Selling the farm to the workers – 5 benefits of transitioning ownership to your employees
Chris Galloway, Director
February 24, 2023
We set up CoActive in late 2022 to promote and support the creation of employee-owned businesses. Our mission is based upon the belief that broad-based employee ownership leads to stronger and fairer economies.
We know that employee-owned businesses have generally been proven to keep jobs in local communities at a higher rate, and they are much less likely to default on their debt. They have also been able to weather financial crisis more effectively, and therefore are more resilient in economic downturns, which unfortunately seems to be where we are right now.
This all might sound far too good to be true and you’re likely asking yourself: “If this is the case then why are there not more employee-owned businesses?”
Well, your question is totally valid, and we are big believers that the world needs more employee-owned businesses, including the creation of more worker-owned co-operatives. The reasons as to why employee-ownership is not more prevalent in our society is frankly multi-faceted, and this question is probably better discussed in a coffee shop or a pub!
Rather than focusing our blog efforts on analyzing all of the problems that that are caused by an economic system that actively promotes monopoly ownership, we thought that it is more beneficial to discuss what the many benefits that will come from transitioning to a more equitable society that actively promotes businesses that are owned by their workers.
We truly believe that this type of action can be one of the ways that we can start to diminish this divide in our society and to reverse the lack of cohesion in the relationship between capital (money) and labour (people). It can be a way to tackle the lack of equity in the workplace, and to decrease the level of wealth inequality that is seemingly increasing exponentially.
Over the coming weeks we will post a series of five blog articles that will outline at least one key benefit of transitioning businesses to being owned by their employees. We will discuss how employee-owned companies can achieve something that many other inequality solutions struggle to do which is helping more people build wealth through the accumulation of assets.
Employee ownership isn’t necessarily a new idea, but it’s often widely overlooked, which is surprising, given that it can be beneficial to not just workers, but also to owners of small- and medium-sized businesses who are looking to sell or divest.
If you are chomping at the bit already and can’t wait until our first post next week, we highly recommend that you watch one of our favourite movies, The Take, written by Naomi Klein, and directed by Avi Lewis (see: https://en.wikipedia.org/wiki/The_Take_(2004_film)). The Take tells the story of workers in Buenos Aires, Argentina who reclaim control of a closed Forja auto plant where they once worked and turn it into a worker cooperative. While the movie itself is really compelling and a great story, it is also a good introduction to this blog series so cook some popcorn and give it a watch!
CoActive Pilot Project
CoActive will be conducting 10-12 feasibility analyses over the next 12-18 months at little or no cost to a business that wishes to determine if employee-ownership works as an option for them. We hope that by screening our applicants that we would have at least a 75% continuation rate through the next stages of the transition process. By the end of our pilot project, we will compile several case studies for analysis and sharing with other agencies. We firmly believe in cooperative principle #6: cooperating amongst cooperatives, and so reach out if you want more information or if you are interested in working together. For more information either email info@coactive.ca or contact us on Linkedin or Facebook.
Welcome to CoActive Developments Worker Co-op
Daphane Nelson, Director
January 13, 2023
About a year ago, a group found themselves having the same conversations about business conversion to employee-owned businesses. Each came at it from a different perspective, but all wanted to bridge the gap between the knowledge in the business development and cooperative sectors. After months of meetings theorizing about the topic, a smaller group broke away, calling themselves the Get Shit Done Consultancy as an homage to their desire to actively seek this as a business opportunity.
The business plan was penned and a pilot project imagined. And while the group wanted to continue as the GSD Group, the name CoActive was born out of a combination of the word cooperative and being active about the work they wanted to explore. Or similar to a peloton, where the group moves forward toward the betterment of the team.
Who are these folks? You’ll find their bios on the About Us page, but maybe a bit of detail about how they met and decided to work together. Marty Frost, or The Godfather of cooperatives in BC, has been a cooperative developer for over 40 years and knows his way around a cooperative. His experience and knowledge of the sector have made it possible for this group to dream big with solid footing.
Chris Galloway has spent a number of years working with credit unions, which, for knowledge sake, are financial cooperatives. Chris spent time in Mongolia Malawi on a credit union coaching tour which really sparked his passion for how cooperatives can positively impact people’s lives in their communities. His financial expertise combined with the relationships he has with credit unions bring the lens of financial assistance and deal structure to this group.
Daphane Nelson has worked in business development and has ties to the many non profit business development agencies throughout BC. She saw the potential of this opportunity through one of the Community Futures programs , the BC Business Sale and the ensuing Venture Connect program which seeks to connect business owners with business buyers through an online portal.
Through their many conversations this trio acknowledged and became aware of the research that had already been developed around business succession planning issues in BC, across Canada and really anywhere else in the world. The Baby Boom generation is set to retire, with many already realizing this North American dream. It has been estimated that only about 10% of business owners have a succession plan in pace which leaves the business, employees and customers in a precarious situation. This solution is fairly straightforward. The employees who have been undertaking the work necessary to keep the business rolling throughout the years would become uptrained in the manners of business ownership. And in order to purchase the business from the existing ownership group, democratic cooperative governance. This mode isn’t without it’s own issues and is not intended for a quick turnover, rather, the process does take time and all parties must be poised and ready to dig in and work hard to make this work.
At the end of the day, not all businesses are a fit for the cooperative model, which is why CoActive is prepared to conduct 10-12 feasibility analyses over the next 12-18 months at little or no cost to the potential group. They hope that by screening applicants they would have at least a 75% continuation rate through the next stages of the transition process. By the end of the pilot project, CoActive will have compiled several case studies for analysis and sharing to other agencies for the sole purpose of cooperating amongst cooperatives, one of the seven cooperative principles.
For more information about CoActive Developments Worker Co-op please visit the website and feel free to contact CoActive through the contact form or by emailing info@coactive.ca. Also, follow us on LinkedIn and Facebook!