RETAIN BUSINESSESin Long Beach, CA
As business owners retire, we help keep these businesses
thriving in our communities
Long Beach, CA
Employee ownership as a strategy for business retention
The city of Long Beach has a population of 470,000 and is located in Los Angeles County, CA. As a port city, Long Beach is a critical city for the region’s small business economy. The median income of its residents is $60,000, but currently, almost twenty percent of the city’s population lives in poverty.
Long Beach seeks to curb the effects of the Silver Tsunami
Small, locally owned businesses are essential to Long Beach’s local economy and community vitality. Among the challenges the city faces is keeping small businesses and the jobs they provide rooted in the community, as the Silver Tsunami – the retirement of baby boomer business owners – impacts Long Beach.
The silent risk of the Silver Tsunami
Baby boomers (those born between 1946-1964) own nearly half of all businesses with employees in the Los Angeles metro area. Cities and regions need to understand the risk of the so-called Silver Tsunami as these business owners retire. The risk is that these legacy businesses won’t be retained locally — either because they quietly close down, are sold to out of area buyers, or simply don’t have a succession plan as the owner marches into retirement.
Long Beach’s proactive approach
The city of Long Beach, CA is taking a very proactive look at this issue and is supporting local and employee ownership succession. The city has partnered with Project Equity to shine a light on the need for smart succession planning and to develop an effective strategy to engage with their legacy businesses.
Project Equity performed an analysis for Long Beach to quantify the number of privately-held companies with employees that are 20 years or older — a good indication that they need succession planning — and the impact if these businesses are not retained.
- Represent over 2,500 of the city’s businesses
- Employ an estimated 46,700 individuals
- Generate over $12.3B in revenue
Local ownership over the long-term
Keeping companies locally owned over the long term is a critical economic development strategy. Only 15 percent of businesses get passed onto the next generation because the kids aren’t interested in taking over their parent’s business. According to BizBuySell, the largest online marketplace for businesses, only 20 percent of businesses listed for sale ever sell. We clearly need more strategies for local business succession to avoid businesses inadvertently closing their doors due to lack of planning. The good news is employee ownership is viable for many companies, and it provides similar benefits to family ownership.
Employee ownership may be unfamiliar to many, but it keeps companies rooted in place, provides quality jobs and strengthens businesses for the long-term. It also offers a ready solution to the retiring business owner: there’s a buyer right there under your nose — the very employees who helped you build the company.
Local ownership is important to our region’s future. Let’s make sure the Silver Tsunami doesn’t put us at risk.
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When either is in crisis, both suffer. But there’s a fix.
Project Equity has partnered with the San Diego Workforce Partnership to host community workshops and help to make financing available for San Diego businesses to transition to employee ownership.
Steve Storkan, the Executive Director of the Employee Ownership Expansion Network (EOX) and his staff members have been very busy expanding the network of state centers for employee ownership.