Tag Archives: Worker cooperative

Owners at Work, Summer 2013–Now Available!

coverInside this issue:

  • How Risky Are Acquisition Loans for new ESOPs?
  • The 27th Annual Ohio Employee Ownership Conference: Employee Ownership: Building Jobs, Wealth & Communities
    • “Your Story Makes the Difference.” J. Michael Keeling, ESOP Association, Morning Keynote Speech
    • “Is Employee Ownership Really Worth It?” Corey Rosen, National Center for Employee Ownership, Lunch Keynote Speech
  • Ohio’s Top 50
  • Book Review: Gar Alperovitz, What Then Must We Do? Straight Talk About the Next American Revolution

View the full edition online by clicking the image below or download the newsletter in one of 3 formats:


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City of Buffalo Honors Cooperators in Recognition of UN’s International Year of Co-ops

On June 12, the Common Council of the City of Buffalo unanimously adopted a proclamation to recognize the value of cooperatives in Buffalo.

We embrace cooperative business principles, including democracy and social responsibility. We use a cooperative business model that strives to meet members’ needs, not maximize profits for a few. . . We believe we are stronger together than we are individually. And we strive to make Buffalo and the Western New York area a better place to live and work.

Official copies of the proclaimation were presented to representatives of seven co-ops including Fancy and Delicious Bakery, the newest start-up worker’s cooperative in Buffalo. Fancy and Delicious will be hosting a Worker Cooperative Forum and will be attending the U.S. Federation of Worker Cooperative’s Conference in Boston.

Read more and learn more about the Cooperatives who participated in the Common Council event on Buffalo Rising.

Cooperatives: Doing Business Better

The Christian Science Monitor has a nice article highlighting the cooperative business model.

Two important points are made in the piece:

Co-ops worldwide represent much more than hippie grocery stores: They’re a fast-growing way to do business better in fields from finance to agriculture to industry…

…Cooperatives are more widespread than you might think. From banks and credit unions to apartment buildings to worker-owned businesses, co-ops appear in every facet of today’s economy. In most cases, they formed in response to economic crises like the Great Depression, or to let small groups compete in monopolized markets. In 2012, both of those conditions exist – and unsurprisingly, so do cooperatives.

All too often when talking to the general public about cooperatives, misconceptions and misunderstandings occur about the nature and scope of cooperative enterprises. The truth is, there is enough flexibility in the cooperative model to handle any type of business endeavour.

New Set of Free Webinars for Current and Hopeful Business Owners

I just posted on our website a listing of our new series of webinars for business owners. And the best part is that through the support of the Ohio Department of Development and the US Department of Agriculture, they are still free to attend. The webinars cover a range of topics, including business succession planning, cooperative formation, and just plain good business planning.

The session dates and times are as follows:

  • May 26th, 2011, 10 am – Joint Leadership Teams: Why It’s a Smart Way of Doing Business – Presented by Sandra Kennedy, Jim Cowles, & Sandra Simon of the Ohio Labor-Management Cooperation Program
  • May 26th, 2011, 2 pm – Successful Business Cooperative Models in Practice –  presented by Scott Bagley of the Center for Cooperative Forest Enterprises 
  • June 2nd,  2011 ,  10 am – Transitioning a Private Business to a Worker Co-op –  Presented by Roy Messing of the Cooperative Development Center at Kent State University
  • June 7th, 2011, 10 AM – Charitable Planning and Business Succession: How Giving It Away Helps You Keep More – Presented by Laura J. Malone, Director of Gift Planning at AEF (American Endowment Foundation)
  • June 9th, 2011, 10 AM – Steps for Organizing a Worker Cooperative – Presented by Roy Messing of the Cooperative Development Center at Kent State University 
  • June 16th, 2011, 10 AM – Best Practices When Your Business is in Conflict or Turmoil – Presented by Jack Veale, President of PTCFO, Inc.

Guest Post: 7 Myths About Worker Cooperatives

Note: this is a guest posting from Jim Anderson of the OEOC and George Cheney of the University of Texas.

WORKER COOPERATIVES OFFER ONE KEY TO ECONOMIC REVIVAL

Jim Anderson and George Cheney

The Great Recession has taken a huge toll at all levels of society.  We have little time to debate the causes.  We need pragmatic solutions for economic development, job creation, collective wealth building and bold, creative leaders who can build momentum  in our communities.  Intensive employee involvement within a culture of success makes enterprises work.  Employee-owned businesses, organized as cooperatives, offer great potential for serious consideration across the country.  Yet, there are a number of myths that persist regarding cooperatives.  We discuss these myths and offer our ideas on how to get beyond them.

Myth #1:  Worker cooperatives are a form of socialism.  Fact: At a time when all citizens are concerned with job creation, it’s important to stress that co-ops are not centralized programs but rather grassroots economic development initiatives. Worker cooperatives are capitalist enterprises. However, their equity or worth is not publicly traded in the stock market; nor are these firms subject to the whims of distant owners. Worker co-ops distribute ownership among members, who are all invested equally in the company and its successes. Employees are also nearby residents and consumers; they build on local pride through being owners in their workplace and they keep earnings in the community, creating a multiplier effect in the local economy.

Myth #2:  Worker cooperatives are not-for-profit.  Fact: Most worker coops are private for-profit firms.  They need viable product or service niches and therefore must be profitable to survive.  If there’s no margin, there’s no mission.  At the same time, if there’s no mission, there’s no soul to the enterprise.  Financial solvency is essential, but so is the thoughtful commitment to customers, stakeholders, and community.

Myth #3: Worker cooperatives do not have managers and other experts. Fact:  Worker co-ops enlist various kinds of expertise while also encouraging worker-owners to develop their skills to advance in the company. Effective worker co-ops employ an array of professionals, including experienced managers, accountants, engineers, attorneys, marketers, and so forth, along with workers who are close to the basic products or services.   Worker-owners have opportunities for advancement and leadership, and they also benefit from the company’s commitment to them.

Myth #4: Worker cooperatives suppress creativity and innovation.  Fact: Worker cooperatives are all about entrepreneurship and innovation, while meeting community economic and social needs and growing toward the future.  Beyond mere survival, worker cooperatives use a mix of individual and group incentives to encourage new ideas and their applications.  The array of incentives actually makes worker cooperatives more resilient than many traditional firms in both good and bad economic scenarios.

Myth #5: Worker cooperatives cannot grow to have a big impact on community economic development.  Fact: The cooperative economy focuses on small- and

medium-size business development, but many of these businesses grow through acquisitions, mergers, and strategic alliances.  In fact, most large businesses began as smaller enterprises. Ultimately, through collaboration as well as competition, worker cooperatives can become stable parts of urban as well as rural economic mixes.

Myth #6:  Worker cooperatives are short-term enterprises. Fact:  Stakeholders in businesses, whether traditional or cooperatively owned, are committed to long-term success.  Very few organizations of any kind, regardless of sector or industry, last more than a few decades.  Some worker cooperatives are large, well-established enterprises that have become part of the economic bedrock of their communities and regions.  There are sound examples of this in the United States and Canada as well as in many other countries around the world.

Myth #7:  Worker cooperatives are feasible only for a few kinds of business.  Fact:  There are thriving worker cooperatives in U.S. businesses ranging from agriculture and food and beverage services to clothing and household appliance manufacturing to law and journalism to transportation to high tech and alternative energy development.  The worker-cooperative model is not one-size fits all but rather one that can be adapted to specific business, sector, and community needs.

In sum, the worker cooperative is a flexible and well-tested model that should be part of the tool kit of inventive responses by policy makers and business leaders to today’s community and global economic needs.  Worker co-ops can be designed to take advantage of market niches, fit community needs, and build stable, prosperous, and just enterprises.

For further information, please consult the following resources:

Cooperative Curriculum   http://cooperative-curriculum.wikispaces.com/

Industrial Cooperatives Association (ICA Group)   http://www.ica-group.org/

Ohio Employee Ownership Center   http://www.oeockent.org

Mondragón Cooperative Corporation  http://www.mondragon-corporation.com/ENG.aspx

National Cooperative Business Association   http://www.ncba.coop

Third Coast Workers for Cooperation   http://www.thirdcoastworkers.coop

US Federation of Worker Cooperatives   http://www.usworker.coop

____________________________

Jim Anderson, Program Coordinator, Ohio Employee Ownership Center, Kent State University, Kent, Ohio 44242. Tel.:  330-672-0999 (o); 330-265-4109 (c). Jander77@kent.edu

George Cheney, Professor, Department of Communication Studies, The University of Texas at Austin, 1 University Station A1105, Austin, TX 78712.  George.cheney@austin.utexas.edu

Selling Your Business To A Worker Owned Cooperative – Part Two

Building on my previous post, we just so happen to be offering a free hour-long webinar this Friday on “Selling A Business To An Employee-Owned Cooperative: Doing the Deal.” The speaker is Mark Stewart, a lawyer and cooperative expert, and primary author of Ohio’s current cooperative law. The best part is, the webinar is free. Can’t beat that…

Selling Your Business to A Worker Owned Cooperative

Many business owners and advisors are familiar with Employee Stock Ownership Plans or ESOPs. They are a good tool for business owners looking to cash out some or all of their equity in the business. ESOPs provide significant tax breaks for the seller AND the business, as well as definite productivity and profitability benefits to the company moving forward. Another advantage of employee ownership is that, when done right, the extra incentive of ownership can drive the employees and the company to new heights of productivity and profitability.

However, there can be some roadblocks for smaller small businesses. Two of the major ones are the cost of setting up the plan, and the cost of maintaining the plan. Generally speaking, both of these can be prohibitive for companies with fewer than 20 employees and less than $1 million in sales. More on the basics of an ESOP can be found here.

The good news is that there is another alternative for smaller companies: an employee-owned cooperative.

Selling to a worker-owned cooperative provides a similar benefit to the selling owner, what is commonly known as the 1042 Rollover. The 1042 rollover is so named for the section of the Internal Revenue Code (section 1042) that permits owners of closely held businesses who sell 30% or more of the stock in their company to their employees through an Employee stock Ownership Plan (ESOP) or a worker-owned cooperative to shelter the capital gains from taxes by rolling the proceeds of the sale over into other qualified domestic securities within 12 months of the sale. This is the primary benefit for the selling small business owner.

The other major “selling” point is that the setup costs, as well as the ongoing costs, are much lower than with an ESOP.

There are some differences between the two structures (for example what business issues are voted on by the employee owners, and how ownership shares are voted) that need to be taken into consideration. But generally speaking the hurdles are very manageable.

A more in-depth exploration of these and other issues when selling to a cooperative can be found in our website library.