With funding and support from Co-Op Cincy, five Shine Nurture Center workers paid $1,500 to join the company.
Katie McGoron founded Shine Nurture Center — a daycare center and preschool in Mt. Airy, Ohio, a suburb of Cincinnati — in 2015. She envisioned a small, tight-knit daycare center where children would play outside and eat healthy foods. This is exactly what she has built over the past seven years. But when she decided to go back to school and start a new phase of her life, she did something unexpected. Rather than selling her business to the highest bidder, she sold it to five of her workers, turning it into a worker cooperative.
The transition process was completed last month when ownership was officially transferred from McGoron to Shine workers, largely with the help of Co-op Cincy.
A worker-owned business incubator, Co-op Cincy guided Shine in his transformation. “Katie came to us in 2016 because she thought a co-op was the best way to grow her daycare, but she was just starting out and wasn’t yet breaking even, so Shine wasn’t in a position to support her. ‘be prepared,’ says Ellen Vera, director of Co-op Cincy’s cooperative organization.
The time had come, however, when Co-op Cincy partnered with the community wealth co-op Common seeds in the fall of 2020 to launch a $3 million fund for businesses to become worker-owned in the wake of the pandemic and the corresponding rise in the number of entrepreneurs retiring. With cash on hand to help cover the purchasing costs of the workers as well as to provide loans to newly transferred businesses, Co-op Cincy appealed and McGoron responded.
Shine was one of six companies selected from 12 applications at the end of 2020. Cohort work began in January 2021 with an educational series that consisted of three webinars and bi-monthly meetings between Co-op Cincy and each company. “It’s really to help them assess whether it really makes sense for their business and determine what the true value of the business is,” Vera says. “We do an informal valuation to get a sense of the value of the business and from there it’s kind of a do-it-or-fail situation.”
McGoron went for it, moving on to the next phase, which included signing a letter of intent and a more thorough formal evaluation process. “We’re doing real due diligence in determining what the transition would look like, how it would be structured, how knowledge would be passed on,” Vera says. “The process is pretty much the same for every company, but the transition plans are unique. Some owners sell and stay while others sell and move.
When Co-op Cincy transitions a business, they like to work with at least three worker-owners, but the goal is to get as many as possible and the ability to increase that number over time is built in. in the articles of association. “Our main goal is to create an economy that works for everyone. We believe worker ownership is an important way for our economy to work for more people,” adds Vera. “In addition to having more control over their work and professional life, they can also share in the wealth that is created and this is a form of wealth creation that many people do not have the opportunity to access. otherwise.”
In addition to helping businesses like Shine become worker-owned, Co-op Cincy supports the start-up of worker-owned businesses in the greater Cincinnati area. So far, they have loaned $366,000 to co-op businesses since 2011 and trained more than 1,300 people on worker ownership each year. Co-op Cincy’s work has led to the employment of 89 people across its co-op network, 71% of whom are women and 67% are people of color.
At Shine, the cost for workers like Beth Heeg to buy from Shine was $1,500. Heeg started with Shine in February 2021, and McGoron had let him know during the interview that a co-op was on the horizon. “It was an incentive to join Shine,” says Heeg. When it came time to buy last summer, “our group was really diverse in terms of buying ability,” she adds. “The Cincy Co-op made it accessible by offering loans to individuals so they could pay part of it to get their foot in the door and pay the rest back later.”
After everyone agreed on the purchase price in June, Shine and Co-Op Cincy developed Shine’s new operating plans, drafted the articles of association and defined their specific transition plan. This was all completed in October, but the licensing element turned out to be a problem. By the end of January 2022, they had settled everything: McGoron would continue to own the building and lease it to Shine while Shine would continue to use the company’s old license until his own arrived.
“As a childcare agency, we’re never going to make a huge profit. We’re not trying to become millionaires,” says Heeg. “Right now, the return is going to be less because we’re going through the expensive licensing processes. But over time, it will be easier… to see faster returns.
In addition, the parents were supportive, even going so far as to arouse interest in creating some kind of PTO that would also be involved in the cooperative. “In general, this type of inheritance is really an option for owners who are concerned about preserving the legacy of the people who have helped build their business,” adds Vera. “It’s not charity. It’s getting fair market value for your business. It’s a real option for owners looking to exit their businesses, especially small ones, because there aren’t usually a ton of buyers.
Cinnamon Janzer is a freelance journalist based in Minneapolis. His work has appeared in National Geographic, US News & World Report, Rewire.news, and more. She holds a master’s degree in social design, with a focus on intervention design, from the Maryland Institute College of Art and a bachelor’s degree in cultural anthropology and fine arts from the University of Minnesota, Twin Cities.