RETAIN BUSINESSESin Berkeley, CA
As business owners retire, we help keep these businesses
thriving in our communities
Employee ownership as a strategy for business retention
The city of Berkeley has a population of 120,000 and is located in the San Francisco Bay Area just north of Oakland. Berkeley is a critical city for the Bay Area’s small business economy. The median income of its residents is $70,000, but currently, twenty percent of the city’s population lives in poverty.
Berkeley seeks to curb the effects of the Silver Tsunami
Small, locally owned businesses are essential to Berkeley’s local economy and community vitality. Among the challenges the city faces is keeping small businesses and the jobs they provide rooted in the community, as the Silver Tsunami – the retirement of baby boomer business owners – impacts Berkeley.
ADAMS AND CHITTENDEN SCIENTIFIC GLASS
A Berkeley manufacturing company transitioning to employee ownership
Meet George and Tom, the owners of Adams and Chittenden Scientific Glass. They are choosing employee ownership as their succession plan.
The silent risk of the Silver Tsunami
Baby boomers (those born between 1946-1964) own nearly half of all businesses with employees in the nine county San Francisco Bay Area (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, Solano). Cities and regions need to understand the risk of the so-called Silver Tsunami as these business owners retire. The risk is that these legacy businesses won’t be retained locally — either because they quietly close down, are sold to out of area buyers, or simply don’t have a succession plan as the owner marches into retirement.
Berkeley’s proactive approach
The city of Berkeley, CA is taking a very proactive look at this issue and has invested city funds to support local and employee ownership succession. The city has partnered with Project Equity to shine a light on the need for smart succession planning and to develop an effective strategy to engage with their legacy businesses.
Project Equity performed an analysis for Berkeley to quantify the number of privately-held companies with employees that are 20 years or older — a good indication that they need succession planning — and the impact if these businesses are not retained.
- Represent over 1,200 of the city’s businesses
- Employ an estimated 13,000 individuals
- Generate over $1.6B in revenue
Local ownership over the long-term
Keeping companies locally owned over the long term is a critical economic development strategy. Family businesses aren’t getting passed on to the kids, who aren’t interested in taking them over. According to BizBuySell, the largest online marketplace for businesses, only 20 percent of businesses listed for sale ever sell. We clearly need more strategies for local business succession to avoid businesses inadvertently closing their doors due to lack of planning. The good news is employee ownership is viable for many companies, and it provides similar benefits to family ownership.
Employee ownership may be unfamiliar to many, but it keeps companies rooted in place, provides quality jobs and strengthens businesses for the long-term. It also offers a ready solution to the retiring business owner: there’s a buyer right there under your nose — the very employees who helped you build the company.
Local ownership is important to our region’s future. Let’s make sure the Silver Tsunami doesn’t put us at risk.
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The City of Berkeley is the first California city to invest city funds to advance employee ownership. Other cities are becoming aware, and Project Equity will be increasing the number of municipal partnerships in the year ahead to address these very issues.
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"Employee ownership is both a profound and a simple business model in which business decisions are made through the lens of what is good for their employees and by extension, their families and their communities. It creates true pathways to opportunity and quality...