CINCINNATI — Katie McGoron started Shine Nurture Center six years ago with the goal of creating a child care business that matched what she wanted as a parent.
She found a nice location near Mt. Airy Forest and built a curriculum around early childhood development, healthy food and plenty of time for kids to explore the natural world around them.
But as a business owner, she said she learned quickly that the center’s teachers and staff were the key to success.
“The teachers are what make or break the center,” she said. “A nice facility is great. We love that we’re here by the woods. That’s a huge advantage. The food is really important to us. But we know that it’s the teachers and the staff that make the most impact on the children.”
She began exploring what it would take to transform her business into an employee-owned co-op to attract and keep the high-caliber staff she wanted. But figuring out how to finance the sale stymied her – until Co-op Cincy’s Business Legacy Fund came along.
Launched in 2020, the Business Legacy Fund is designed to help business owners transition their companies to employee ownership by essentially loaning employees the money they need to buy the business. Profits then help employees pay off the loans over time.
During a Zoom news conference Wednesday, Co-op Cincy highlighted Shine Nurture Center as the fund’s first success story, with another five local businesses taking concrete steps toward worker ownership. Those six businesses have a total of 110 workers who are poised to become business owners – including 12 employees at Shine.
Co-op Cincy now is accepting applications for its 2022 Business Legacy Fund program to help retiring business owners – or those who want to sell their companies for other reasons – explore whether employee ownership could be right for them.
“This is not a rescue fund,” stressed Ellen Vera, Co-op Cincy’s director of development and co-op organizing.
But employee ownership, she said, can be a way to address three economic challenges that Ohio is facing.
Seeing opportunity in a ‘dark, scary picture’
- Baby-boomer business owners are preparing to retire in big numbers. In Ohio, baby boomers own 54% of all businesses, according to the report. That amounts to 94,000 firms employing 2.6 million people. And while more than half of those business owners plan to retire in the next 10 years, 80% of them don’t have a formal succession plan, the report found.
- Many employees are living on the edge. Half of workers between the age of 18 and 64 earn a median annual income of only $17,950, according to the report. The number of jobs that pay low wages and lack stability is growing, the report said, and women and people of color are disproportionately working in low-wage industries.
- And wealth inequality is worsening. Since 1980, the share of income going to the top 1% has doubled, the report noted, while the share of income going to the bottom 50% of all earners has been cut in half.
“It’s kind of a dark, scary picture, right, in a lot of ways,” said Michael Palmieri, research and program assistant at the Ohio Employee Ownership Center. “But what we see in these three challenges is also an opportunity. And worker ownership provides a solution to many of these problems.”
Organizations across Ohio joined forces in 2020 to create the Ohio Worker Ownership Network, or OWoN, to support employee-owned businesses and raise awareness about the benefits of that business model.
Co-op Cincy is part of the network and hopes the Business Legacy Fund can help more retiring business owners consider transitioning their companies into employee-owned co-ops, Vera said.
To qualify, companies must have strong business fundamentals and be a good investment for the employees that want to become owners, she said.
‘Our voices get to be heard’
The Business Legacy Fund has recruited five entrepreneurs of color to help transition companies to worker-ownership and will be seeking out companies with more than $1 million in revenue, good cash flow and at least 10 employees that could be good candidates for the program, said Christopher Bennett, Co-op Cincy’s Business Legacy Fund acquisition program manager.
McGoron said she thinks it’s a good option for more business owners to consider, especially if they have employees who are invested in the company’s success.
“I feel like if you have the right people in place, it’s a great option to explore,” she said.
Shine’s transition to become employee-owned has helped attract and retain talented teachers and staff, she added.
Bethany Heeg, who recently became the center’s administrator, is among them.
Heeg, who started working at Shine in March, said she was drawn to the center by the focus on nature and the chance to work with the kids there. Knowing she would have the opportunity to become an employee owner, she said, was an exciting bonus.
None of the Shine staff members expect to make a fortune from their ownership stakes, she said, but it’s not about the money.
“As a care center, we’re not making millions of dollars. Our profits are closer to the thousands, and most of that goes into the building,” she said.
For Heeg and the other teachers at Shine, she said, it’s more about having a say in how their workplace operates.
“Now it feels like all of our voices get to be heard,” Heeg said. “There’s a space for that. And we get to make choices that are best for, not only the teachers, but for the kids, because the teachers are with the kids all day long.”
Co-op Cincy’s Business Legacy Fund is accepting applications through Nov. 15, 2021 for business owners that want to be considered for the next cohort. Finalists will be notified by Dec. 15, and the program will be held from January to July of 2022. More information is available online.
Lucy May writes about the people, places and issues that define our region – to celebrate what makes the Tri-State great and shine a spotlight on issues we need to address. To reach Lucy, email email@example.com. Follow her on Twitter @LucyMayCincy.