Ask any elected official to name their favorite local business, and chances are they don’t name the newest one. They name the one that has been there for decades: the restaurant that hosted every celebration, the hardware store that knew everyone by name and the barbershop that doubled as a gathering spot.
These are legacy businesses. And in most cities, they are underserved, underrecognized and increasingly at risk.
What is a Legacy Business?
A legacy business is a small business that has been active (PDF) in a community for ten or more years, though the threshold may be older, depending on the locality. What sets them apart is not just longevity; it is the institutional memory they carry, the neighborhood identity they anchor and the generational wealth they can represent for their owners and families.
Think of the vegan restaurant that has fed a neighborhood since 1979, or the hardware store founded in 1895 that is still family-owned. These businesses are part of what makes a place feel like home.
Second-stage businesses share some of these qualities. They are established businesses that have moved past the startup phase. They have a customer base, a team and a track record, but face a distinct set of challenges (PDF) as they look to grow, adapt or plan for what comes next. Many legacy businesses are also second-stage businesses, but not all second-stage businesses have been around long enough to carry legacy status. Both matter, and both are often overlooked.
Unique Challenges Legacy Businesses Face
Most cities invest heavily in startups, which makes sense as new businesses create energy, attract attention and signal economic vitality. However, existing businesses generate up to 80 percent of net new local jobs.
While early-stage businesses struggle to get off the ground, build clientele and often have a learning curve on fundamentals (like budgeting, hiring and marketing), legacy and second-stage businesses often face separate challenges (PDF). Rising operating costs, workforce shortages, supply chain disruptions and shifting consumer behavior are prevalent stressors. On top of that, many established business owners are beginning to ask questions about what happens when they are ready to step back.
Succession planning and ownership transition (PDF) are important topics within economic development, and play a critical role in the success of second-stage and legacy businesses (PDF), especially. Without a plan, many businesses that could survive under new ownership simply close, taking with them jobs, storefronts or wealth that could have transferred to a family member, a longtime employee, or a community cooperative.
Rather than leaving owners to navigate transition alone, municipalities can connect them with information about employee ownership models, co-ops and other alternatives to a third-party sale. NLC and the Democracy at Work Institute published a playbook focused on supporting cities with directing their legacy businesses toward employee ownership. This kind of support keeps businesses in the community and keeps their benefits there, too.
What Cities Can Do
Supporting legacy and second-stage businesses does not require a new department or a large budget.
Direct engagement (PDF) such as collaboration with small businesses through a designated city office, and dedicated funding, staff or other resources to engage with longtime business owners builds the kind of trust that makes meaningful engagement and local economic revitalization come together (PDF). Cities that know their legacy businesses are better positioned to connect them with technical assistance, financing tools, and peer networks before a crisis hits.
The City of Evanston, Ill. offers one example worth watching. Its Legacy Business Alliance, created in 2023, formally recognizes businesses that have been part of the city for more than 20 years. The program includes fifty-one members, connects established businesses with programming and recognition, and even facilitates mentorship between legacy owners and newer entrepreneurs. It is a low-cost intervention that signifies that these businesses matter, and that the city sees them.
How Your City Can Advance Legacy Business Support
NLC’s forthcoming Legacy Forward cohort will include cities at the forefront of tackling the challenges of and building new solutions for local legacy businesses. City leaders will develop the tools and strategies needed to identify, support and sustain legacy and second-stage businesses in their communities, with particular attention to businesses led by under-resourced entrepreneurs facing workforce, supply chain, or succession challenges.
Cities selected for the cohort will participate in peer learning, expert-led workshops and hands-on technical assistance. Their experiences will inform a replicable toolkit that cities across the country can use to build or strengthen their own legacy business programs.
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