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Small businesses are often in need of funding for everything from new equipment and inventory to real estate space to hiring new employees. The traditional sources of business financing include bank loans, venture capitalists, friends and family and just plain boot-strapping. Some entrepreneurs also turn to their credit cards or short-term online loans to fill their working capital gaps. There may be yet another option that while rarely used can be sometimes fit the bill – inviting employees to invest in the company.

Business owners can offer employees a chance to buy up so many shares of company stock in order to raise the next round of funding. If a company is doing well, or at least showing significant potential, employees will want to get in on some of the future profits. Plus there will be the added benefit that as employees invest in the company they will feel more committed to making the firm great and help it succeed.
If this idea sounds like a good fit for your company, you could take it a step farther and turn the business into a worker co-op (or cooperative). In this situation, the company is owned and operated by its employees but is still a for-profit business. Employees get a vote in major company decisions and are also granted part of any profits made.

Even though employees are heavily invested in the worker co-op set-up, there is still potential for outside venture capital investment as well. Stock shares can be sold to non-voting company “members.” In this scenario, businesses can continue to receive cash infusions from within as well as without.

If you are interested in setting up a worker co-op, you can consult with one of several national organizations like the International Co-operative Alliance, National Cooperative Business Association and the United States Federation of Worker Cooperatives.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources