Today, the Colorado Employee Ownership Office, housed within the Colorado Office of Economic Development and International Trade (OEDIT) announced 5 businesses that have converted to employee ownership with assistance from the Employee Ownership Grant. These grants save businesses money as they transition to employee ownership models, so more business owners and employees across the state can realize the economic and quality-of-life benefits of employee ownership.
“I congratulate these businesses on their transition to employee ownership and am proud to continue our administration’s work to save businesses money and support employee ownership so that everyone can benefit when a business thrives,” said Gov. Jared Polis.
Gov. Polis established the Colorado Employee Ownership Office in 2020 to provide programs, funding, and incentives for business owners to understand, explore, and pursue employee-owned business structures. Since the Employee Ownership Grant program opened in early 2021, 18 businesses have converted to an employee-owned structure. This is a significant increase over trends observed prior to the launch of the grant and other Employee Ownership Office initiatives when one to two employee ownership conversions took place in Colorado each year.
“When a company transitions to employee ownership, the business benefits from a more engaged workforce, a guaranteed succession plan, and a way to attract and retain top talent. Employee-owners generally experience higher wages, access to better benefits, and improved job security,” said Nikki Maloney, Director of Business Support at OEDIT. “Among Colorado’s small businesses, we are seeing a growing recognition of these benefits along with increased interest in Employee Ownership Office resources that can help them convert. This trend will have lasting benefits for business owners and workers alike. ”
Most recently, five businesses have transitioned to employee ownership models with a $3,000 Employee Ownership Grant to reimburse expenses associated with the transition to employee ownership:
- Cooperativa Mano A Mano, Denver (Cooperative)
- EZTAX Denver, Denver (Profits Interests)
- Family Village Cooperative Coworking and Childcare, Longmont (Cooperative)
- Top Notch Logworks, Gypsum (ESOP)
- Visual Interest, Denver (ESOP)
These funds offset professional service costs such as accounting, business valuation and legal counsel, and represent just one funding source the Employee Ownership Office has introduced to support employee ownership transitions. The Office also offers the Employee Ownership Tax Credit, which covers up to 50% of professional service fees necessary to become employee-owned, up to $25,000 for worker-owned cooperatives and employee ownership trusts and up to $100,000 for employee stock ownership plans (ESOP).
“A recent survey conducted by the Employee Ownership Office and the Exit Planning Institute shows that 72% of respondents want to sell their business within the next 10 years, which is indicative of a nationwide trend. Yet 68% reported that they were unfamiliar with their exit options. We see employee ownership models as a way for retiring business owners to realize the economic benefits of their hard work while preserving their businesses for future generations,” said Jennifer Briggs, Chair of the Colorado Employee Ownership Commission.
To that end, the Employee Ownership Office is also partnering with the statewide network of Small Business Development Centers to develop low-cost and no-cost resources that help business owners understand employee ownership options and guide them through the transition process. These programs are expected to launch over the next several months.
Applications for the next round of the Employee Ownership grant are being accepted through November 4, 2022, and will require a successful conversion by January 6, 2023 to receive funding. In addition to employee stock ownership plans and cooperatives, any structure that gives at least 20% of ownership to employees is considered an employee-owned business in Colorado and is eligible for the grant. To learn more and apply for open funding opportunities, visit the Employee Ownership Grant and Employee Ownership Tax Credit webpages.