By Katie Mehnert, CEO and founder, ALLY Energy
Small businesses have played a major role in fueling America’s recovery and will lead the country into a new era of business. But the people who lead these organizations need new kinds of support. That's a crucial, overarching message from the Goldman Sachs’ 10,000 Small Businesses Summit taking place in DC, where lawmakers and corporate executives are pledging their support to help make big changes happen.
Warren Buffett, Michael Bloomberg, former President George W. Bush and Gwyneth Paltrow are among the speakers here helping to make clear what investors, executives and government officials should understand: Boosting small businesses is essential to strengthening the economy.
About 2,500 small business owners are in attendance. We’re among the more than 10,000 who have graduated from Goldman Sachs’ 10,000 Small Businesses program. As part of the summit, we’re meeting with congressional leaders to discuss the small business agenda. Goldman CEO David Solomon explained to CBS, “We’re here to let those small businesses express directly to their legislators how they can be supported to help drive economic growth across the country.”
Struggles with hiring, capital and more
A new survey from the program and the Bipartisan Policy Center highlights major challenges facing many small business owners.
Nearly all (97%) say difficulty hiring is affecting their bottom line, up 17 points from September. This may be little surprise amid very low unemployment and the “great resignation.” But small businesses are especially disadvantaged in the war for talent. Three-quarters of small business owners who are having difficulty retaining employees say they can’t compete on salaries, and two-thirds say they can’t afford to compete on benefits.
Small businesses are also especially in need of capital -- and minorities in particular have trouble accessing such funds. Nearly half of Black small business owners (48%) expect to seek a loan or line of credit for their business this year, but only 19% are “very confident” that their business will be able to access capital.
The survey also found that barriers to getting government contract work are too high -- particularly for women-owned small businesses -- and that ongoing childcare challenges are creating problems.
The report, titled from Pandemic to Prosperity, offers solutions, including tax credits, subsidies, and access to resources. It also calls for the reauthorization of the Small Business Administration for the first time since 2000.
The key will be encouraging those in power to prioritize these needs.
Diversity and small businesses
It’s very significant that the survey points to issues disproportionately facing Black Americans and women. In order to build an economy that can withstand recessions and crises (such as epidemics), our nation must make sure that marginalized groups get equal opportunities.
McKinsey reports that expanding Black entrepreneurship in the United States could help to “unlock some $700 billion in value that would be shared by companies and Black households. This is a dual opportunity to add revenue for companies and growth for the economy while addressing important gaps in neglected communities and creating value for consumers.”
Similar reports exist on a global level. Boston Consulting Group found that “if women and men around the world participated equally as entrepreneurs, global GDP could ultimately rise by approximately 3% to 6%, boosting the global economy by $2.5 trillion to $5 trillion.”
Addressing these gaps requires steps that yield concrete results. In fact, I became involved with Goldman Sachs after criticizing an effort the company announced involving gender balance. In the Harvard Business Review, I called it misguided, potentially damaging, and a fig leaf. Solomon then contacted me to discuss, and we had a terrific conversation about other steps the company was taking and could add. I soon applied for, and was accepted into, the small business program, which itself includes efforts to lift up women and minority entrepreneurs.
Tackling climate change
For me, there's another major reason that small business must flourish in a way that involves people from all walks of life: climate change. Numerous studies show that the more diversity and inclusion an organization has, the more innovative it is. And innovation is essential to the energy transition, or what I call Energy 2.0.
Small businesses are already creating new ways of delivering energy and advancing efforts to decarbonize. I’m proud to be a part of Greentown Labs Houston, the top climate tech incubator in North America. Some of these small businesses will become the next unicorns or decacorns -- rewarding early investors and those who jump on IPOs.
That message is one of many that I hope will resonate from this ongoing conference. Ninety-eight percent of U.S. businesses have less than 100 employees; 89% have less than 20. Participants at the summit are using the hashtag #makesmallbig. It’s a fitting choice. While we are small business owners, together we’re a huge force -- one with incredible potential to build the future.
Katie Mehnert is CEO and founder of ALLY Energy, ambassador to the U.S. Department of Energy’s Equity in Energy Initiative, a member of the National Petroleum Council, and a graduate of the Goldman Sachs 10,000 Small Businesses program.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.