Two grants boost support for business ownership transitions in rural Maine
The Cooperative Development Institute has received two grants totaling more than $400,000 in public and private funds to support business ownership transitions in rural Maine.
National studies show the largest single source of avoidable job loss is from business closings due to owner retirement, and the annual rate of retirement is projected to double over the next 20 years. The problem is much more acute here in Maine because the state has the oldest population in the country — and Washington County has the oldest population in Maine.
CDI said in a news release that a $200,000 grant from the John T. Gorman Foundation will help support the Ownership Transition Initiative, which assists Washington County business owners in developing exit plans that will sustain their businesses after retirement and thereby improve the quantity and quality of jobs in the region.
The initiative is being launched by a new partnership that includes CDI, Sunrise County Economic Council, Axiom Education and Training Center, Eastern Maine Development Corp., Acadia Capital Management II Inc. and Husson University’s Center for Family Business. It will offer a wide variety of education, training and services designed to ensure that Washington County’s aging business owners understand their options and prepare accordingly, CDI stated.
Complementing this grant is another recent award of a $215,000 Rural Community Development Initiative grant from the U.S. Department of Agriculture.
The grant will support education and training for the Sunrise County Economic Council in Washington County and several groups in the Lewiston region that will improve their capacity to offer cooperative development services, including support for worker cooperative conversions, agricultural cooperatives, and affordable housing cooperatives.
Resources available for ownership transitions
The Ownership Transition Initiative has developed a new website to educate business owners about planning for retirement and exiting their business and will organize a series of workshops on selling a business, family business transitions, employee ownership transitions, financial analysis and business valuation, and other topics. To develop the most useful content for this program, the initiative is asking business owners to do a short, five-minute survey to determine their needs and help shape the trainings and services offered through the Initiative. Business owners can also do the survey through the initiative’s website.
“The default succession option for business owners nearing retirement is, all too often, to reluctantly liquidate and close.This option shortchanges owners and drains the communities’ access to jobs and economic activity that the business provided,” said Rob Brown, director of CDI’s Business Ownership Solutions program, which assists business owners and their workers in carefully evaluating whether transition to employee ownership can meet their needs and guiding businesses through a transition to a worker cooperative.
Charles Rudelitch, executive director of Sunrise County Economic Council, said the goal of the initiative is to “ensure business owners have the information, training and analysis they need to retire comfortably without letting the business and jobs disappear.”
Husson University lends a helping hand
One unique aspect of this program will be the services provided by Husson University students studying business development and entrepreneurship, financial analysis and planning, exit planning and other relevant fields.
“We are proud to offer our students these innovative internships where they will work under the supervision of experienced advisors, gain real world experience, and provide small businesses in Washington County with valuable and needed business services,” said Brien Walton, director of the Dyke Center for Family Business at Husson and CEO of Acadia Capital Management II Inc., a federally-certified community development entity that creates business financing solutions for economically-distressed communities.
Husson faculty from several departments, and seasoned strategy consultants from Acadia Capital Management II Inc., will collaborate in support of Washington county entrepreneurs.
Federal changes facilitate employee ownership transitions
Business owners interested in exploring an employee ownership transition will receive additional support through the recent passage of the Main Street Employee Ownership Act at the federal level. The new law expands U.S. Small Business Administration loan guarantee programs for employee ownership conversions and requires SBA and Small Business Development Centers to make available education and training for employee ownership conversions.
Co-sponsor U.S. Sen. Susan Collins, R-Maine, characterized the new law as the most significant legislation supporting employee ownership to become law in 30 years.
“As they prepare for retirement, many older business owners are concerned about what will happen to the enterprise they created and nurtured with so much time and effort,” she said in a news release. “An employee ownership arrangement helps to ensure that the business will continue to thrive with a loyal workforce that is literally invested in its future.”
Kitty Barbee, director of business services and lending for Eastern Maine Development Corp., the official workforce development agency for Washington County, said the Ownership Transition Initiative offers a comprehensive approach.
“[It] will provide business owners with the succession planning assistance needed to sustain these rural businesses, provide workers with new skills that will improve profitability, and sustain economic activity and access to goods and services in rural communities,” Barbee said.
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