6 out of 10 U.S. business owners
Small businesses are the lifeblood of our economy.
Employee ownership deepens the impact
Benefits to the selling owner
– Take care of your employees
– Realize market rate for your business
– Enjoy tax advantages
For cities & regional planners
– Engage with businesses & help them plan for succession
– Employee ownership education
own nearly half of all privately-held businesses with employees in the Twin Cities
As baby boomer business owners retire, our local business landscape is poised to go through a dramatic shift. With boomers owning about half of all privately-held businesses in the Twin Cities, we will see a massive ownership changeover of locally-held businesses as the ‘Silver Tsunami’ of retirements approaches.
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.
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.
Why does this matter?
Small businesses are the lifeblood of our economy, making up 97.7% of all firms and providing 48% of jobs in Minnesota. Locally owned businesses circulate three times more money back into the local economy than absentee-owned firms or chain businesses. And local businesses are based on local relationships, fostering trust and civic engagement.
Employee ownership extends the legacy of these businesses while deepening their impact in our community. By selling businesses to the employees businesses remain anchored in the region while continuing to provide good jobs, enhance access to wealth and promote entrepreneurship.
What can we do about it?
We can all play a role in keeping businesses local and promoting employee ownership.
Raise awareness of the problem
We hear about the impact of baby boomer retirements on health care and on employment, but there is low awareness of the impact on local business ownership. 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 can convene local officials, business networks, lenders and others to determine how they are assessing and addressing this issue.
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 preserve its 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 can integrate the stabilization of local business ownership into their goals
About Nexus and Project Equity
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, we support this work in regions across the country.
Nexus Community Partners is a community-building intermediary that builds more engaged and powerful communities of color by expanding community assets and fostering social and human capital. They provide grants and capacity-building support to community- and culturally-based organizations in the Twin Cities region. Together, we partner to promote a community wealth building framework and to advance our collective work; and to bring Nexus’ and Project Equity’s models to other communities across the country. Nexus believes that the key to building just and equitable communities lies in the intersection between authorship, leadership and ownership.
Authorship: ENGAGING COMMUNITY
In a strong, equitable and just community, all members are engaged in and have authorship of their lives and their future. Nexus builds infrastructure for stronger community engagement learning and practice.
Leadership: CULTIVATING POWER
In a strong, equitable and just community, all members are seen as leaders, are given ample opportunities to grow in their leadership, and are able to represent their communities in multiple spaces. Nexus invests in and cultivates leaders of color who are working to advance a broader agenda for equity.
Ownership: BUILDING COMMUNITY WEALTH
In a strong, equitable and just community, all members are afforded ample access points to generate wealth and to own the wealth they have helped to generate. Nexus challenges practitioners, community leaders and investors to use a community wealth building framework to think and act differently about community revitalization in ways that are culturally relevant and promote economic justice.