Business-related COVID-19 impacts and the looming retirement of baby boomer entrepreneurs present challenges to small businesses and the communities they call home. While cities, towns, and villages aim to build more resilient local economies, the small businesses they value are often underprepared for long-term stability. Without succession plans or buyers at the ready, small business owners may be forced to seek quick exits that result in the loss of local ownership and critical services.
The good news is that small business owners and communities have options.
Among the most accessible options for communities to help is sponsoring a business assistance phone line for small business owners to call. A support line leverages existing small business service provider networks to educate business owners on employee ownership as a succession plan and connect them to experts that can assist them.
The most basic form of a business support line can be established as a website or a webpage hosted by a city or trusted community partners. The website or webpage can provide small business owners with information on employee ownership and connections to local services like succession planning or ownership transition experts. Cities can contract with service providers to support transitions and connect small business owners to a national network of expert providers such as the Workers to Owners Collaborative. A more robust approach may include setting up a phone number for business owners to call and be directed to employee ownership transition experts. The City of New York’s Owner to Owners initiative, which has included employee ownership in its long-term economic resiliency plans, is one example of how a city has created a business support line, including both a website and phone number, to educate business owners on employee ownership as a viable business option.
Launched in December 2020, Owner to Owners, an Employee Ownership NYC initiative, sought to normalize employee ownership by introducing the business model to 10 percent of local businesses. This initiative leveraged an experienced local network of service providers to teach local business owners and business-serving organizations about the benefits of employee ownership. It then relied on those organizations to act as communications conduits and advocates, identifying and connecting interested business owners with technical assistance. This effort resulted in a rapid expansion of businesses familiar with employee ownership and organizations equipped to support businesses in need. And it worked: the number of local service-providing organizations familiar with employee ownership tripled. The number of organizations including employee ownership in their service offerings doubled. Hundreds of businesses—72% of which were previously unfamiliar with employee ownership—engaged with the support line to learn more about employee ownership and how it may help meet their needs.
New York’s efforts also highlighted several additional benefits of using a business support line to support a long-term business retention strategy:
1. Business Support Lines can be Established Using Existing Resources in Communities
Strong relationships with trusted service organizations and business owners are the foundation of a successful business support line. Owner to Owners relied on promotion from business leaders and community partners to introduce the employee ownership option to local entrepreneurs. Support from elected officials was also critical: Owner to Owners saw a large spike in business owner engagement when the city’s mayor announced its launch. Because employee ownership is a new concept for many business owners, many of whom have dedicated their lives to building successful companies, it was best received when delivered by a trusted messenger such as elected officials or nonprofit partners. The most successful engagements from the Owner to Owners initiative have come from nonprofit partners who have referred business owners they know well.
2. Business Support Lines Can Build a Pipeline for other Local Services
While they primarily aim to educate business owners on employee ownership transitions, support lines also provide an opportunity to hear from business owners and connect them to other services available in the local ecosystem, such as support with licensing or permitting, minority or women-owned business certification, workforce development or procurement.
3. Business Support Lines Can Collect Valuable Business Data
By inviting businesses to reach out for support, municipalities will gain valuable information about local businesses and the services provided to them. This information can also be used to inform future targeted assistance of all kinds. For many communities, data on local businesses can be hard to come by. Some cities are even barred from using business licenses to collect data in order to provide targeted services. As a result, it can be difficult to assess the impact of preventable business closures on employment, services, and tax bases. With business data in hand, cities are better equipped to serve their business communities. Trends detailing which sectors are most vulnerable can be identified and information on business age can be gathered. This can inform a gap analysis of services offered or requested.
4. Business Support Lines Can Effectively Normalize Employee Ownership
When established in partnership with local service providers, business support lines can effectively normalize employee ownership for local business owners, employees, and service providers. Once embedded in the offerings of local providers, this approach can provide resilience for local economies by becoming a familiar business option when local business owners are ready to exit, whether that happens in five months or five years.
If you are interested in exploring how a business support line like the NYC Owner to Owners can work in your city, please join the next webinar in the National League of Cities and Democracy At Work Institute’s “Shared Equity in Economic Development Series” on October 5, 2021.