CDS sees worker ownership as an important but under-utilized tool to retain businesses in communities during a time of major business transitions. Even before the Covid-19 crisis, small businesses were facing a “silver tsunami” of owners approaching retirement without succession strategies. Literally tens of thousands of businesses in our region will change ownership or cease operation in the coming decade. For businesses with less than 50-100 employees, it is entirely possible for employees to form a worker-owned cooperative to purchase the business from a retiring owner. (Larger businesses can consider creating an Employee Stock Options Plan, or ESOP, to incorporate worker ownership strategies. Because CDS focuses on cooperative business strategies, our work is primarily with smaller businesses). Not only does this option provide an exit option for the owner, but it retains jobs, supply chains and tax base in the community.
Since 2018, CDS has been creating an eco-system to support the conversion of small businesses to employee ownership via worker-owned cooperatives. Our partners to date have included Shared Capital Cooperative as our finance and lending partner; our community education partners include the University of Minnesota Business Retention and Expansion program, and the University of Wisconsin Center for Cooperatives. CDS provides business analysis and technical assistance to the conversion process.
To grow awareness of employee ownership strategies, our team delivered the Worker Ownership Roadshow in early March 2020, visiting eight communities in western WI and eastern MN, and attended by about 100 local business and community development leaders, bankers, and business owners. Participants scored our workshops highly, uniformly affirming our assumptions about the lack of adequate business succession planning and identifying their increased knowledge about worker ownership strategies in general, and worker co-ops specifically. We intend to offer more such workshops in the region and to create new presentations describing the process to be used by employers and employees in the transition process, as well as the unique interests of lenders. We will also be looking for specific projects to support in this process.