You built your business... What will your legacy be?
Why Conversion to worker ownership?
Many small business owners find it difficult to exit their business when they are ready to retire. The next generation may not wish to continue the family business, and many owners are concerned that selling their businesses could mean job loss for long-time loyal employees if a new owner moves or discontinues the work. Employee ownership is a method of business succession planning that allows owners to exit on their own timeline while sustaining their company’s mission and leaving their legacy in the hands of those employees who helped them build their company. It is also an effective way to engage and retain talented employees and increase business efficiency and financial performance through the inclusion of employees in the ownership of a business. Transitioning ownership to employees is not a new or untested business strategy – it has been used by companies throughout the United States.
Who is CUCI?
CUCI is a not for profit community initiative dedicated to creating and preserving good jobs in the Cincinnati region by incubating cooperative start-up projects and by providing technical support and training to owners and employees who wish to convert existing businesses into cooperatives.
How is a worker owned business managed?
Our cooperative governance structure is based on a tried and true template: worker-owners elect employee representatives to serve as a Board of Directors. The Board appoints a management team to run day-to day operations (usually in a conversion, the existing management team remains). The Board engages in decision-making for the business, and annual (or more frequent if needed) general assemblies of all employees make major decisions and set the course for the business. Employees can choose to select a union committee of employee representatives to bargain collectively with the management team over workplace terms and conditions. All profit that is not reinvested in the business is shared by worker-owners on a one-share per person basis.
What role will the CUCI play?
CUCI assists in conversion by:
- Leading business feasibility studies to gauge financial and operational needs
- Supporting business development and engaging governmental and community stakeholders
- Helping to design legal, financial, management and governance structures
- Providing ongoing training, culture change support and education for employees and stakeholders on the union cooperative business model, general business practices and skills, and the collaborative principles that make cooperatives resilient and successful.
WHAT ARE THE FINANCIAL BENEFITS OF CONVERTING TO A WORKER COOPERATIVE?
- Depending on how the deal is structured, the owner can be eligible for a 1042 Capital Gains Deferral over multiple years.