UNI’s Advance Iowa is creating an Employee Ownership Center to advance the College’s mission to promote the economic vitality of Iowa communities. Across the U.S., small business closures have been identified as a potential crisis for rural and underserved populations. A 2022 Business Enterprise Institute (BEI) study found over 80% of business owners plan to exit in the next decade. Few of these businesses have a succession plan or plans to transfer ownership. If these businesses close, that could be especially devastating for rural families and economies. Every business closure means lost jobs and economic activity, but in a small  community, this can also mean the loss of critical community resources or amenities. 

As business owners approach retirement age, they might look first toward family or outside purchasers to take over the business. However, a growing number have turned to employee stock ownership plans (ESOP), which have emerged as a potential solution. Especially in rural areas where there may be few potential purchasers, employee ownership can be a win-win-win solution. Transitioning business owners achieve their financial objectives and legacy goals, while  the business’ employees have an opportunity to acquire ownership, and the community retains an important part of its economic ecosystem.  

“Employee ownership works, regardless of the company size, because employees directly associate their vested interest with the company’s financial success.”

Advantages of employee ownership extend well beyond being a solution to save rural businesses.  Employee and shared ownership is gaining momentum because the structures  democratize business ownership benefits and improve financial results. According to a Rutgers University study, employee ownership can boost company productivity by 4%, shareholder returns by 2%, and profits by 14%. Paul Kinghorn, Director of Advance Iowa, states, “Employee ownership works, regardless of the company size, because employees directly associate their vested interest with the company’s financial success.”

The many company benefits that can come with employee ownership, including improved pay, benefits, wealth, and job satisfaction, and a mechanism that provides a smooth and seamless transition of ownership offers long term benefits to Iowa’s rural communities with increased local spending, stable jobs, and community wealth building.  

UNI’s new Employee Ownership Center provides structures and resource networks to support the long-term success of employee and shared ownership models that fit a company’s unique needs and goals. Program services include support for Worker Cooperatives, Employee Stock Ownership Plans (ESOPs), Employee Ownership Trusts, and other shared options such as profit sharing and stock options