Washington Economic Development Webinar 12 20

so close to having that timed properly good morning and thank you for joining us to learn more about employee ownership as a strategy for economic development and resilience whether in the midst of a massive population shift like aging baby boomers a global pandemic or even if you can imagine it in these times in the absence of circumstances that threaten our lives and livelihoods my name is mori ingram and i'm the ceo of the whatcom community foundation and also a former small business owner whether you work in the field of economic or community development or you're a business owner yourself you know that businesses and communities are most successful when everyone is pulling in the same direction and invested in the same goal employee ownership is designed to foster just that kind of culture and brings many other benefits you'll hear about today you'll also learn a bit about the efforts underway with many thanks to our local partners in the economic development field here in bellingham and watkins county to develop a more robust ecosystem to support the creation and conversion of employee-owned enterprises across washington state today's webinar is being recorded and all the registrants will receive a link to the recording as soon as it's available on the project equity website we'll have some time for q a at the end so please enter your questions in the q a rather than the chat along the way that will allow us to keep all that information for future reference in case we can't get to everyone's questions today and now it's my great pleasure to introduce sarah lee the governor's sector lead and director of advanced manufacturing for the washington state department of commerce sarah will share her perspectives on the value of employee ownership and the critical partnership potential in economic development and community philanthropy working together for stronger local economies that work for everyone thank you maury as maurice said i'm the governor's advanced manufacturing sector lead which probably means nothing except for what i really believe i am is just a dot connector bringing people and resources together to make bee hag's big hairy audacious goals happen maury and the wacom community foundation uh are a shining example nationally of that and the power and potential of community foundations wacom community foundation and many community foundations on this call have used their power of convening and close connection to their communities as a platform to bring people together to explore new ways of doing things and this power and willingness to use it is more important today than ever the kogit 19 pandemic has been and continues to be a huge tragedy people have died businesses have struggled and gone over and many have lost jobs but it's also an opportunity to rebuild in a more equitable and resilient way for the future if we all work together wacom community foundation and community foundations through our state are important partners for those of us in economic development and one of the things that the wacom community foundation is doing is helping us explore how employee ownership can play a key role and the cool thing about it is as a small business owner former small business owner myself is that there's other folks who've gone ahead of us and that's like super feet in ferndale i don't know if you've been there bought their products they're awesome a1 building builders in bellingham and excel pacific which is in bellingham and all along the west coast and colorado now employee ownership isn't meant for everyone or every business but thanks to wacom community foundation we have a chance as economic development um people folks and the foundation folks and all the other folks in the community you have a chance to explore it kick the tires and ultimately be able to offer it as one option to help our businesses recover stronger than before thank you i'll jump in thank you so much um so much mori uh for introducing us and and sarah for kicking us off um i'm allison lingan i'm the co-founder of project equity we are a national nonprofit dedicated to employee ownership and we really work to make what we consider this best kept secret business model more widely known and understood so communities businesses and workers can reap the benefits i'm joined today um in addition to sarah and maury by my colleague evan edwards from project equity and diane gassoway and john mcnamara from the northwest cooperative development center and each of them will introduce themselves because when they when they uh uh join the the kick off their section when we talk about employee ownership we mean broad-based employee ownership and so this is compared with say stock options or management buyouts in which a small number of employees usually management has access to ownership what we're referring to in this conversation today is when all employees who meet basic criteria say a minimum number of hours per week threshold have opportunity to become employee owners and employee ownership provides values really to three constituencies to the community broadly by retaining jobs and businesses by keeping companies rooted in place and in the next generation to the businesses by creating more resilient companies that outperform their peers and to the employees themselves by creating high quality jobs that includes building up ownership of an asset the asset being the business where they work um this is ren he is from a slice of new york which is a pizzeria has two locations with about 35 employees ren is one of the founder worker owners from their transition to become an employee-owned business in 2017. at that time it was a 10 year old company and the sale provided its founders with a market rate financial exit for the husband-wife founders the impact of for the workers of employee ownership has been profound over the last two years the slice of new york has distributed more than 600 thousand dollars of profits and this is on top of raising wages the company itself has also experienced tax savings making it easier to share the financial benefits with the full employee base as we begin to see the light at the end of the tunnel through this dark dark coveted winter of the tremendous economic disruption we really really really need cost-effective strategies that build truly resilient economies and employee ownership is one proven solution that applies across most industries here's the agenda for the presentation today and i'm going to kick off by talking about what we call the twin small business crises pre-pandemic we already had a small business crisis given uh the silver tsunami of baby boomers and kovit has just taken this to the whole a whole new level as we know if more businesses if more small businesses go out of business or change hands it can really affect local economic vitality rural communities are of course especially hard hit when long-standing businesses are lost so we need decisive action to preserve washington's small businesses and jobs what do the numbers look like in terms of covid the census does a weekly survey of small businesses the small business pulse what you see on this slide is the responses of washington businesses to the question overall how has this business been affected by covid19 the takeaway is that it's affecting practically every business 80 percent are either seeing a large or moderate negative effect on the right you'll see how different industries are affected not surprisingly some are hit harder than others hotels and restaurants for example but no industry has been spared and so this is all happening on top of the silver tsunami it's estimated that one out of every two local job creators these are the privately held small businesses with employees are owned by baby boomers and boomers today are aged 55 to 74. so the impact of their retirement is already being felt but it is long from over because most baby boomers don't retire right at 65. 65 from their businesses in the state of washington the estimate is that nearly 60 000 local employers are owned by baby boomers employing nearly 600 000 people well this these are pre-coded numbers of course um so so with nearly 60 000 businesses owned by people at or way beyond their retirement age how many of those business owners want to forward invest to ensure their company whether it's the crisis uh project equity we have partnered as maury mentioned with her team at the walking community foundation to lay the groundwork and engage stakeholders to move towards a washington state employee ownership center based in bellingham and serving businesses all across the state through this partnership we completed a study at the city of bellingham to help local leaders understand the need and opportunity for employee ownership now project equity has done studies like this in multiple different cities small and large and we have generally found a pattern that holds true across all of them long-standing businesses have an outsize impact on the local economy probably not a surprise you can see that in the stats here for the city of bellingham that businesses over 20 years old account for 63 percent of small business revenue and they employ two and five workers the importance of these long-standing businesses to our local economic vitality cannot be understated and each community is slightly different different workers different mixes of industries but the strategy of local business preserve preservation through employee ownership can meet those different needs with so many businesses needing to change hands we have lots of sellers and few buyers so business is listed for sale sell at a very low rate kids are not taking over their parents businesses these days only about 15 percent transition to the second generation and so employee ownership helps business owners find a buyer right under their nose when business owners think about their succession options which by the way uh this is the first and and and most important piece of the puzzle that we just have to get business owners um acting thinking about and acting on their succession planning we have unfortunately many many examples of business owners who wait too long and then it's too late medical crises force them to liquidate um or year after year they just start slowing down and then the business value is reduced significantly and so what we really just want to avoid all together is the company closing down and the community losing those jobs and business assets but even if um there weren't trouble finding a buyer when we asked business owners to take a step back and say what is it that you want when you retire and sell your business employee ownership really measures up to other options it's about legacy it's about a market value sale employee ownership can can bring really meaningful tax benefits to the seller and the business and of course it retains employees we're working right now with an 80 year old business owner who when the pandemic hit he could have just closed up shop he actually didn't need the sale of the business for his retirement but he has 40 employees more than half of whom have been with him for over 15 years and he shared with us that he just couldn't shut his business down and and take take that that away from them and could we please help him so we know small businesses are hurting right now and that we have a huge business succession need employee ownership can address both of these needs by increasing um uh by by increasing employee engagement creating stronger businesses quality jobs and offering a smart business succession strategy another quick story this one is from one of our clients cal solar they're 100 employee-owned solar design and installation company they have a team around 30 and early in the shelter in place they made the decision to furlough all of their employees so they could tap unemployment well furloughed they still came together to try and figure out how to keep the business earning revenue how to keep their jobs it came up with a new idea which was to become a battery reseller for storing electricity produced by solar panels um and they were able to create a whole new line of business that ended up making up for all of the lost revenue that came about from the business disruption the shelter in place and they're on track to meet their original revenue goal for 2020 as a result so would furloughed employees in a non-employee in business have shown this proactive ingenuity it's all because of the employee ownership the employee engagement that ownership brings given the benefits to workers and engagement it's not surprising that employee owned businesses outperform their peers pulled out two data points um we see higher profit margins eight and a half percent more than industry peers and we see sales and employment scoring two percent faster year after year after year stronger businesses that outperform their peers have more money to share with their employees based on a study by the national center for employee ownership we see that employee owners earn wages that are a third again as high as their industry peers and non-employee-owned firms they stick around at their jobs about half again as long which by the way is also a lower cost for the business for not having to replace those replace employees as frequently and their household net worth is nearly twice as high and we have a recent study published by the employee ownership foundation that shows um uh talks about how employee owned firms fared better and created job stability for their employees the report talks about how the employee-owned companies experienced similar shock from the pandemic as other companies but it was their response to the shock that was different non-employee-owned companies were nearly six times as likely to report that the business would never return to its usual level of performance this is the kind of resiliency that we want lots more of in our local economy we're gonna switch gears now and i'm gonna pass it over to my colleague evan edwards to talk a bit about what employee ownership is and how it works hi good morning everyone and thank you for your time and attention uh thank you for the introduction allison my name is evan edwards i am director of strategic partnerships in business engagement for project equity and uh two really important parts of my role include working with the leadership of localities uh cities and counties throughout the u.s to help them to understand the value of employee ownership as a business retention strategy that stabilizes economies and employment as well as providing a pathway to business ownership for for workforces the other piece of of my job that's really important is i have a team of uh six folks who uh do consultations with business owners uh every week we do uh dozens of consultations uh with the objective of helping them to understand how employee ownership transitions are uh a good way for them to have business succession and to see a return on their many years of hard work as a business owner so i'd like to talk to us a little talk to everyone about a little bit about how uh employee ownership transitions happen and so let's move into that right now um what is an employee ownership transition a simple description excuse me a simple description of employee ownership transition is when ownership of a business is conveyed from its legacy owner to its workforce these transactions are financed by a debt that is serviced by the new employee-owned entity and not the individual employees themselves and though employee owned and though employee owned management and operations remain consistent even as governance of the business changes so what are the forms of broad-based employee ownership the three more common forms are employee stock ownership plans also known as esops uh worker cooperatives and employee ownership trusts esops are the most commonly known form in the u.s they're the best fit for companies with larger workforces say 30 plus 35 plus employees and also with substantial ebitda um esops provide potentially significant tax benefits to both the legacy uh business owner and or shareholders of the business and the business itself as a retirement plan esops are governed by erisa law and not to get into the weeds here but there are certain regulatory costs that are a part of operating an esop and that's the reason why they aren't necessarily a fit for smaller workforces and businesses that don't have significant evidence worker cooperatives are fit for just about any size business at project equity we tend to focus on those that have workforces of 10 15 or more employees co-ops are far less complex in their structure than esops and they also provide a more direct role in governance than than an esop might and finally employee ownership trusts are a less common form and offer the benefits of customization for for the selling owners for whom esops or worker cooperative transitions aren't a fit so business readiness factors it's really important um particularly in our work at project equity because our work extends beyond simply wanting to transition uh business to employee ownership to also wanting to normalize employee ownership in other words have this become a business model that is uh readily executed by uh business professionals nationally and it does a disservice if we are work transitioning companies that aren't ready for that sort of transition so what do we look for business got to be profitable uh good financial health for the past five years and experienced employees are really important because we want businesses to continue to succeed as they have in the years prior and having a workforce that has a management depth and an understanding of how it is that the business operates is really important and then of course a proven track record of success so once a business owner arrives at the conclusion that employee ownership transition is the right succession plan how do they go about actually transitioning the business from their ownership to ownership by by the workforce well as with any other business transaction a sale price and deal terms need to be established uh part of our work at project equity is helping to business owners to understand how uh at what transaction price of business can be sold we do that as part of our feasibility assessment process uh once uh once that uh that proposition has been established the business obtains a loan now notice i said the business obtains a loan and not the workforce itself and that's because the business then services the debt that pays the business owner uh through its going forward cash flow so financing the sale uh typically in a typical transaction uh there's 30 to 50 percent seller financing so the business owner is holds a note um we work with uh cdfis um you all are probably familiar with them community development financial institutions uh they happen to have alignment with us many of them mission alignment and so far is the importance of seeing employee ownership uh as a means for providing economic resiliency for workers and so they are inclined uh more inclined to support these transaction as lenders generally the senior debt holder and then there's there is a nominal buy-in that employees of a business may provide this is as much uh an element of creating ownership culture in other words we want the workforce to have skin in the game now keep in mind please that we understand that workers generally don't have cash sitting around that can be applied for this and so typically in our feasibility or transition stage project equity will structure a payroll deduction plan that will allow employees to be able to contribute to this employee buy-in at a at a rate that works for them through through payroll deductions over time accelerate employee ownership is an initiative that project equity uh is currently partnered with shared capital cooperative uh to provide funding for these transactions and by q2 of next year we expect to be able to offer financing that is inclusive of employee ownership setup costs and has needed working capital for business continuity the goal is to make sure that cash flow isn't a very barrier to employee ownership unique benefits of employee buyouts so this is really important because business owners obviously have other options they are limited i think as allison pointed out the ability to transition a a business within a family um is uh uh less seen these days um selling a business on a platform or through a business broker uh is often a transaction with what we would refer to as friction so the owner can't control the pace uh the owner uh oftentimes sees erosion insofar as the sale price that they're looking for and oftentimes with a strategic buyer or other acquirer of the business the workforce is sacrificed and so through employee ownership the owners can achieve a fair sale price it's it it's based on an assessment of the capacity of the business to be able to pay for itself through going forward profits the owner can control the pace of the transaction so many times we meet an owner who would like to stay involved with the business over a period of time is it ready to leave at the point that a sale agreement is finalized employee ownership transactions provide the ability for owners to stay a part of the process and stay a part of the business and then of course really important uh from a mission perspective project equity is that we're able to preserve the workforce uh in place uh preserve jobs and economies and basically allow for a continuity of legacy that is not achieved with sale to an outside buyer so what does the employee ownership process look like well it's really important for a business owner or anyone who's interested in employee ownership to explore the process uh once there is an understanding a little bit more of how employee ownership works and what the benefit might be to then move to a feasibility assessment and uh during that assessment we the owner wants to take a a look at is this really a solution that fits their particular circumstance both uh from a personal perspective and also the perspective of the business and the workforce and if those two boxes are checked then a business can move into a transition phase and that's when it's actually established how the employee owned business will function going forward and then of course there's closing sale and then finally and a particular importance to project equity is the thrive step or step four which is essentially uh establishing that the business and the workforce are stable and successful on a going forward basis after the business owner has exited and so with that um i hope you all have a greater understanding of how these transit transactions happen uh i'm sure that you'll have questions uh we can't speak through uh an explanation of this in just a few minutes and and have it land with everyone so we do look forward to your questions in this regard and with that i will pass the baton to diane gassaway thanks evan good morning everyone cooperatives are one of my favorite topics and i'm glad to be participating in this presentation my name is diane gasway i'm the executive director for the northwest cooperative development center to my continuing amazement i have had the opportunity to work in this field for almost 20 years now in my opinion it's a wonderful pursuit and it feels right to help people take control over their economic futures through business ownership the northwest cooperative development center is a nonprofit organization focused almost exclusively on the cooperative business model this slide lists a number of the services we provide which other than the first two in the last item marketing the cooperative advantage look a lot like other types of business development there's no getting away from the fact that there has to be a reasonable expectation of positive cash flow however the board and governance roles are critical in the conversion and startup phase as well as after launch and this is where nwcdc comes in to help workers navigate the development and conversion processes nwcdc currently has a team of eight cooperative development specialists including john mcnamara and myself our service territory includes washington oregon and idaho at any one time these days we have approximately 80 projects going on all in various stages of development and about half of these projects are conversions the northwest cooperative development center is funded through grants contracts and donations many of the grants that we receive have been from usda they've been a great partner throughout the years and the funding provides for much of the pre-development activities for co-ops located in rural areas recently we've had good conversations with other funders and are hopeful to have new resources for the work we undertake in urban locations one last note about funding in general nwcdc has a small loan fund that worker co-ops have been able to access for working capital loans that wouldn't otherwise be available i'm excited to share this that this fall we were awarded a grant from the u.s treasury department to create a community development financial institution also known as a cdfi to expand our loan program this morning we'd like to share a bit more detail about the assistance nwcdc provides small businesses that choose to convert and some examples of recent conversions that despite the challenges created by the pandemic are making real differences in the lives of their new owners dr john mcnamara and wcdc's senior cooperative development specialist is also with us this morning and i pass the rest of the presentation on to him okay well thank you very much diane and yes uh my uh john mcnamara a senior cooperative development specialist i've been with nwcdc since 2014 and before that spent 26 years with a worker-owned taxicab company which at the time when i left was the second largest camp company in wisconsin so one of the things we do is or one of our partners in our work nationally is the workered owners collaborative which is a project of the democracy work institute and we tend to follow the outline that we're talking about here which is uh consists of essentially five steps explore assess structure complete and then support um i'll talk a little bit about each of these but the key part of the exploration is as is mentioned earlier is making sure that it's uh the business isn't going concerned that it's uh profitable and that it functions but also going a little bit deeper into the weeds and understanding um what it will cost to replace the owner sometimes in small businesses owners aren't always compensating themselves for all of their work as the owner and of course once it becomes cooperative that work will have to be paid and and over time and other issues have to be adjusted in so we need to build that back into the system to make sure that the business will still be feasible or what it will take for it to be feasible and then the other end of it is to make sure that the staff actually want to become worker owners and sometimes it's getting people over that barrier thinking you know they might see that the owner is is fully dedicated to the business and they don't necessarily want that level of commitment but we are able to work with them and then the mantra um many hands make like work is often a big part of that step of helping workers understand that um becoming an owner in the sense of a co-op doesn't mean that they have to do everything or that they are forever you know committed to this business but that they um and they can participate and have a different relationship the next step of course is getting into looking what the future will look like with ownership again that's building out a basic cost analysis and developing a plan how the bringing the entire staff into the discussion and actually starting to practice uh democracy or democratic ownership at uh at an early level having the staff actually elect a buyout committee that then does the most of the work in putting together the next phases which includes working with outside professionals not only us but lawyers and accountants to help determine the best type of sale whether it's going to be what is called an asset purchase where they create the co-op and the co-op buys the business or whether it'll be a merger where the workers join the existing business and then uh change the bylaws to make it a a cooperative model and that then involves also talking about the structure and arranging financing with groups like shared capital and like i said like diane mentioned uh our own revolving loan fund um and also talking about what sort of financial commitment the members the future members of the co-op will be making all of this of course ends up coming up from the close of the sale and celebrating that but then we also continue this support afterwards making sure that that the new board of directors and let the membership get the proper training and making that transition from being an employee to an owner of the organization of understanding shared governance and and learning how to run meetings and create policies and figuring out what changes they want to make in their culture and usually that support will last up to at least the first general membership meeting where that buyout committee or the incorporating board becomes an elected board of directors and even beyond um so this is basically uh the formula that that gets followed there's a lot of nuances and juggling that happens in all this it's not essentially linear a lot of things will be happening at the same time but it is a basic process and so to round things out with a few minutes left i want to talk about some of those our successes so if you go to the next slide so this is a really i think a nice list of some of the the various types of businesses we have i want to point out working systems um they're an example of uh they're a software development company and so um they ended up being i would say a pretty light touch uh in terms of things they the company had already been using team management and as software developers they were used to writing or working in a world where everything is sort of an if then situation so if you do this then this will happen so that allowed them to pretty easily jump into uh to managing the company and in fact their productivity soared after the transition and they're really a great success story of how fast that productivity can ramp up um likewise um well just the general thing so marine survey and assessments in port townsend they do um uh as they might suggest they do uh environmental surveys for for building and new uh new uh i guess you have new construction and then we have a number of cafes work of books is uh is also a good example um they were a little bit uh a little bit more required a little bit more assistance they were um in a very uh difficult retail spot and actually they converted on april 1st of uh this year so right as the shutdown was happening was when they made their uh their change and for them part of that feasibility was really looking at at their whole location for them to become and be profitable they really ended up having to move so not only did they uh did they close on the conversion during the state home orders they also moved three blocks to a new location as well so it was really a lot of a lot of work for them but they've been they're pretty successful they're open now and uh they seem and they have a lot of support in the community and i think they're also a great spot in that they're kind of considered one of those downtown businesses in olympia that make olympia olympia and so uh that's another part of some of these small businesses is that uh very often they are part of the identity of the culture of the community that they exist in and so keeping them isn't only about keeping jobs which is important it's also about helping that community maintain its identity as as what it wants to be and how it projects itself out to the greater community and i think um i think i'm going to pass it back to i think allison right and then i should say yes i'm sorry if you want to contact us our contact information is there we are always happy to talk with anybody about their options and take them through a half hour to an hour with no worry about cost to just to explore what they want to do thank you wonderful thank you so much to both diane and john from the northwest cooperative development center and you know as you can see employee ownership really can be a fit for companies of all sizes so from on smaller ends about 10 employees are up those tend to be a better fit for the worker cooperative form and as the company size grows to many hundred and larger we can look to all of the forms of employee ownership inclusive of employee staff ownership plans employee ownership trusts and worker cooperatives so we are i want to really encourage the folks who are joining the webinar today to pose your questions we want to get a nice robust list of questions going for a q a so um in the webinar panel there is a question section and please go ahead and type your questions in there so we can address them when we get to the q a in a few minutes so um so in terms of resources for washington businesses um you know there are there are um a number of really experienced so in addition to the northwest cooperative development center number of really experienced qualified employees stock ownership plan or esop practitioners um so the you know the question of who to go to should there's there's not any there's not a sort of a lack of resources to support the businesses um i do want to uh make a special note um with the slide that we've got up here about small business development centers um you know communities have a lot of resources for small businesses um fbdc's are important because every single community has a has one um and so fbdc's with the support of organizations that are already fluent if you will in employee ownership can themselves gain enough fluency to play a really important role um you know the numbers when i talked about 60 000 companies owned by retiring baby boomers the need for this is vast um and so these sbdcs that are embedded in every community can play a role in spotting businesses we call it candidate spotting spotting businesses that could be a fit for employee ownership they can also potentially provide that first level of education talking about employee ownership getting the business owners interested enough to then be able to have a conversation you know set up a consult with an organization like the nurse olympic cooperative development center if a co-op might be a fit with an organization like project equity to explore a full range of options and then they can also partner with employee ownership experts to either learn how to directly provide or to engage that you know that expert to help the business in areas like debt capacity analysis or preparing for the management transition and one of the things that we do at project equity is we we do partner directly with a number of sbdc's we have relationships with sbdc's in both rural and urban communities and we serve as a contractor to do this education of the sbdc as well as to provide direct services to the business in the feasibility stage one really great example is the washing western washington sbdc um in bellingham that has partnered with the whatcom community foundation to raise the profile of employee ownership as a viable option for succession planning so cj uh their center director might be on the webinar today and she brought her entire team of business advisors to half day training that was hosted by the watkins community foundation and put on jointly by project equity and the bister institute byster is a wonderful employee ownership organization that is out of the rady school of business at uc san diego so this is just one example of how sbdc's can kind of get up that learning curve of employee ownership and be ready to engage with small businesses in their community we also want to highlight community philanthropy as a really important partner in spreading the need and opportunity of employee ownership two conversations really all across the state of washington community foundations affinity funds potlatch and the latino community fund and united ways are all involved in bringing this conversation together today okay so um you know if you are somebody who is a small business advocate or economic development profess professional or at an sddc or another small business organizations what does it look like to start the conversation with business owners so we could go to the next slide um you know these these things on the left here on the slide are what we often hear are some of the motivations for business owners so in this first one i want to preserve what i've built and i want to see it thrive both during and after this crisis so really integrating and this is you know talking about the business owner well integrating employee ownership and investing in an ownership culture makes the business more resilient or you know helps the business get through the crisis and then uh you know really really uh go back to the way go back to is how how things were remember the story about the solar company and how the come the owners really came together during the crisis um business owners say i want to take care of my employees when i leave well in employee ownership employees share in the success of the business through profit sharing and asset abbreviation appreciation so it really does that or gosh you know i've struggled to find a buyer i'm not sure i'm going to be able to find a buyer well as i said employee ownership helps you find a buyer right under your nose employees have qualifying experience and they don't need to bring the financing out of their own mattress or their rich uncle right this is a leveraged buyout where the company is the one taking out the loan based on the company's cash flow history and then another one that we hear commonly is you know i'd like to remain involved like i'm not ready to just cut the you know immediately cut the cut the um my involvement but i i you know i'm interested in somebody else taking the reins and one of the benefits of an employee ownership succession plan is that that owner can remain involved and reduce that involvement um over time but ultimately begin to share that weight of both the workload and of ownership so this is a quote i just wanted to share from the president and ceo of the bellingham regional chamber of commerce who really notes the need as we are looking towards a post-pandemic economy for approaches that provide business sustainability employee retention and community success um and flagging employee ownership as a strategy that does just that and i really want to serve as a resource to help expand employee ownership to help people learn about it and and assess if it can be a fit for the needs in the community or the needs of specific businesses we really encourage you to reach out to us let us know how we can help we will be planning a future webinar that will be targeted for small business owners and we will let you know about that um so that you can spread that invitation to the business owners in your network and that will go more deeply into the nuts and bolts of employee ownership and how it works and how to get started we'll be sending out the slides and the recording for today's webinar along with some links to some key materials that might be helpful to get some conversation started so thank you all um so very much and with that we would like to move into into our q a if we can ask all our presenters to come come back on camera here and i will turn it over to maury great and actually in the interest of uh the size of our faces i'm actually gonna go off camera and let you all be seen um so uh while we're waiting for questions and again we really look forward to hearing from you um what you would like to hear a little bit more from our panelists about um i wonder if you all could speak a bit to how folks i know i believe we have a few local governments um on the on the webinar and i wonder if you could speak to how local governments can play a role in helping to build out this strategy for local communities kevin do you want to take that first sure i'd love to um so first of all i appreciate the question thank you mari local governments are really key uh to this work because you all have your hands on the pulse of local business community and so what project equity likes to do is tap into your local relationships uh oftentimes that's through an economic development uh department um depends on who is uh actually uh conducting relationships and providing services for businesses in a particular locality but uh we like to do a couple things in particular in engaging with local government um one is helping uh helping local government to understand what companies might be at risk for retention in other words who are the business owners that uh might be looking to retire what are the legacy businesses that are really important to a particular community and whether in terms of workforce and sizable workforce or revenue helping to determine who those are often times you may know them right away and just want to point them our direction which we always appreciate um but digging deep and helping local governments to understand you know who those businesses are and then crafting engagement strategies for being able to uh engage with those business owners and start to bring employee ownership as a succession strategy uh to them um so that oftentimes looks like us doing well in the covid era webinars like this where we've invited business owners and uh what we refer to as business connectors or business influencers those are folks that's like a business owners cpa or their attorney or someone else who has their ear and might be able to save them hey employee ownership's this great strategy you might want to look at um so so uh localities can help us with that the other really important piece is for us to i'll use the term hardwire employee ownership in the local government so that on an ongoing basis you are able to identify companies that would be good uh candidates for employee ownership transition this might not necessarily mean a business that's right now 30 years operating and and and the owner may be on the way out the door but a business that's operated for 15 years and we know it's really important that that business owner have the options for employee ownership on their radar earlier rather than later so local government can help us with all three of those things identifying businesses engaging with business owners and then developing strategies that allow employee ownership to be hardwired or baked into economic development policy on an ongoing basis thank you evan that's terrific i also wonder whether how you're adapting knowing that one of the readiness factors is making sure that businesses are profitable post covid how are you working with businesses that are either thinking about employee ownership or part way through the process when that profitability may be a little more perilous at this time diane might you want to kick that off and then we can pass it to evan so so we have a few conversions going on right now and all of the steps that we mentioned earlier the processes for conversion and working with feasibility are still relevant and conversations there are about what what modifications need to be considered as they um and i had ownership of where the business is going next month or an energy issue occurrence we see that happen with other conversions and uh [Music] and being able to implement that has been to keep um doors open so visibility is still a really important part of that and as the other steps um so what we've seen at project equity uh is a significant amount of uncertainty uh amongst business owners um given the crisis and uh obviously as allison alluded to earlier a fair amount of business disruption uh we've tried to take that into consideration in our feasibility assessment process and so you know 2020 is largely a snapshot right uh historical financial performance remains really important to us and then uh within our feasibility assessment process we're taking a a lot closer look at the business's current resiliency and its ability to sustain to rebound and sustain on the other side of kobe and so there's a little bit more art that's now a part of the science with respect to our work but we recognize that you know this is hopefully just a snapshot in time and businesses that have uh prior strong fundamentals if we can find ways that support those fundamentals existing on the other side we think those businesses will remain strong candidates now to that in uh i mentioned uh towards the end of my section of the presentation that we're coming close to closing a fund that a key aspect of that will be business continuity capital that could reasonably help business owners that are right now dealing with uncertainty not inclined to spend on uh either capital equipment or other uh other means to support their businesses right now just provide them additional runway to get to the other side of this circumstance and you know part of the part of the the incentive is that an employee ownership transition on the other side can also provide them a succession means uh by accessing some some business continuity capital we would call it so uh we are uh remain cognizant of this circumstance not necessarily being indicative of a business's history or its future and we try to be uh very mindful of that when we're doing an assessment of a particular business right now [Music] businesses have received and in that conversion it appears that uh forgiveness needs to happen first um for the best outcome and the least complexity i guess for the honors to take over thank you honors yeah diane i'm just saying your sound quality is coming in a little hard to understand i don't know if there's a an alternative method great well i think we may have time for any final comments from any of our panelists any any final thoughts you want to share before we do a little quick wrap um i think i just uh i just want to mention that about a year or so ago we worked with a couple attorneys out of colorado to do a series that we call the legacy project and we videotaped their three-hour presentation and it's on our website an easy to digest 20-minute segments that talks about the tax and different structures of employee ownership and if people go to our website at wcdc.com and look for a legacy project nice put the link in hopefully they can be sent out but it's a nice primer for people to go deeper into the discussion wonderful thank you thank you so much i would just like i would just like to put a little bit finer point on the comment allison made earlier uh about the silver tsunami um we're at a very unique time in uh u.s economic history from the perspective that we have this uh very large cohort of baby boomer business owners who will be exiting in the next five to 15 years and this is a unique time in that uh through employee ownership we are able to transition uh some of the economic prosperity and stability that those boomers created to work forces and do so in a means that is in no means punitive it's not based on on tax policy it's based purely on business fundamentals of transitioning a business through a sale from one party to another it provides business owners with a very tangible means of supplementing their retirement it helps to stabilize communities from an uh from an economic standpoint and an employment standpoint and pointedly it helps to provide workers who ordinarily wouldn't have an opportunity to be able to purchase a business a share in business ownership and with that economic resiliency that they wouldn't otherwise achieve and so i think it's incumbent upon us to see this opportunity this snapshot in time and take advantage of it with the tools that we have and i see employee ownership and we project equity see employee ownership as one of the most uh valuable tools in the toolbox for being able to address this current circumstance so with that i'll kick it back over to allison wonderful so i would just encourage anyone on the webinar today to not be shy please reach out let us know how we can be of service um diane and john talked about how they offer um you know initial consults to business owners project equity does the same and um i'll just speak for project equity we're happy to speak with with any of you um whatever your role may be um uh you know whether you're at an sbdc or in a local government or a local chamber or a business owner um so please don't hesitate to reach out we would love to talk to you as you can tell we're very passionate about this um and uh we we believe that this is sorely needed right now terrific i want to thank all of our panelists and project equity for hosting um as we said at the top we're really looking to build a robust ecosystem and as you can see we've already got a significant number of invaluable assets across the state and beyond and so i want to just encourage again that folks reach out if you want to know some of the organizational work that's happening to try to coordinate a lot more activity across the state of washington please feel free to reach out to our team at the community foundation and also to the team at project equity and we'll have that webinar posted on project equity's website very soon so please stay in touch and thanks so much for joining us today thank you so much maury this is great