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Carolyn Berke knows the challenges of owning a food business in the Bay Area.
As the owner of Union City-based Niles Pie Company for several years — and having owned and worked in bakeries on the East Coast — she’s experienced some of the industry’s long-standing challenges: a struggle to find and keep employees in what is notoriously a high-turnover, low-wage profession, and the challenge of growing a business in a high-cost region.
As of recently, however, Berke’s not handling the challenges of business ownership alone. Her employees are now owners themselves, since Niles Pie Company made the shift to a worker-owned cooperative about six months ago.
Employee-owner Carolyn Berke works in the Niles Pie Company on Wednesday, Jan. 10, 2018, in Union City, Calif. Berke, who founded The Niles Pie Company made the transition from a single owner to a employee-owned buisness model to help expand and prolong the company. (Aric Crabb/Bay Area News Group)
The worker-owned model is nothing new, but it could have important implications as businesses try to get ahead of the challenges of operating in the Bay Area and as the wave of baby boomers — who own more than half of all privately owned businesses in the Bay Area — retire, sometimes without a succession plan for their business.
“We are looking at employee ownership as a way to stabilize local ownership versus absentee ownership,” said Alison Lingane, co-founder of Project Equity, an Oakland-based nonprofit that helps businesses, including Niles Pie Company, transition to worker-owned models.
Absentee ownership, the argument goes, makes it easier for businesses to make decisions that are disconnected from what is good for workers, and with union membership lower in many regions than it has been in the past, low-wage workers have little protection.
According to research from Project Equity, more than 85 percent of business owners do not have a succession plan in place for their businesses, and increasingly, many are struggling to find a buyer when they are ready to sell. Some close down, some are passed on to family members or sold to local owners, and others are sold to larger companies or absent owners.
“If they’ve got family in the wing to take over, or another local owner to sell to, that’s a fantastic succession plan,” Lingane said. “But increasingly, kids don’t want to take over family businesses. The challenge right now is that employer ownership is not on the menu for a lot of businesses.”
Project Equity is trying to change that. It works to educate business owners about the types of employee ownership available, which can range from worker-owned cooperatives to the widely used employee stock ownership plan in which shares of a company are owned by a trust on behalf of employees. Conversions to worker-owned cooperatives are mostly debt-financed, in the form of loans to the employee-owned business that pays the departing owner the value of the business.
It’s not a model that will work for everyone. If …read more
Source:: The Mercury News – Latest News