A Cincinnati nonprofit is launching the third year of a program to help retiring business owners sell their companies to their workers.
Co-op Cincy’s Business Legacy Fund launched Sept. 15, with applications from businesses due Nov. 15.
“The Business Legacy Fund is an innovative way for retiring business owners to sell their businesses for fair-market value and preserve local jobs, but more importantly, the fund will help create a more resilient and stable economy for our city’s future,” said Cincinnati Mayor Aftab Pureval.
Building on past success, Co-op Cincy is searching for businesses with at least 10 employees and $1 million or more in revenue, though smaller businesses are also eligible. This past year, the fund refined the transition process while helping two local companies become worker-owned, saving jobs and anchoring the firms in their communities.
The fund broadens business ownership in two different situations. The fund can help retiring business owners sell their company to their employees, saving jobs while securing their retirement. It can also enable business owners to broaden ownership to their employees while continuing with their business.
“It’s crucial right now to invest in building economic resilience and stability for our communities,” said Ellen Vera, director of organizing at Co-op Cincy. “Our research suggests that even before the pandemic, over 5,500 Southwest Ohio businesses were at risk of closing due to lack of a succession plan. This fund will reduce that risk, preserve these businesses, and save local jobs.”
The fund and Co-op Cincy have partnered with the Cincinnati USA Regional Chamber’s Minority Business Accelerator, the African-American Chamber of Greater Cincinnati-Northern Kentucky, the Greater Cincinnati Microenterprise Initiative, All-in Cincinnati and Xavier Leadership Center. The fund is made possible by support from the Carol Ann and Ralph V. Gaile Jr. Foundation, the Greater Cincinnati Foundation, the Fifth Third Foundation and PNC Bank. The city of Cincinnati recently awarded funding to the organization.
The fund helps business owners secure a fair-market value for their company and craft an exit strategy.
As in the rest of the country, Greater Cincinnati faces an unprecedented wave of retirements by baby-boomer business owners, a shift known as the “silver tsunami.” More than 40% of the country’s 30.7 million small business owners are 55 and older.
Worker-ownership is an economic strategy. It offers worker, company and community benefits, including higher wages, greater business stability and even better productivity. In the U.S., worker-ownership is already a significant part of the economy. About 12% of the U.S. workforce is employed at worker-owned enterprises. The worker-owned model is flexible and has variations, from employee stock ownership plans to worker cooperatives.
More than 65 worker-owned businesses operate in Greater Cincinnati, and that number is growing. This year, Co-op Cincy’s fund helped two local businesses adopt the worker-owned model, and staff are in discussions with more firms.
One of the businesses the BLF transitioned, Shine Nurture Center, is a childcare center. Five female employees purchased the business from the departing owner, helping preserve this important resource for the community. The other, Heritage Hill, sells apparel that celebrates Black culture. The founder broadened ownership to a team of three worker-owners, all of whom are Black.
Brandon Hoff, the founder of Heritage Hill, said he transitioned the business because he was looking for a way to “participate in capitalism without being predatory.”
“I really want people who work in the company to have an opportunity to benefit from the company,” Hoff said.