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RETAIN BUSINESSES

in Berkeley, CA

 

As business owners retire, we help keep these businesses

thriving in our communities

View the infographic

Berkeley, CA

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.

The city is taking a proactive approach to assist locally owned businesses that are at risk of retention by partnering with Project Equity to help them learn about the option of employee ownership succession. Berkeley is already the home of many successful employee-owned businesses and California has, by far, the highest number of employee-owned businesses of any state in the US. 

 

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 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.

Companies that are 20 years old and over in the city of Berkeley:
  • Represent 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. Only 15% of businesses get passed onto the next generation because the kids aren’t interested in taking over their parent’s business. 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.

Check out more coverage of our work with the City of Berkeley, CA:

Project Equity Data Uncovers Opportunities to Sustain Berkeley’s Small Businesses
Press Release / March 12, 2019

In California, Berkeley City Council Votes Unanimously to Support Worker Co-ops
Nonprofit Quarterly / March 8, 2019

Berkeley City Council increases support of worker cooperatives
The Daily Californian / March 7, 2019

Berkeley Pledges Support and Funding for Worker Co-ops
East Bay Express / March 6, 2019

Interested in how we partner with communities?

Learn more about our partnership with the City of Berkeley.

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Berkeley supports employee ownership

On February 26th, 2019, The Berkeley City Council adopted a set of recommendations provided by the Sustainable Economies Law Center (SELC), based on significant input from Berkeley worker cooperatives, organizations that support worker cooperatives (including Project Equity) and city staff.

2019 Government Equity Summit

Project Equity & Nexus Community Partners hosted the Government Equity Summit in San Francisco, California, with a focus on advancing equity, retaining assets and supporting legacy businesses and to promote and support small business retention through employee ownership conversions.

Berkeley invests in employee ownership

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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