The COVID/Silver Tsunami Opportunity: Strengthening Ohio’s Small Businesses by Building Worker Equity
Never let a crisis go to waste.
What that means now is we should leverage the sense of urgency that accompanies scary economic times like these to develop long-term solutions to make our economy stronger, more resilient, and likelier to withstand whatever’s thrown at us next.
In other words: Build back better.
COVID is ravaging thousands of small businesses in every part of Ohio, putting their workers on the street. Many of these businesses and the jobs they provide are gone forever. And the grim list of closures, furloughs and cutbacks keeps growing.
Even before the pandemic, Ohio’s small business sector was running straight into the headwinds of the so-called Silver Tsunami. That’s the colorfully dramatic term for baby-boom business owners trying last minute to figure out how, or even if, their businesses will outlast them without anything resembling a succession plan.
For too many hyper-busy small business owners, even asking the what’s next question can feel like a frivolous luxury or a sinkhole. Issues of time, legacy, family, money, and workplace dynamics can make succession, at best, a challenging topic. That’s likely why studies find that eighty percent of Silver Tsunami business owners have no succession plan at all. And no succession plan or path to employee ownership means their businesses and the jobs they directly and indirectly create could very well vanish when they leave the scene.
But Ohio has the power to make sure that COVID and the Silver Tsunami become a synergistic opportunity to fortify small businesses to increase their odds of survival and growth in the unpredictable years ahead.
Here’s how and why
One of the most productive ways to improve small business long-term survival odds is to make more of them Employee Stock Ownership Plan companies (ESOPs), worker cooperatives. And one of the most efficient ways to make this happen is to advocate for and support converting Silver Tsunami businesses into worker-owned enterprises.
We know from various studies that worker-owned companies are 25 percent more likely to stay afloat in recessionary times than traditionally structured businesses. Worker-owned companies also have higher growth rates, hire more people, and trigger virtually no loan defaults. Maybe that’s because highly motivated worker-owners retire with 2.5 times assets than those who work in other kinds of businesses, giving them a whole new level of commitment to their company’s success.
From any economic, community or human development perspective, creating more ESOPs and worker cooperatives means businesses that last well beyond their owners’ working lives, stay in the community, and deliver real financial security to their workers.
A Leading Role for JobsOhio and Local/Regional Economic Developers
The COVID/Silver Tsunami crisis synergy offers JobsOhio the chance to take the lead in creating long-term resilient worker-owned businesses by ratcheting up the advocacy and support services that make them possible.
This work needs to be strategic and proactive because there’s too much at stake and too little time to leave business conversions lying in the “hope that happens” pile. Political leaders and economic developers need to begin thinking of efforts that lead to more worker-owned businesses as a frontline business retention strategy – a strategy implemented and measured by successful business conversions. Now is the right time to make worker ownership a fundamental underpinning of statewide economic development policy and practice.
Specifically, JobsOhio, building on the best practices of successful local and regional worker ownership advocacy programs around the state, should lead the next step and create a strategic public/private initiative that fully mainstreams worker ownership. This leadership initiative would engage local and regional economic development organizations, business groups, financial and legal services firms, worker ownership advocates, and others to:
- Identify and prioritize those Central Ohio businesses with the most economic impact that are most at risk of vanishing when the owner moves on.
- Determine the specific challenges and resistances that stand between these businesses and workable employee ownership succession plans and help them work through them.
- Incentivize a subset of these targeted businesses — with special outreach to minority-owned firms – through personalized in-kind and low-cost legal, financial, and technical assistance to those willing to commit to convert their operations in a timely way.
- Strengthen grant, taxation, public contracting, loan, and other programs in ways that encourage succession planning and worker ownership.
The urgency of this moment makes it the right time to open the Overton Window of economic development policy and practice a little wider.
Brian Morris operates Morris Communications, a marketing/public affairs firm in Columbus, where he serves as Chair of the Workforce Development Board of Central Ohio’s Business Solutions Committee. He created and developed the award-winning Business Resource Network, a collaborative business retention program operating in Ohio, Pennsylvania and West Virginia.
At OEDA, we are thankful for our members who are passionately committed to the success of their communities and advancing Ohio’s economy. Over the past year, we’ve appreciated having you as part of our community of economic development professionals and are grateful for the opportunity to be your partner again in 2023.read more
As your partner for success at every step of your career, OEDA strives to provide high-impact training opportunities for our members each year. The foundation of that training is our Basic Economic Development Course (Ohio BEDC). This year’s course will be held from May 1-4 in Dublin, Ohio, and Early Bird Registration is open from now until March 1.read more
(Wilmington, Ohio) The Clinton County Workforce Collaborative hosted its first meeting of the year on Thursday, January 19. With almost 40 individuals present, representing schools, businesses, service providers, and community organizations, members reviewed accomplishments from 2022, established a new meeting structure for 2023, and discussed how their current efforts can continue to meet the needs of the local community.read more