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Providing support on sucession planning & paths to ownership for legacy business owners.
Sucession Planning
Given their importance to local economies, cultural continuity, and community character, a primary goal of legacy business programs is to retain and sustain legacy businesses. However, many legacy business owners do not have a plan for the business's continued operation beyond the current owner. This is called succession planning, and it is a significant issue for all small businesses nationwide. Recent polls from Gallup and US Bank show that about 35-45% of small businesses (polled) lack a succession plan. Gallup further identifies that over 50% of all small business owners are near retirement age (55+). These numbers are alarming if they are reflected in legacy businesses, as their losses can be detrimental to a community. This underscores the need for legacy business programs to address this problem. In fact, Portland’s recent Legacy Business Preservation Study identifies a significant issue facing legacy businesses: “aging owners who lack a clear succession plan.”
Legacy business owners may not plan for their business’s future for several reasons, including limited awareness or time to develop a formal succession plan, emotional ties to the business or family-related complications that delay decisions, and the lack of an interested successor among employees or relatives. To resolve this issue, several legacy business programs are providing support or training to help legacy business owners understand and create succession plans. Since succession planning is essentially about preserving cultural heritage, adding training and support to your legacy business program ensures that the business's underlying significance—knowledge, history, cultural practices, skills, etc.—is passed on to the next generation, whether that is family or a new owner.
That being said, succession planning is a complex task. You should look for partners and programs in your community that can assist your legacy business owners, rather than take this on in-house. Thankfully, there are already a few examples that may help show how this is done. As part of their 2017 Legacy Business Study, the City of Seattle recommended that assistance in succession planning targeted explicitly to legacy businesses should be a priority for the city’s Office of Economic Development to undertake. Prioritizing the sustainability of their local legacy businesses, the Boston Legacy Business Program provides “targeted technical assistance with a focus on succession planning and employee ownership” through the city’s small business program. To address the lack of an heir apparent to the legacy business, Miami’s Allapattah Collaborative CDC has a unique program that helps up-and-coming entrepreneurs take over local businesses.
Pathways to Ownership
While national or regional data specific to legacy businesses could not be found, a 2024 FED Small Business survey found that 59% of small businesses in general rented rather than owned their property. According to a 2022 FED Small Business report, even more BIPOC and immigrant small business owners are likely renters due to limited access to capital, lending bias, neighborhood divestment, or language barriers. What is certain is that legacy businesses that own their buildings have a much greater chance of succeeding and sustaining, especially when faced with external pressures like gentrification. Building ownership creates stable, predictable costs, uninfluenced by market pressure and rapid rent increases, while also creating a path to generational wealth and stabilizing the local economy.
Because of this, legacy business programs are beginning to prioritize support for building ownership. Legacy business programs in Atlanta and Detroit now offer grants and financial support for building acquisitions. Other legacy business programs, like Boston and Seattle, provide access to existing municipal programs that help small businesses with pathways to ownership.
As you create your own program, consider the importance of enabling commercial property ownership for the long-term success of your legacy business owners. Examine if your local municipality already has programs in place to help small businesses that you can leverage for your program. It is also worth investigating whether any private entities, such as commercial community land trusts or community co-ops, exist in your target communities.
Inclusive Action for the City | Los Angeles, California
Los Angeles’ Inclusive Action for the City runs the Community Owned Real Estate (CORE) program that creates pathways for commercial tenants to become owners by buying property in rapidly gentrifying communities.