CRISIS #1: The devastating impact of COVID-19 on our local economies
Employee ownership can support business continuity, preserve good jobs and rebuild our local economies.
Many local businesses have shut down due to COVID, and local economies are hurting. Now is the time to build a more sustainable and stable economy. As North Carolina rebuilds and invests in the future economy, many are wondering how to increase opportunities and build an economy that works for all.
Employee ownership increases engagement, dedication and ingenuity, which is key to business success, and even more critical during this challenging time.
The Census Small Business Pulse captures business owners’ responses to key questions about the outlook for their business, including the effects of COVID-19 and their sense of how long it will take for the business to return to normal.
CRISIS #2: The baby boomer retirement wave
As baby boomer business owners retire, our local business landscape is going through a dramatic shift.
We must support retirement-age business owners to avoid simply closing up shop. Faced with the challenges of bridging this crisis, many business owners may feel that the best route is to close down; the investment of energy and capital may not feel worth it at the end of a long career as a small business owner. Since for most small business owners, the business is their retirement nest egg, they are faced with devastating choices.
We have the opportunity to keep many of these businesses locally owned for the long term and to deepen their positive impact on our local economy.
How? By helping them transition to broad-based employee ownership.
With around half of all privately held businesses with employees having owners over age 55 in North Carolina, we will see a massive ownership changeover of locally held businesses as the wave of baby boomer retirements advances, leading to the greatest transfer of generational wealth in history. The vast majority (over 85%) of business owners do not have a succession plan in place, and increasingly, many are finding it hard to find a buyer when they are ready to sell. As a result, some of these companies will quietly close down, a very small percent will be passed on to family members, others will sell to another local owner, and some will be sold to a larger company or out of area buyer. Those in this last category will likely lay off employees and will further concentrate ownership and wealth.
Why does this matter?
Small businesses are the lifeblood of our economy, making up over 99% of all firms and providing around half of private sector jobs. Locally owned businesses circulate three times more money back into the local economy than absentee-owned firms or corporate chains. And local businesses are based on local relationships, fostering trust and civic engagement.
Employee ownership offers business owners a way to increase employee engagement now, and a path to a sale and to preserving their legacy, while at the same time deepening the impact of small businesses in our community.
Broad-based employee ownership has tremendous benefits for workers, for businesses, and for communities. When successful businesses become employee-owned, they create high quality jobs, increase worker voice, and facilitate asset building for employee-owners—all while boosting business survival rates and keeping local economies strong. For more detail, see our publication, The Case for Employee Ownership.
Investing in employee ownership as part of our recovery agenda creates more resilient local economies with stronger small businesses and higher quality jobs.
What can we do about it?
Raise awareness of the problem
There is low awareness of the impact of the baby boomer retirement wave on local business ownership and how it compounds the COVID-19 small business crisis. Please share this information with your city government and others who can help.
- Local governments can measure the impact on their tax base by using business license data to track how many businesses are over 15, 20 or 25 years old.
- City and regional planners and economic developers can convene local officials, business networks, lenders and others to determine how they are assessing and addressing this issue.
Engage businesses about employee ownership transitions
The benefits of broad-based employee ownership are clear, but most business owners do not know that selling their business to their employees is a great way to increase employee engagement and preserve the business’ legacy.
- Business service providers can add succession planning to their service offerings and include employee ownership as an option
- Cities can add succession planning into their economic development goals and partner with organizations that provide education and expertise on employee ownership
- Regional planners and economic developers can integrate the stabilization of local business ownership into their goals
Join us: Two-pronged small business recovery agenda
Join us in advancing a two-pronged small business recovery agenda that supports business continuity and incorporates employee ownership. With our partners, we are accelerating our efforts and working across North Carolina to help business owners who are considering closing their businesses for good.
We must rebuild with more resiliency and equity for workers, businesses and communities.
About Project Equity and our partners
As a national organization, Project Equity advocates for and raises awareness of broad-based, democratic employee ownership, and we support businesses in transitioning to this highly beneficial business model. Through amazing local partners like the North Carolina Center for Employee Ownership, we support this work in regions across the country.
The North Carolina Employee Ownership Center, (NCEOC) is on a mission to preserve and protect the job and community impacts of small and medium sized businesses throughout the state of North Carolina by helping to transition many to employee ownership. NCEOC has a particular focus on increasing these opportunities to BIPOC-owned businesses and businesses with majority-BIPOC workforces.
Download the infographics
for businesses interested in employee ownership