Each year many viable businesses close and many skilled workers lose their jobs because the owner no longer wants to continue with the concern.
This may be for a variety of reasons:
- the owner has reached retirement age
- a parent company wishes to offload a trading arm as a result of corporate restructuring
- the company has been badly managed and is facing liquidation
- the owner wishes to realise the assets of the company
Worker buy-outs are one option to secure the future of the employees and the company.
Often the workforce:
- understands the products or services the company produces
- knows the production techniques
- knows the customers
- can spot inefficiencies across the whole production system
By forming a co-operative the workers can combine their resources - both financial and skills- to achieve ownership of the company and the necessary financial support.
This can create a sustainable business that:
- is owned and controlled locally
- employs local labour
- uses the existing asset base, built up over many years
- encourages the business to stay local
Because it is usually the owners or managers who decide to close a business, the management skills need to be transferred to the workforce to enable them to take full control of the organisation. The new co-operative's management needs to learn skills in business administration; finance, marketing, IT, law, recruitment and training, democratic management and internal communications.
CAN provides a comprehensive development service for worker buy-outs;
including:
- feasibility assessment
- business plan development
- training in all aspects of business management
- how to be a member and director of a co-operative
- ongoing consultancy and support
CAN has worked with many business rescue and succession cases, ranging from engineers to teachers, car manufacturers to printers.
In the process of Business Rescue, CAN can help with negotiations between the new management and existing customers, trade suppliers and any official bodies that may be involved; eg the tax office or liquidators. CAN's flexibility ensures the quick response needed when companies are faced with bankruptcy or closure.
With Succession cases, CAN helps formulate the structures to enable a smooth transition from existing ownership to co-operative ownership in a time frame to suit all parties.
CAN has developed several stages of planning
- facilitating meetings of the proposed co-operative members to ensure that they understand and are commited to take the business over
- working with the team on site to understand the processes of the business
- identifying skills gaps in the proposed take-over team
- developing a business plan based on the experience of the workforce
Working Examples
For CDA (Brave Ltd) in Bristol, CAN provided a full succession service that enabled the workers in Autoquip to purchase the business from the retiring owner. Ongoing training, support and consultancy has been provided to the team of workers who kept their jobs and now manage their workplace democratically.
For Essex County Council CAN worked with the staff of an engineering company facing redundancy, Ever-Ready Tools Ltd, when their parent company decided to close that part of their business. CAN were called in to advise on the viability of the business and the logistics of taking over the business themselves. CAN helped with the development of a business plan, sourcing finance and setting up the co-operative legal structure.
For Tower Hamlets Co-operative Development Agency CAN provided a business counselling service as part of a Succession project. 5 businesses and their workers were advised on appropriate succession strategies.