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 Capitalism talk on November 8th 2012.

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Alternative Business Structures Overview

  1. 1. Alternative Business Structures A brief overview...
  2. 2. The Basic Overview Employee Owned/Profit Sharing Models − Corporations or LLCs with internal structure to create employee ownership
  3. 3. The Basic Overview Employee Owned/Profit Sharing Models − Corporations or LLCs with internal structure to create employee ownership Cooperatives
  4. 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. 5. The B-Corp
  6. 6. The B-Corp Relatively new legal structure
  7. 7. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit.
  8. 8. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial
  9. 9. The B-Corp Relatively new legal structure Has a legal obligation to meet other criteria aside from turning a profit. − Financial − Environmental
  10. 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. 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. 12. The B-Corp 650+ B-Corps currently
  13. 13. The B-Corp Like:
  14. 14. The B-Corp For more info: − www.bcorporation.net
  15. 15. The ESOP
  16. 16. The ESOP Employee Stock Ownership Plan
  17. 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. 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. 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. 20. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock
  21. 21. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices
  22. 22. Other “Employee Owned” Models  Direct Purchase Plans − Employees may purchase stock  Stock Options − Defined number & prices  Restricted Stock − Having met certain requirements
  23. 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. 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. 25. Where to learn more National Center for Employee Ownership − www.nceo.org
  26. 26. Cooperatives - Overview• Voluntary and open membership
  27. 27. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)
  28. 28. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members
  29. 29. Cooperatives - Overview• Voluntary and open membership• Democratic member control (often One Member – One Vote)• Economic participation by members• Autonomy and independence
  30. 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. 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. 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. 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. 34. Basic Types of Coops  Consumer Coop
  35. 35. Basic Types of Coops  Consumer Coop − Business is owned & operated by the customers
  36. 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. 37. Basic Types of Coops  Worker Coop
  38. 38. Basic Types of Coops  Worker Coop − Owned and democratically controlled by its "worker- owners"
  39. 39. Basic Types of Coops  Worker Coop − Owned and democratically controlled by its "worker- owners" − Many hybrids and adaptations world-wide
  40. 40. Basic Types of Coops  Retailer Coop
  41. 41. Basic Types of Coops  Retailer Coop − Employs economies of scale to receive discounts from manufacturers and to pool marketing.
  42. 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. 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. 44. Basic Types of Coops  Business & Employment Coop
  45. 45. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation
  46. 46. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases
  47. 47. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported
  48. 48. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported  Salaried
  49. 49. Basic Types of Coops  Business & Employment Coop − to incubate start-ups from idea to maturation − Three phases  Supported  Salaried  Member
  50. 50. Basic Types of Coops  New Generation Coop
  51. 51. Basic Types of Coops  New Generation Coop − Hybridization of cooperative and LLC
  52. 52. Basic Types of Coops  New Generation Coop − Hybridization of cooperative and LLC − Ideal for capital intensive business
  53. 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. 54. Familiar Cooperatives  Housing & Building Cooperative
  55. 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. 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. 57. Familiar Cooperatives  Utility Cooperative
  58. 58. Familiar Cooperatives  Utility Cooperative − Type of consumer cooperative
  59. 59. Familiar Cooperatives  Utility Cooperative − Type of consumer cooperative − Delivers utilities (i.e. electricity, water, telecommunications)
  60. 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. 61. Familiar Cooperatives  Agricultural Cooperative
  62. 62. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives
  63. 63. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives  Provide various services to their individual farming members
  64. 64. Familiar Cooperatives  Agricultural Cooperative − Agricultural Service Cooperatives  Provide various services to their individual farming members − Agricultural Production Cooperatives
  65. 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. 66. Familiar Cooperatives  Credit Unions and Cooperative Banking
  67. 67. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions
  68. 68. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions − 90 million members
  69. 69. Familiar Cooperatives  Credit Unions and Cooperative Banking − 7,950 active status federally insured credit unions − 90 million members − $679 billion on deposit
  70. 70. Familiar Cooperatives  Cooperative Federations
  71. 71. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak
  72. 72. Familiar Cooperatives  Cooperative Federations − A Co-op of Co-ops so to speak − Example: Mondragon Corporation of Spain
  73. 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. 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. 75. Where to learn more?  National Cooperative Business Association − www.ncba.coop  United States Federation of Worker Cooperatives − www.uswoker.coop
  76. 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?

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