There are four ways to start a worker cooperative:
- Start from scratch
- Buy a franchise
- Buy an existing business
- Convert an existing business
Start from scratch
This is extremely hard and not recommended.
Buy a franchise
Some franchises have extremely solid training and support systems in place. When they do, this is an excellent way to get started. You may need to raise a large sum of money to go this route.
Buy an existing business
The advantage is that there is an immediate stream of income and some seller financing may be available.
Convert an existing business
This is the recommended option. There are several advantages both for the owner and the workers:
For workers, the possibility that a competitor will buy it and sell off the assets, fire all the workers and integrate it into their existing business is eliminated. This is a common scenario.
For the owner, if the company is a C corporation or can be converted to one, taxes on the capital gains from the sale may be delayed or eliminated altogether.
Since the workers have the most to lose, they should be the best customers and perhaps willing to pay a good price.
If you are a business owner or know someone who might be thinking about selling their business, please let them know about converting it to a worker cooperative.