Supporting Underserved Entrepreneurs

Goldman Sachs' initiative to help small business has drawn headlines. Here are some programs targeting microenterprises and inner-city entrepreneurs

By Karen E. Klein

Tim Ferguson and Ron Walker founded merchant bank Next Street Financial to focus on underserved, inner-city businesses.

Goldman Sachs (GS) announced last week that it is teaming up with Berkshire Hathaway (BRKA) CEO Warren Buffett to launch 10,000 Small Businesses, a $500 million initiative aimed at assisting low-income entrepreneurs.

Goldman is hardly alone in investing in small business. There are thousands of organizations—private, public, nonprofit, and hybrid—whose primary mission is to mentor, train, educate, and fund entrepreneurs.

One group reaching out to struggling entrepreneurs in distressed communities is Rising Tide Capital. The Jersey City (N.J.)-based nonprofit, founded by Alfa Demmellash and Alex Forrester when they were classmates at Harvard University, offers one-on-one business coaching and a 10-week entrepreneurship course called the Community Business Academy.

Since it was founded in 2004, Rising Tide has worked with more than 250 individuals, mostly single mothers, in Jersey City. "We noticed that there was a gap in the services provided, particularly to low-income entrepreneurs living in distressed inner cities. A lot of the established groups, such as SCORE and the U.S.Small Business Development Centers, focus on entrepreneurs further along in their journey," Demmellash says.

far from aid: inner-city entrepreneurs

She and Forrester recognized that many micro-entrepreneurs, such as mothers offering home day-care services, did not consider themselves small business owners and did not tap into existing educational and coaching services. Even if they were aware of such resources, she says, they tend to be delivered in far-off suburbs and office parks remote from an inner-city population that often lacks transportation.

"These groups were struggling to find people to lend to, but they were not accessible to the population they were targeting," Demmellash says. "Our idea was to be on the ground in the community."

Another disconnect that Rising Tide discovered is that traditional entrepreneurial training programs frequently focus on formal business plan writing, a daunting prospect for entrepreneurs with limited educational backgrounds. "A lot of people we work with are coming out of an educational system that hasn't been invested in for decades. They can't fathom spending six to eight weeks trying to write a business plan," Demmellash says.

Her group focuses on helping entrepreneurs organize their businesses so that a working business plan often results, she says. Rising Tide markets its programs by partnering with such existing organizations as National Urban League and Dress for Success. Flyers about the academy are even mailed out with monthly welfare checks, Demmellash says.

Entrepreneurs and would-be entrepreneurs interested in Rising Tide are invited to an orientation session where they evaluate their status to determine if they are ready for the program. Everyone who is selected to participate in the academy gets a full scholarship.

Can Rising Tide replicate elsewhere?

Initially, Rising Tide offered its educational seminars for free but found it didn't get the response or commitment it had hoped for. "Free generally implies 'without value,' so we changed the dynamic and made the program selective. It's amazing to offer someone an educational opportunity who has never before been offered an investment in their future," Demmellash says.

Business Exchange

Track and share business topics across the Web.