Legacy Businesses in Arizona Worth $100 Billion in Revenue at Stake
Project Equity Initiative Preserves Local Business Legacies
Today Project Equity launched an initiative to retain legacy businesses in Arizona in partnership with Local First Arizona (LFA) and will be joining LFA’s Arizona Good Business Summit April 5 to share more about employee ownership as a business succession, workforce recruitment/retention and pandemic recovery strategy. In Arizona, according to a study by Project Equity, 30,000 businesses are 20 years old or older, accounting for over $100 Billion in revenue. These businesses employ over 500,000 workers in the state. In addition, half the owners of Arizona’s job-creating local businesses are at or near retirement age, yet, many have no exit strategy. Notably, only one out of five businesses put on the market successfully sells. Additionally, the pandemic has made recruitment and retention of employees more challenging for business owners, thus slowing the recovery of their operations.
“Employee ownership can retain local businesses and build a more resilient local economy,” said Project Equity CEO Evan Edwards. “By selling businesses to their employees or providing workers equity, owners can preserve their legacies, keep companies rooted in local economies and sustain quality jobs, which is critical in many parts of Arizona, including rural areas, as well as increase productivity and support workforce retention. For employee-owners, household net worth is 92% higher, median job tenure is 53% longer, and median wage income is 33% higher according to a study by the National Center for Employee Ownership.”
“Every day, more baby boomers retire without a successful plan to sell their businesses. We must turn this vulnerability into an opportunity,” said Local First Arizona Founder and CEO Kimber Lanning. “Arizona is famous for its climate and natural beauty. But it is the local businesses that make this state so special. We can preserve these local economic drivers and business legacies through employee ownership.”
With the vast majority of retiring small business owners having no exit plan, Project Equity and Local First Arizona are raising awareness of employee ownership to strengthen Arizona’s economic resilience by protecting local jobs and revenue; and providing business owners a workforce development strategy. In an effort to stem the tide of the Silver Tsunami of retiring baby boomers and the fallout from COVID-19, this initiative will expand the number of employee-owned businesses—and workers holding equity in their employers—in the state to make Arizona a place where working people can create quality jobs as employee-owners, and support a thriving economy throughout the state.
Providing local business owners with a strategy, hands on support and also potential financing, for transferring ownership to dedicated employees is a powerful economic development strategy. The collaboration will help identify businesses likely in need of succession planning to transition into employee-owned companies, then help support them every step of the way. These businesses stay rooted in the community, driving economic activity and providing frontline workers a path to shared entrepreneurship.
Examples of employee-owned businesses in Arizona include Kitchell Construction, Sundt, and U-Haul.
Very few businesses with retiring owners will be passed on to family members, which leave many at risk for closing. In some instances, these businesses will be sold to someone with no connection at all to the community. Keeping local legacy companies anchored in Arizona, retaining valued employees, and providing opportunity for growth positively impacts the entire state while simultaneously preserving community wealth.
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Project Equity
Project Equity is a national leader in the movement to harness employee ownership to maintain thriving local business communities, honor selling owners’ legacies and address income and wealth inequality. Project Equity works with partners around the country to raise awareness about employee ownership as an exit strategy for business owners, and provides hands-on consulting, support and financing to companies that want to transition to employee ownership.
Local First Arizona
Founded in 2003, Local First Arizona (LFA) is a community and economic development organization working to strengthen local economies. LFA’s areas of focus include developing entrepreneurship, rural and urban community development, racial equity, environmental action and food access. LFA is the largest local business coalition in the U.S. and advocates for independently-owned businesses of all sizes by assisting local owners with technical assistance designed to help them compete and collaborate, which ultimately strengthens Arizona’s economy and builds hometown pride. Visit http://www.localfirstaz.com for more information and a directory of more than 3,000 locally-owned businesses.
