Retaining Rural Businesses by Transitioning to Cooperative Ownership
See proposal abstract
Principal Investigator: Michael Darger, University of Minnesota
Co-Principal Investigator: Courtney Berner, University of Wisconsin-Madison; Kevin Edberg
The UofM Extension and the UofWI Center for Cooperatives, along with Cooperative Development Services in St. Paul will design, deliver and evaluate a “road show” about converting businesses to employee ownership with audiences in rural areas. Converting businesses to employee ownership through worker-owned cooperatives is a new approach to retaining businesses when owners retire. At least it’s new in terms of acceptance and application in the economic development field. It has gained traction on the East and West coasts, however adoption has been slower in the North Central region. For businesses with <100 employees, converting to a worker owned cooperative is potentially a pathway for business succession. However, outside of co-op circles few are aware of this method nor have considered it as a viable option for retaining businesses. In Minnesota and Wisconsin there are ~27,000 retiring business owners potentially interested in this research. Additionally, this project builds on new federal legislation and rules, including the availability of USDA Business and Industry Loan Guarantees for cooperatives, and the Main Street Employee Ownership Act.
This project will create insights and greater understanding of needs/barriers relative to supporting rural business-to-cooperative transitions in the North Central region. Leveraging the knowledge and experience developed by project partners and practitioners in other regions, the project team will create, pilot test, and evaluate methods. The goals include 1. creating basic awareness about converting businesses to employee ownership, 2. gaining its acceptance as a viable option and 3. spurring adoption of cooperative conversions as a succession strategy.
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