City of Santa Clara Partnership

February 25, 2021
Project Equity

A new business retention partnership:
City of Santa Clara, California

The City of Santa Clara launched an initiative to assist locally-owned businesses that are at risk of closure to learn about the option of employee ownership. The initiative highlights the need for succession planning for local small businesses. It focuses on transitions to employee ownership to address hundreds of Santa Clara business owners’ potential retirement.

Santa Clara’s “Worker Cooperative Initiative”, which launched in January 2021, is a collaborative partnership with Project Equity, Democracy at Work Institute, Sustainable Economies Law Center and United States Federation of Worker Cooperatives. Read more in the City of Santa Clara’s press release. The City’s investment in this initiative is critical to preserving local businesses’ legacy given the high percentage of owners who do not have succession plans. “Small, locally owned businesses are essential to Santa Clara’s economy and community vitality,” said Santa Clara Mayor, Lisa M. Gillmor. “Now, more than ever, solutions are needed that create economic resiliency for workers and local economies.”

“Small businesses are the backbone of our local economy and we need to continue to be creative about how we support them. This is a win-win-win for business owners, workers and our community.”

Deanna J. Santana, Santa Clara City Manager

Data study illustrates Santa Clara business impact

Project Equity analyzed data on the businesses located in the City of Santa Clara to quantify the number of privately-held companies that have employees and are 20 or more years old — a good indication that they need succession planning — and to illustrate the impact if these businesses are not retained. With COVID-19, more owners might accelerate their exit from a business because it could take months to return to a normal level of operations.

The data study has uncovered some significant findings, including that there are 1,138 companies (fewer than 20% of the total businesses) in the City of Santa Clara that have been in business for 20 or more years, yet they employ an estimated 33% of the city’s private-sector employees (20,000) and generate about 57% of small business revenue ($6.2B).

This data study, with the fact that an estimated 80% of business owners do not have succession plans, demonstrates the importance of reaching Santa Clara’s small business owners to help them understand their succession and selling options.

Employee-owned companies increase job quality

Employee ownership has a proven and positive impact on job creation and on business retention. A study conducted by Rutgers University found that, during the COVID-19 pandemic, companies owned by their employees are proving to be more resilient than companies that are not employee-owned. They are also significantly more likely to retain staff, maintain worker hours and salaries, and protect their worker’s health and safety standards.

“Among the challenges the City faces is keeping small businesses and the jobs they provide rooted in the community. In addition to our small business relief program, we now are able to offer a broader range of services through this succession planning and owner initiative,” said City Manager, Deanna J. Santana. “Small businesses are the backbone of our local economy and we need to continue to be creative about how we support them. This is a win-win-win for business owners, workers and our community.”

Visit the City of Santa Clara website for more information.