A big part of my day job right now is something called “The Legacy Project“. The project has several phases but aims to build the profile of worker ownership at a time when many small business owners seek to retire. Small business owners, often cited as the “backbone” of the nation’s economy, face a dilemma, especially in rural communities. As they reach retirement (thinking 70 and older these days), there may not be an obvious exit strategy. It may be that the kids have flown the coop for a different life or just not interested in the business. A statistical data point is that only 20% of small businesses actually sell to a new owner. The rest simply close and sell off the assets. For some small business owners, this might mean a precarious retirement. For the workers, it means an end to employment. For the community, it can mean reduced economic vitality and loss of a “sense of place.”
As the Baby Boom generation creeps towards old age (the youngest boomers turn 55 this year) with “Gen X” hot on their heals, it amounts to an incredible transition of capital from one generation to another, but a lot of this capital may simply disappear. The Legacy Project promotes another option through worker co-ops. By selling to one’s workers as a co-op, the business owner has buyers who have a real interest in the company. The legacy of the owner can live on in the community and keep the jobs in that community. The Workers aren’t likely to buy the company and shut it down as a competitor might (who may only want the physical assets or customer lists). While a small group of the current staff or a single employee might buy the business, I have found that many workers today don’t find that model very exciting. The idea of being tied down to a business in a way that single proprietorship offers doesn’t appeal to the current generation (and I’m not sure that it ever really appealed to a lot of owners). By forming a worker co-op, the staff has the freedom to continue with their life as it unfolds as opposed to bearing the full responsibility of ownership.
The Legacy Project seeks to increase the awareness of worker co-ops as a means of business succession planning. The hope is for rural communities (but also urban areas) to see the co-op model as a means of securing their current economic vitality and creating a resilient economic foundation for continued strength in their communities.