Category Archive: Business Structure

1. Worker Co-ops: A Business Exit Strategy Gaining Momentum

   Business Succession Planning III

   By: Eric Treworgy 

   Even in the most active labor, education, and economic markets, selling a successful small business can be surprisingly difficult. In Maine—where we have the oldest population in the U.S.—the challenge is even greater. Finding a buyer who’s both young enough to carry the business forward and financially positioned to buy (with home equity or liquid assets) is often close to impossible.

   But there’s a promising solution that’s picking up steam: selling your business to an employee-owned cooperative.

   What Is an Employee Co-op?

   Unlike Employee Stock Ownership Plans (ESOPs), which are typically viable only for large companies (think $5 million+ in annual revenue), worker co-ops are a more accessible option for smaller businesses. Here’s how it works:

   • The business is purchased primarily through a specialized loan.
   • Employees buy into the co-op with modest investments—often made via payroll deductions over time.
   • Ownership and decision-making are shared among the employee-owners.

   Is Your Business a Good Fit?

   Not every business is ready to transition to a worker co-op. Here are the key requirements for success:

   • ✅ Consistent Profitability: Your business needs to be generating a profit.
   • ✅ Prepared Employees: Staff should be experienced and trained in key areas like operations, finance, and sales.
   • ✅ Strong Cash Flow: The business must be able to handle loan repayment through its regular cash flow.
   • ✅ Owner Readiness: You must be prepared to step back from day-to-day leadership. Some owners remain involved as board members, advisors, or technical contributors.
   • ✅ Employee Commitment: Workers need to be willing to learn about running a company and take part in governance and decision-making.

   How to Get Started in Maine

   You don’t have to do this alone. Maine has robust, free business advising services to help you begin exploring this path.

   • CEI offers personalized guidance for business owners.
   • Maine Small Business Development Centers (SBDC) advisors can help you evaluate your financials and overall readiness.

   When you’re ready to dive deeper, consider connecting with the Cooperative Development Institute. They offer comprehensive support in:

   • Structuring your co-op
   • Training employees
   • Securing financing for the transition

   • Read Business Succession Planning Part I
   • Read Business Succession Planning Part II

   About Eric Treworgy

   

   Would you like help getting your numbers in order or identifying areas to grow value? Reach out—I’d be happy to connect you with free, confidential advising services to guide you through the process.

   Eric keeps an office at URCI and is a business advisor for Coastal Enterprises (CEI) in Brunswick, Maine. He has more than 35 years’ of entrepreneurial experience and specializes in business start-up, strategy, sales and marketing, retail, food and beverage, computer software, and operations management. Through CEI, Eric offers free confidential business advising to help navigate the start-up process, your succession planning, and everything in between.

2. The Plight of the Small Business Owner

   Why No One Can Build a Business Alone Anymore

   By: Kitty Barbee

   

   Walk into any neighborhood restaurant, boutique, or family-run shop and you’ll likely find a small business owner doing the jobs of five people. They’re the face of the business, the accountant, the marketer, the HR department, and the janitor—sometimes all before lunch.

   While the entrepreneurial spirit is alive and well, the challenges of running a small business in today’s economy are more complex than ever. Rising costs, digital demands, stiff competition, and labor shortages are just a few of the hurdles. And yet, many business owners still believe they have to do it all alone.

   That mindset needs to change.

   Modern Challenges: The Ever-Expanding Job Description

   Small business ownership has always been demanding, but today’s landscape adds new layers of complexity:

   • Soaring overhead from inflation, rent, and wages
   • Cutthroat competition from global giants and e-commerce
   • Digital marketing demands including SEO, social media, and online reviews
   • Hiring struggles in a tight labor market
   • Customer expectations for instant service, fast delivery, and constant availability
   • Burnout, from trying to keep up with it all

   

   • According to the U.S. Chamber of Commerce, 58% of small business owners say inflation is their biggest concern, while 61% struggle to find and retain skilled workers.
   • The Bureau of Labor Statistics reports that 50% of small businesses don’t make it past their fifth year.

   These are sobering numbers—but they don’t mean failure is inevitable. They mean that no one should try to do it alone.

   The Myth of the Solo Hero

   

   The “self-made” entrepreneur is a powerful image, but in reality no business succeeds without support. The belief that you must wear every hat, do every job, and be everything to everyone isn’t just unrealistic, it’s harmful.

   Even the most successful entrepreneurs have accountants, mentors, assistants, advisors, and partners. If you’re trying to run a business completely solo, you’re not proving strength, you may be limiting your potential.

   Why You Need a Team

   

   A strong team lets you focus on your strengths and outsource your weaknesses. Whether it’s bookkeeping, marketing, or customer service, delegating frees you to lead, grow, and breathe.

   As an accountant who works closely with small business owners, I see this every day: clients exhausted from managing their own books, taxes, and financial decisions—often with little training or confidence, and usually after an already long workday. Overwhelmed by daily demands, they become paralyzed, and crucial aspects of the business are pushed aside.

   Your “team” doesn’t need to be a full payroll of employees. It can be:

   • A bookkeeper or accountant who keeps your numbers in order
   • A virtual assistant who handles administrative tasks
   • A marketing freelancer who helps you get noticed
   • A mentor or coach who helps you stay on track
   • Smart tools that automate repetitive tasks

   What Building a Team Looks Like Today

   The good news? You don’t need to build a corporate structure to create a support system. Start small:

   • Hire one contractor or consultant
   • Join a local business network
   • Invest in accounting software like QuickBooks—and learn how to use it properly
   • Connect with peers who understand your journey
   • Use affordable freelance platforms for graphic design, social media, or web help
   • Take time to connect with your local business resources

   The key is to stop doing everything yourself—and start building the right kind of support around your goals.

   First Steps Toward Support

   Here’s how to begin building your team:

   1. Identify the biggest time-wasters or stress points
      (Finances? Marketing? Admin?)
   2. Start small with one area
      Outsource bookkeeping, or get trained in QuickBooks to streamline your workflow.
   3. Ask your network
      Other entrepreneurs can refer reliable experts and tools.
   4. Join a community
      Find a mastermind group, online forum, or local small business meetup.
   5. Change your mindset
      Leadership isn’t doing everything yourself. It’s knowing what to delegate.

   You Were Never Meant to Do It All

   Small business ownership is one of the toughest, most rewarding paths out there—but it doesn’t have to be isolating. Success today isn’t about being a lone superhero. It’s about knowing when to ask for help and building a team that lifts your business up.

   Whether you need someone to manage your books, help with your marketing, or empty your inbox —there are people ready to support you.

   About Kitty Barbee

   

   Kitty is the owner of Barbee Business Services, as well as a partner in her latest venture NorthEast Tax Services. Although her services include QuickBooks Training & Support, Financial Consulting, and Tax Preparation, she prides herself and her experienced team for taking the time to sit with clients, listen to their concerns, and help them navigate through their own unique financial challenges.  For more information about Personalized QuickBooks training, Affordable accounting and financial services,  and Expert tax preparation and planning visit www.barbeebusinessservices.com for a complimentary  consultation.

3. Maximizing the Value of Your Business

   Business Succession Planning II

   By: Eric Treworgy 

   If you’re like most small business owners, you’ve probably focused intensely on minimizing your tax liability in order to preserve cash and reinvest in your business. Maybe you don’t pay yourself a regular salary but instead write the occasional check to cover personal expenses and label it an “owner draw.” Often, businesses don’t even know how profitable they’ve been until it’s time to file taxes.

   That approach might work—until it’s time to sell.

   When you’re ready to exit your business, potential buyers will want to see exactly how much income the business generates for you. Why? Because business valuation is directly tied to what’s known as Seller’s Discretionary Income (SDI)—the total financial benefit you’ve received from owning the business. A quick online search of SDI will give you plenty of insight, but here’s what you really need to know:

   Start Paying Yourself

   It’s never too late to start documenting your income properly. One of the simplest and most effective ways to show a buyer (and their bank) that your business is profitable is to add a clear line item in your budget for owner compensation.

   Better yet, rather than paying personal expenses directly from your business account, transfer money to yourself and pay those expenses personally. This method clearly shows that the business is generating income, which boosts your valuation. Yes, you may pay more in taxes—but that cost is minimal compared to the return you’ll get from showing strong earnings when it’s time to sell.

   If you’re in a special situation, such as receiving Social Security and needing to limit reported income, consult your accountant. They can help you strike the right balance between tax planning and presenting an attractive, profitable business to a buyer.

   Don’t Inflate Your COGS

   Cost of Goods Sold (COGS) refers to the cost of materials or ingredients used to produce your products. It does not include your or your employees’ labor. Many small business owners unknowingly inflate their COGS by including personal purchases or unrelated expenses—making the business look less profitable than it is.

   Buyers will scrutinize your profitability. They typically expect to see COGS at 30% or less of total sales (though this varies by industry). If your COGS is high, it may be because:

   • You’re absorbing personal expenses in business purchases
   • You haven’t raised your prices in years, despite inflation
   • You’re not tracking inventory or waste accurately

   Take a fresh look at this area—it’s one of the biggest levers in boosting your business’s market value.

   Re-Examine Your Supply Chain

   While reviewing COGS, evaluate your suppliers and your product mix. If you’re in retail, prune slow-moving or low-margin items. Focus on bestsellers with high profitability, and brainstorm how to grow sales around those winners.

   Also look at shipping—both incoming and outgoing. Small changes in shipping strategy or negotiating better rates can result in significant savings and stronger margins.

   Highlight Expansion Opportunities

   Most buyers aren’t just buying what you’ve built—they’re buying what it could become. Unless your buyer is paying 100% in cash (which is rare), they’ll likely need financing. That means the business must generate enough income to cover both personal expenses and loan payments.

   If your current financials don’t show that level of income, you need to paint the picture of how the business could grow:

   • Are there untapped markets?
   • Could you expand your product line or services?
   • Is there potential for online sales, events, or partnerships?

   These ideas not only help prospective buyers envision growth—they might even help you generate new revenue in the short term while your business is on the market.

   Start Now—Not Later, for Business Succession Planning

   Maximizing the value of your business starts with clean, transparent financials and a clear demonstration of the business’s profitability and potential. This isn’t something you can do in a week. It can take two to three full seasons to get your books in shape, build a strong track record, and present your business at its best.

   So don’t wait until you’re ready to sell—start now. The effort you put into business succession planning today could make a six-figure difference tomorrow.

   Read Business Succession Planning Part I

   About Eric Treworgy

   

   Would you like help getting your numbers in order or identifying areas to grow value? Reach out—I’d be happy to connect you with free, confidential advising services to guide you through the process.

   Eric keeps an office at URCI and is a business advisor for Coastal Enterprises (CEI) in Brunswick, Maine. He has more than 35 years’ of entrepreneurial experience and specializes in business start-up, strategy, sales and marketing, retail, food and beverage, computer software, and operations management. Through CEI, Eric offers free confidential business advising to help navigate the start-up process, your succession planning, and everything in between.

4. Business Succession Planning:

   It’s Never Too Early to Start!

   By: Eric Treworgy 

   If you own a business—or are thinking about starting one—you’ve probably envisioned what life will look like when it’s time to retire. But for many small business owners, planning an exit strategy is often put on the back burner until the moment they’re ready to sell. Unfortunately, waiting too long can lead to disappointment when a business broker reveals the market value of the business—sometimes far less than expected. At that point, owners face two choices: spend a few more years optimizing operations to increase value or sell for less than they had hoped—just when they were ready to enjoy that long-awaited cabin by the lake.

   The Reality of Business Sales

   The statistics can be discouraging: only 10-20% of small businesses listed for sale actually sell. The rest are often forced to close, selling off physical assets instead. But you don’t have to be part of that statistic. With the right preparation, you can make your business attractive to an outside buyer—or even transition ownership to your employees.

   What’s Ahead

   Over the next few months, I’ll introduce key concepts to help you successfully plan your business transition. Topics will include:

   • The most important factors that determine your business’s value
   • Different ways to sell or transition your business
   • How to get started with succession planning

   Key Questions to Consider for Succession Planning

   To start thinking about your business transition, ask yourself these important questions:

   1. Retirement Readiness – Have you budgeted for retirement, and do you have a financial goal for selling or transitioning your business?
   2. Your Role After Transition – Do you want to stay involved in some capacity, or are you ready to fully step away?
   3. Legacy and Community Impact – Is maintaining your business’s role in the community important to you?
   4. Understanding Your Business’s Financial Health – Do you have a clear picture of how much your business contributes to your personal finances (Seller Discretionary Income)?
   5. Potential Buyers – Have you identified any businesses or individuals who might be a good fit to take over?
   6. Financial Documentation & Transparency – Are your financial records clean, organized, and able to show consistent income? If you’ve been under-reporting income, are you prepared to adjust your strategy to maximize your business’s documented earnings?
   7. Operational Independence – Have you trained your staff to run the business without you? If you took a two-week vacation, could the business operate smoothly in your absence?

   A Final Thought: Selling to Your Employees

   One option you might not have considered is selling your business to your employees. Employee ownership is a growing trend, and there are innovative financing options available to make this transition easier.

   Planning ahead gives you more control over your future and ensures that your business continues to thrive. Start thinking about your succession strategy today — you’ll thank yourself later!

   About Eric Treworgy

   

   Eric keeps an office at URCI and is a business advisor for Coastal Enterprises (CEI) in Brunswick, Maine. He has more than 35 years’ of entrepreneurial experience and specializes in business start-up, strategy, sales and marketing, retail, food and beverage, computer software, and operations management. Through CEI, Eric offers free confidential business advising to help navigate the start-up process, your succession planning, and everything in between.

5. How to Return to Work Post-COVID

   As COVID-19 vaccinations become widespread and infection rates decline, many businesses are discussing how they can return to their workspace safely while accommodating the new work styles that have emerged from the COVID-19 pandemic. What’s the right way to go back? Would your team work efficiently in a new or modified format? Keep reading to learn more about how your business can combine remote and in-office work or even shift its business model to maintain a cohesive and productive team after COVID-19.

   1. Turn to your employees and stakeholders for ideas.

   Your employees are your strongest asset – and the ones most affected by any changes to workplace rules. Conduct a survey of your employees to determine how and when they would feel comfortable returning to work. Be sure to welcome and encourage innovative ideas regarding returning to your workplace. If you’re a solo entrepreneur or a one-person team, think about what would work best for your customers, clients, or other stakeholders. Do they prefer to meet in person? Do they prefer to have a physical location to visit you in, or are they accepting of virtual meetings? Would it be more cost-effective for you to work or attend meetings in a coworking space as needed, and work remotely most of the time? Use these insights from your industry, employees, and customers to lead your plan.

   2. Choose a return model that makes sense for your business.

   Every business has different needs, policies, processes, and clientele. Even businesses in the same industry or with similar product offerings operate differently! Keeping this in mind, and using the information you gathered from your employees and stakeholders, choose a return model that works best for your business. According to the Harvard Business Review, there are five primary models that businesses have been implementing for work after the pandemic. Options include returning to “business as usual,” meaning going back to work the way it was before the pandemic, hybrid models combining remote and office work, and all-remote options.

   3. Use this time as an opportunity for growth and positive change.

   You have been given the gift of opportunity – opportunity for reflection, opportunity for growth, and opportunity for positive change. Use this time to evaluate your previous business practices and determine if they should be modified. Is this the right time to hire a new employee? Could this be the right time to improve your internal processes or upgrade your product offerings? In the same survey to employees and stakeholders, ask for opinions about current processes and what positive changes may go hand in hand with your post-COVID work model.

   While the pandemic hasn’t completely gone away yet, we are beginning to see the end approaching. Now is the time to plan for your business’s workplace updates and strategies post-pandemic, and ensure that those changes are beneficial to your key stakeholders. If you need a physical workspace in Maine, contact the Union River Center for Innovation today to learn more about our private offices and coworking space.