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Unlikely partnerships help small businesses thrive

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press

Pairing large companies with small making a difference

Monday, May 5, 2014 - 12:01 am

NEW YORK – When Psyche Terry's lingerie business needed a lift, she got it from a retailing giant.

Terry started Urban Intimates, a lingerie line for curvy women, in 2009. At first, its lacy bras and panties were sold only on the company's website. She wanted to get them into stores.

A small-business association told her about The Workshop at Macy's, a training program that teaches women and minority entrepreneurs how to get their products into major retail stores.

Terry, who lives in Dallas, took the weeklong course in New York in 2011. The yellow, green and animal-print lingerie had to go, Macy's told her. Shoppers preferred them in red, black and pink.

Other changes were made to the business, and last year, Macy's, one of the nation's largest department stores, started selling Urban Intimates at 10 of its stores in California, Georgia, Maryland, South Carolina, Texas and Virginia.

Another department store, J.C. Penney, began selling the line on its website around the same time. Sales jumped 700 percent in 2013 from the year before and are expected to grow again this year. Without the Macy's program Terry says, “I'd still be a little dot-comer.

“It's definitely life-changing,” says Terry. “They really held my hand through the entire process.”

Unlikely pairings of large and small companies are making a difference for small businesses. Small companies often struggle with a lack of funding and little experience running a business. About half fail within the first five years.

Some large companies are coming to the rescue providing mentorship, formal instruction and cash in the form of loans or prizes to help give small companies a leg up.

For the big companies it's not just about being nice. Giving back can polish their reputations and may even boost profits. People are more likely to support a company they know is giving back to the community, says Scott Davis, chief growth officer of brand and marketing company Prophet. Working with smaller companies also exposes the big brand to the customers of the small business, says Davis. The entrepreneurs are likely to talk to their customers about a company that helped them when they were starting out.

“Storytelling is such a big part of brand building today,” says Davis.

There's more. Some say working with small businesses inspires their own employees and helps them attract and retain top talent. It can even help them identify hot products.

More than 60 businesses have been through The Workshop at Macy's since it launched in 2010. Smallbusinesses accepted into the program have no obligation to work with the retailer in the future, but a few, like Urban Intimates, have. The program gives Macy's access to new products to sell.

“We're looking for the next great thing,” says Shawn Outler, a vice president at the company.

LIGHTING A PATH

Investment bank Goldman Sachs helped Ryan Walsh see his electrical company's future. Walsh, who took over New York-based Walsh Electrical Contracting from his father, was accepted into the Goldman Sachs 10,000 Small Businesses program, which provides a free business course, spread out over several weeks, for entrepreneurs. Walsh says it forced him to come up with a 5-year plan for the business.

Another benefit is networking. One business owner in the class hired Walsh's company to install lights and electrical equipment. Walsh paid another classmate to redesign his company's website, brochures and business cards. And a restaurant owner from his class now caters Walsh's lunch meetings and even his child's christening.

“You meet some good people,” he says.

Many of the small businesses that have participated have had good results. Sixty-four percent of 572 small businesses that have completed the Goldman program said they increased their revenue six months after graduating and 45 percent added new jobs, according to a survey conducted by Babson College. Babson, a business school in Wellesley, Mass., helped develop the program.

“It's like a mini MBA,” says Nneka Mosley, who owns Philadelphia-based Nneka Saran, which makes colorful purses and leather bags. Mosley applied for the Goldman Sachs class through the Tory Burch Foundation, which partners with the investment bank. The foundation, launched by high-end fashion company Tory Burch in 2009, helps women entrepreneurs secure loans and offers mentoring.

Dina Powell, president of the Goldman Sachs Foundation, says the initiative helps the bank recruit and retain workers. Recent college graduates want to work at companies that have programs that give back. It helps attract “the top talent that we want,” Powell says. Employees at the investment bank are able to offer business owners advice and feedback. Powell says there are hundreds of Goldman Sachs employees on a list waiting to participate.

A TASTE OF SUCCESS

When the owners of ice pop maker Brewla Bars are in need of business advice, they email a contact at Boston Beer who connects them with an employee who can help them out.

Brewla Bars, started by New York-based siblings Daniel Dengrove and Rebecca Dengrove in 2011, became involved with the maker of Samuel Adams beer after taking out a $10,000 loan two years ago from its Brewing the American Dream program. They used it to help pay for packaging for the low-calorie treats, which are made with brewed teas, root beer and espresso.

At the time, the Degroves were selling the frozen bars at street fairs. The loan helped get them into stores around the country. They heard about the program through Accion, a nonprofit that provides small loans to entrepreneurs. Accion partners with Brewing the American Dream to administer loans using money donated by the beer company. Along with the loan, Boston Beer gives entrepreneurs advice.

The Dengroves have received advice on everything from how to design a trade show booth to buying supplies more cheaply. Brewla Bars had revenue of nearly $100,000 last year and is expecting more this year. In the first three months of 2014, revenue is up 50 percent from the same period a year ago.

Boston Beer gets something out of it too. Jim Koch, who started the company in 1984, says the passion and drive from small-business owners breathes new life into the company. “It keeps us connected to our small business roots,” he says. Back when he started out he couldn't get a loan and advice was hard to find. The program has provided more than $2.6 million in loans to nearly 300 small businesses.

CRAFTING A RELATIONSHIP

Sometimes the biggest reward the programs offer is being attached to a big brand.

In 2012, media company Martha Stewart Living Omnimedia launched Martha Stewart American Made. Business owners nominate themselves online to win a prize. Editors of Martha Stewart Living select businesses to highlight in the magazine and some of the businesses are asked to sell their products in busy Grand Central Station in New York for a couple of days. Readers select their favorite business online. The one with the most votes gets $10,000.

Leo Kowal and his wife Mary won the prize in 2013. The Kowal's business, Saint Charles, Ill.-based SVGCuts, sells downloadable designs for people who craft with paper. The designs are used to construct greeting cards or holiday decorations.

The couple used the $10,000 to give their six workers a year-end bonus. Traffic to the SVGCuts website increased 15 percent after it won in October and sales are up at least 10 percent. But the best part of winning is being attached to the biggest name in the crafting world. “It's instant creditability,” says Leo Kowal.

SVGCuts announced it won the Martha Stewart American Made contest on its website and even on the company's voicemail message.