So it
is good to be able to come and exchange
ideas. We always knew marketing was
our weakness. Then someone I met on
the programme told me ‘You can’t sell to
non-techies’ and we could address it.”
The tie-ups often can be profitable
almost at once. Chris Ives, who cofounded Ilkley Brewery in West
Yorkshire in 2009, met Viv Parry, the
owner of Exquisite Cakes, of Leeds,
through the scheme. They have teamed
up to sell Christmas cakes made with the
brewery’s award-winning stout.
Mr Ives said: “Those cakes were sold
last Christmas on Park Avenue in
Manhattan and go for around $15 a time.
British products are what people want.
The British brand has a significant
premium attached to it, whether you are
selling handbags, shoes, beer or meat —
there is an open door for exporters.”
This was also the experience of Diane
Burridge, chief financial officer of
Moneyline, a not-for-profit social
enterprise from Blackburn that offers
small unsecured loans.
Through the scheme, she met Andy
Simpson, who runs a Doncaster-based
social enterprise that sells second-hand
furniture: “I have worked with him to put
pop-up shops in his stores and that has
widened our access to customers, while
his customers have access to short-term
financing.”
One of the key aims of the programme,
to support job creation, appears to be
working. Analysis by the business
schools suggests that 77 per cent of the
small businesses taking part in the
programme have hired more staff during
the past year, compared with 23 per cent
for the average SME.
Susanna Lawson, operations director of
Citrus Lounge, a Manchester-based
software development company, said:
“We have gone from 19 employees to 29
and we have three vacancies at present.”
Ms Lawson said it was particularly
pleasing that her business was able to
bring work to parts of Manchester, such
as Newton Heath and Harpurhey, that
traditionally have been afflicted with
high levels of long-term unemployment.
She finds it depressing that, despite
being a force for good in society,
entrepreneurs often are still treated with
suspicion, as “Del Boy” characters.
“Entrepreneurs are still seen as
negative,” she said, “but for a lot of us, it
wasn’t a case of thinking ‘here’s
something I can sell to someone else’, it
has been growing a business from
something we were passionate about.”
Mr Cruise agreed: “In the US, they
understand what it’s about. It is OK to
fail, so people take more risks. Here,
there is a huge stigma attached to
failure.”
Access to capital remains a challenge for
many of the businesses. Mr Ives argues
that the attitude of the commercial banks
remains “shocking.” He added: “We still
can’t get the access to the finance that
we want without offering the type of
security that the banks want and that I
am not prepared to give them.”
According to others, access to finance is
only one of a number of challenges that
small business owners face.
Mr Cruise said: “There are many factors
that drive the growth of a business,
although it was definitely easier to raise
capital before the financial crisis than
has been post the crisis.
“And there are other things, such as
research and development tax credits,
that help. The Government is doing its
bit.”
Ms Burridge added: “One problem that a
lot of small businesses and social
enterprises have is that they are not
investment-ready. The banks are
prepared to lend but they will not lend to
you if, for example, you do not have a
business plan.
“Doing this programme has helped me to
pitch the business to our social investors.
It has made the business investmentready.”
Equally pertinent to the debate, perhaps,
is why it has been left to a Wall Streetbased investment bank that does not do
SME lending to run a programme like
this for British SMEs, rather than, say, a
British commercial bank.
Richard Gnodde, co-chief executive of
the bank’s European division, said: “This
is a global programme. We’re also doing
this in the US. But Britain has been a
great home for us. I started here 26 years
ago when we only had a couple of
hundred people — now we have 6,500.
“Our business is about helping economic
growth and driving employment and this
is aligned to that. We are not a small
business lender but, hope fully, we can
equip people with the skills to receive
lending.
“And we are recruiting for talent — this
is the right thing to do. The kind of
people we are recruiting want to see us
do things like this. It makes Goldman
Sachs a more interesting place to work.”
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