Employee ownership is a win-win for Berkeley’s small businesses, and the community

Businesses owned by their employees keep companies rooted in place, provide quality jobs and a sustainable business model. (Sponsored.)

This story is brought to you by Project Equity.

Mariposa Gardening & Design Cooperative is an ecological design-build landscaping company that was founded in Berkeley in 2005, and that now works throughout the Bay Area. Since 2017, it is also been an employee-owned cooperative, and, as such, exemplifies how such a model can keep companies rooted in place, provide quality jobs and strengthen businesses for the long-term.

“I knew that I wanted Mariposa Gardening & Design to be a company that promoted economic stability for everyone during a time when many on the margins of our society feel uncertain about political and economic change,” said Andrea Hurd, Mariposa Gardening & Design’s founder, lead designer and lead stonemason.

“During the pandemic, it has been amazing to have a team of people who are actively working together to keep our business alive. If the burden was on just me at this point, we would not have such a large and thriving company. We have pulled together in such an extraordinary and supportive way to keep our company going.”

“We have pulled together in such an extraordinary and supportive way to keep our company going.” — Andrea Hurd

Small businesses in Berkeley are facing an unprecedented economic disruption due to COVID-19. Many local business owners may be seeking a way out — considering putting their business up for sale with no clear buyers or shutting them down for good. Regrettably, many of the businesses that will close are viable companies that would probably have recovered post-crisis. They are simply victims of a global crisis that froze demand and stalled cashflow.

COVID-related challenges are layered on top of an ownership succession crisis that was already unfolding, given that baby boomers (those born between 1946-1964) own nearly half of all businesses with employees in Alameda County, as well as nationwide. Cities and regions need to understand — and address — the risk of the “Silver Tsunami” as these business owners retire. The risk is that these businesses will not be retained locally — either because they quietly close down, are sold to out-of-area buyers or simply do not have a succession plan as the owner transitions into retirement.

For meaningful action to help strengthen Berkeley’s small businesses during and beyond COVID, employee ownership should be lifted up within our economic response.

Berkeley partnering with Project Equity to help business owners

Fortunately, the city of Berkeley is taking a proactive approach to assist locally owned businesses that are at risk by partnering with Project Equity, an East Bay nonprofit focused on helping business owners stay locally owned and preserve their legacy through employee ownership succession. Berkeley is already the home of many successful employee-owned businesses and California has, by far, the highest number of employee-owned businesses of any state in the U.S.

For businesses looking to increase employee engagement, or to create a succession plan, employee ownership can be a powerful tool. According to the National Center of Employee Ownership, employee-owned businesses have employees that make 53% higher incomes than those working in traditional businesses.

Project Equity performed an analysis in Berkeley to quantify the number of privately held companies with employees that are aged 20 or older — a good indication that they need succession planning — and the impact if these businesses are not retained.
Companies that are 20 years old and over in the city of Berkeley:

  • Represent 1,200 of the city’s businesses
  • Employ an estimated 13,000 individuals
  • Generate over $1.6B in revenue

Small, locally owned businesses are essential to Berkeley’s local economy and community vitality. Employee ownership may be unfamiliar to many, but it motivates and engages employees, provides good jobs and a sustainable business model and keeps local businesses local. It also offers an appealing answer to the retiring business owner who is wondering about the future: there is a buyer right there under my nose and it’s the very employees who helped me build the company.

This story is written and paid for by Project Equity, an East Bay nonprofit focused on helping business owners stay locally owned and preserve their legacy through employee ownership succession.