Our economy is supported by small businesses. While there are different ways of measuring this, in general we accept that small businesses make up 99.7% of U.S. employer firms, create 63% of net new private-sector jobs, and provide 48.5% of private-sector employment.
Goldman Sachs 10,000 Small Businesses was designed by Babson College to provide an integrated program of education, business advising, and opportunities to access capital to support the growth of participating small businesses. 10,000 Small Businesses was announced in 2009 and launched in 2010. By last year we had grown enough to share what we had learned through the data we collected about the program.
We just released our second progress report which reports on almost 1,000 more business owners who have completed the program and extends the time span from six to 18 months post program. Stimulating Small Business Growth tells the story of small business growth, who grew, by how much, and how.
As the report shares, most participants in 10,000 Small Businesses grow their business revenues, 67% of them at six months and 76% by 18 months. And when looking specifically at those who grew, at 18 months they had grown their revenues by 86%. The results for job growth are equally impressive, with 46% reporting new jobs at six months, rising to 57% by 18 months. At 18 months, the average increase in job creation for those who grew was 155%. While exact national comparisons are difficult, the National Small Business Association 2014 Year-End Economic Report shares that 45% of U.S. businesses reported increased revenues and 22% reported creating new jobs.
These overall numbers, while interesting, raise many other questions, including who grows – considering both the owner and the business, and how they grow. For today, my focus is on the ‘who’, and I will be quoting verbatim from the report.
One question often asked is about the impact of education on business growth. Please note that we are not talking about specific entrepreneurship or even business education, but education in general. The diversity of the educational level of the 10,000 Small Businesses is a hallmark of the program, and business growth is achieved by business owners with all types of educational backgrounds. With the exception of having less than a high school degree (60% grow revenues at six months) and a high school degree (75% grew revenues at six months), all the rest of the educational levels’ revenue growth rates are similar across educational attainment levels, with more variation seen in the creation of jobs. At the six month point, the educational attainment categories with the most job creators are Associate Degrees (52%) and Some College/No Degree (49%).
Entrepreneur’s ages have also been a popular point of discussion in the media, with focal points often either millennials or those considered older (and I use that older phrase with ever increasing respect). While our numbers of participating business owners in some of these age categories are still small, intriguing themes are emerging. Our youngest business owners (those under 44) who grow the revenues are the most likely to increase their growth between the six and 18 month follow-ups. Also, when looking at what happened by 18 months after program completion, the number of businesses with younger owners that grew by more than 100% nearly doubled.