RETAIN BUSINESSESin Santa Clara, CA
As business owners retire, we help keep these businesses
thriving in our communities
Santa Clara, CA
Employee ownership as a strategy for business retention
The city of Santa Clara, CA has an estimated population of 124,600 and is the county seat of Santa Clara County. The county is located south of the San Francisco Bay area and is the heart of Silicon Valley. The median income of Santa Clara’s residents is just over $108,000 and currently almost eight percent of the city’s population lives in poverty.
Santa Clara seeks to curb the effects of the Silver Tsunami
Small, locally owned businesses are essential to Santa Clara’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 Santa Clara.
The silent risk of the Silver Tsunami
Baby boomers (those born between 1946-1964) own nearly half of all businesses with employees in Santa Clara. 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.
Santa Clara’s proactive approach
Santa Clara 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 the entire county 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 1,138 of the businesses in Santa Clara, CA
- Employ an estimated 20,000 individuals
- Generate about $6.2B 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 Santa Clara’s future. Let’s make sure the Silver Tsunami doesn’t put us at risk.
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