Alternative Business Structures Overview
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A very basic overview of alternative/less common business structures. Specifically focusing on employee owned models and cooperatives. This was a slideshow I put together for the Reinventing ...

A very basic overview of alternative/less common business structures. Specifically focusing on employee owned models and cooperatives. This was a slideshow I put together for the Reinventing Capitalism talk on November 8th 2012.

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Alternative Business Structures Overview Presentation Transcript

  • 1. Alternative Business Structures A brief overview...
  • 2. The Basic Overview Employee Owned/Profit Sharing Models − Corporations or LLCs with internal structure to create employee ownership
  • 3. The Basic Overview Employee Owned/Profit Sharing Models − Corporations or LLCs with internal structure to create employee ownership Cooperatives
  • 4. The Basic Overview Employee Owned/Profit Sharing Models − Corporations or LLCs with internal structure to create employee ownership Cooperatives The Benefit Corporation (the B-Corp)
  • 5. The B-Corp
  • 6. The B-Corp Relatively new legal structure
  • 7. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit.
  • 8. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial
  • 9. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial − Environmental
  • 10. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial − Environmental − Social
  • 11. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial − Environmental − Social THE TRIPLE BOTTOM LINE
  • 12. The B-Corp 650+ B-Corps currently
  • 13. The B-Corp Like:
  • 14. The B-Corp For more info: − www.bcorporation.net
  • 15. The ESOP
  • 16. The ESOP Employee Stock Ownership Plan
  • 17. The ESOP Employee Stock Ownership Plan Shares are given to employees and are held in trust until the employee retires or leaves the company
  • 18. The ESOP Employee Stock Ownership Plan Shares are given to employees and are held in trust until the employee retires or leaves the company Most ESOPs are registered as S-Corps
  • 19. The ESOPStudies show on average, employees have considerably more in retirement assets than comparable employees in non-ESOP firms. In some cases, about three times as great. National data from Joseph Blasi and Douglas Kruse at Rutgers shows that ESOP companies are more successful than comparable firms, so wages in ESOP firms were also 5 per cent to 12 per cent higher.
  • 20. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock
  • 21. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices
  • 22. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices  Restricted Stock − Having met certain requirements
  • 23. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices  Restricted Stock − Having met certain requirements  Phantom Stock − Essentially just profit sharing
  • 24. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices  Restricted Stock − Having met certain requirements  Not really Phantom Stock employee owned... − Essentially just profit sharing
  • 25. Where to learn more National Center for Employee Ownership − www.nceo.org
  • 26. Cooperatives - Overview• Voluntary and open membership
  • 27. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)
  • 28. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members
  • 29. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members• Autonomy and independence
  • 30. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members• Autonomy and independence• Education, training and information
  • 31. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members• Autonomy and independence• Education, training and information• Cooperation among cooperatives
  • 32. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members• Autonomy and independence• Education, training and information• Cooperation among cooperatives• Concern for community
  • 33. Cooperatives - Overview More than 29,000 US cooperatives that operate at some 73,000 places of business throughout the United States. Cooperatives account for nearly $654 billion in revenue, over two million jobs, $75 billion in wages.
  • 34. Basic Types of Coops  Consumer Coop
  • 35. Basic Types of Coops  Consumer Coop − Business is owned & operated by the customers
  • 36. Basic Types of Coops  Consumer Coop − Business is owned & operated by the customers − Very commonly grocery stores (food-coops), but also extends to health care, insurance, housing, utilities and personal finance (credit unions)
  • 37. Basic Types of Coops  Worker Coop
  • 38. Basic Types of Coops  Worker Coop − Owned and democratically controlled by its "worker- owners"
  • 39. Basic Types of Coops  Worker Coop − Owned and democratically controlled by its "worker- owners" − Many hybrids and adaptations world-wide
  • 40. Basic Types of Coops  Retailer Coop
  • 41. Basic Types of Coops  Retailer Coop − Employs economies of scale to receive discounts from manufacturers and to pool marketing.
  • 42. Basic Types of Coops  Retailer Coop − Employs economies of scale to receive discounts from manufacturers and to pool marketing. − Members are usually businesses
  • 43. Basic Types of Coops  Retailer Coop − Employs economies of scale to receive discounts from manufacturers and to pool marketing. − Members are usually businesses − Best Western is technically a retailers cooperative whose members are hotel operators.
  • 44. Basic Types of Coops  Business & Employment Coop
  • 45. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation
  • 46. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases
  • 47. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported
  • 48. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported  Salaried
  • 49. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported  Salaried  Member
  • 50. Basic Types of Coops  New Generation Coop
  • 51. Basic Types of Coops  New Generation Coop − Hybridization of cooperative and LLC
  • 52. Basic Types of Coops  New Generation Coop − Hybridization of cooperative and LLC − Ideal for capital intensive business
  • 53. Basic Types of Coops  New Generation Coop − Hybridization of cooperative and LLC − Ideal for capital intensive business − Common purpose is to add value to primary products (ethanol from corn, pasta from durum wheat, or gourmet cheese from goat’s milk)
  • 54. Familiar Cooperatives  Housing & Building Cooperative
  • 55. Familiar Cooperatives  Housing & Building Cooperative − Residents either own shares reflecting their equity in the cooperatives real estate, or have membership and occupancy rights in a not-for-profit cooperative.
  • 56. Familiar Cooperatives  Housing & Building Cooperative − Residents either own shares reflecting their equity in the cooperatives real estate, or have membership and occupancy rights in a not-for-profit cooperative. − Co-op City in New York houses 55,000 people and is the largest in the world
  • 57. Familiar Cooperatives  Utility Cooperative
  • 58. Familiar Cooperatives  Utility Cooperative − Type of consumer cooperative
  • 59. Familiar Cooperatives  Utility Cooperative − Type of consumer cooperative − Delivers utilities (i.e. electricity, water, telecommunications)
  • 60. Familiar Cooperatives  Utility Cooperative − Type of consumer cooperative − Delivers utilities (i.e. electricity, water, telecommunications) − Profits reinvested to infrastructure or distributed to members
  • 61. Familiar Cooperatives  Agricultural Cooperative
  • 62. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives
  • 63. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives  Provide various services to their individual farming members
  • 64. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives  Provide various services to their individual farming members − Agricultural Production Cooperatives
  • 65. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives  Provide various services to their individual farming members − Agricultural Production Cooperatives  Resources such as land or machinery are pooled and members farm jointly
  • 66. Familiar Cooperatives  Credit Unions and Cooperative Banking
  • 67. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions
  • 68. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions − 90 million members
  • 69. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions − 90 million members − $679 billion on deposit
  • 70. Familiar Cooperatives  Cooperative Federations
  • 71. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak
  • 72. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak − Example: Mondragon Corporation of Spain
  • 73. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak − Example: Mondragon Corporation of Spain  256 companies in four areas of activity: Finance, Industry, Retail and Knowledge
  • 74. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak − Example: Mondragon Corporation of Spain  256 companies in four areas of activity: Finance, Industry, Retail and Knowledge  14.8 billion euro in 2011
  • 75. Where to learn more?  National Cooperative Business Association − www.ncba.coop  United States Federation of Worker Cooperatives − www.uswoker.coop
  • 76. Some possible discussion points How can we implement any of these structures into our community? What are the downsides or obstacles? Can we overcome them? What kind of cooperatives can be formed to meet a need in our community? Insurance cooperative? Utility cooperative? How can we transition our current businesses into more democratized ones? Is it cost prohibitive in legal fees? How can we keep this discussion going and help bring these topics into common knowledge? What role can the Link play in the community to help entrepreneurs build these types of businesses?