A worker cooperative is a business that is owned and controlled by the people who work in the company, rather than just a handful of founders or outside shareholders. This means:
- Workers build assets through business ownership on top of wages
- The profits of the company are locally owned, creating a stable local economy for the community
- The company is more likely to be resilient and continue to serve its community through leadership transitions
The ownership structure of a worker cooperative has five defining characteristics:
- Voting shares in the corporation are limited to workers
- All workers meeting certain criteria are eligible to become worker-owners
- Each worker-owner can only have one voting share
- Dividends are issued to worker-owners on the basis of hours of work performed
- The financial value of the membership share is based on a system of internal capital accounts, not a market valuation
The Worker Cooperative Field
Worker cooperatives are found throughout the world, in almost every industry. Today, more than 18 million workers in the US have some ownership stake in the place they work. A democratic workplace is more than just a way to make jobs better, it’s a way to make companies better.
This guide provides a comprehensive introduction to worker cooperatives.
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Learn more about worker ownership
While some businesses are founded as cooperatives, a business can also convert to a cooperative. In a conversion to worker ownership, the shares of the business are transferred from the existing owner to the workers.
A business conversion may be the right solution for you if:
- You want the jobs you’ve created to exist after you leave
- You want your business to survive for the next generation
- You want to reward employees for their commitment and dedication to the business
- You want to convert some of the equity you’ve built up into cash – but don’t necessarily want to leave the company
- You no longer want to be the only owner
The most successful transactions are ones where the company is something worth owning and both the owner and the workers want to complete the transaction.
When thinking about selling your business to your employees consider the following factors:
- Relationships with employees – are the people who helped build your company ready to take it to the next level?
- Management team – do your existing staff have the skills, technical expertise, and relationships to help the business succeed?
- Time – are you able to spend the time necessary to support the transaction?
- Profitability – do you have consistent profits to support an employee-owned company?
If you’re interested in learning more about how ICA can help you strengthen your business through employee ownership, contact us at (617) 232-8765 or firstname.lastname@example.org. The initial consultation can take as little as 30 minutes and there is no cost or obligation.
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Consulting and Technical Assistance
The ICA Group offers consulting and technical assistance to businesses converting to worker ownership, as well as new and established cooperatives.
Consulting to Conversions:
The ICA Group is one of the foremost firms designing employee ownership for small businesses. We have been instrumental in transactions with companies ranging in value from less than $1 million to more than $20 million in value.
We provide simple, straightforward tools designed to minimize costs and ensure that the interests of all parties are addressed. We’ll walk you through the five basic steps to transferring your business to your employees.
Consulting to New Cooperatives:
The ICA Group offers in-depth technical assistance for new cooperative, including:
- Market research to assess demand for services and develop sales estimates
- Feasibility analysis using the business’s operational needs and cost structure to develop detailed financial projections
- Business plan development to guide implementation, attract financing, and cultivate partners
Consulting to Established Cooperatives
The ICA Group believes that training and education can make a significant difference to worker-owned companies and social enterprises. Our staff of trained consultants design programs to meet your firm’s specific needs and to make the benefits of ownership tangible and enduring.
Trainings include: fundamentals for democratic firms, basic and advanced accounting, and the internal capital account system.
Explore our resources for cooperatives and businesses interested in worker ownership
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