Securing Successful Business Practices with Anne-Claire Broughton

anne-claire broughton business succession employee ownership entrepreneurship eot esop justin minott nceoc open book management worker co-op Aug 19, 2022

Check out this week's conversation with the founder of the North Carolina Employee Ownership Center and the principal consultant of Broughton Consulting, Anne-Claire Broughton. She has been head of the business community in Durham for over 20 years.


Q. How did you end up in the world of employee ownership?


It actually goes back to college. I was fortunate enough to go to Oberlin College, where the students ran half of the housing and dining for the other students through cooperatives. I got interested in this idea that you could put your resources together and create something cooperatively. 

After graduating, I worked for the national association of student cooperatives and helped close the books on their student cooperatives for the year and we did some tours for cooperatives of all sorts and all different businesses. This gave me exposure to the idea that any kind of business could be run differently, that it could be run by the people who work there. I was definitely intrigued by that idea. 

It wasn’t for quite some time, however, that I was involved in the cooperative movement. Sometime after getting involved in the recycling industry, I met David Kirkpatrick from Durham and we started an impact investing fund called SJF Ventures. I was the Co-founder and Senior Director of the institute, which was the affiliated nonprofit. We were able to help a lot of businesses that that fund couldn’t invest in, which got me really interested in employee engagement and organizational culture. 

There are so many things that go into employee engagement:

  1. Having some form of open book management- people know what they’re trying to do together and they work together as a team. 
  2. Employee ownership- everyone shares in the rewards together.  

I formed Broughton Consulting back in 2014 to focus on business succession, especially for small businesses. 

  1. There are a lot of retiring Baby Boomer business owners and without someone to pass their business onto, their business is in danger of failing. So far, I’ve helped three businesses transition to worker ownership. 
  2. I’m a certified open book management coach. If you’re going to turn your business over to the employees, they have to understand how to run a business. 
  3. I am very interested in case studies. Curriculum around participatory management, all the different ways that you can get people engaged.
  4. Workforce. How do you create good frontline jobs for people? There’s good pay with livable wages benefits, training, flexible and predictable work schedules and opportunities to advance and have employee ownership. 

The soul of everything I do is wealth building for frontline workers. 


Q. Could you demystify Employee Ownership for us?


There’s lots of ways that you can do employee ownership. 

A worker cooperative. This is probably the most familiar way. In a worker co-op, it’s one member, one share, one vote. Everybody buys their one share of the business, which can be deducted through their paycheck because it is a good chunk of money, but they are now an owner and have an equal voice with everyone else. 

In North Carolina, we’re usually doing LLCs to do cooperatives. In some states, that can be your legal structure to do a worker co-op. They tend to run democratically. You may still have managers, but anything big will probably be run by consensus. North Carolina has some incredible pockets of worker ownership, especially in the western part of the state:

Opportunity Threads, which is an immigrant lead cut and sew factory. PODER Emma, which is a Latinx community of a number of different cooperatives. There are also cooperatives for housing, real estate, bookkeeping, and natural foods. 

The Employee Stock Ownership Plan (ESOP). It’s regulated by Federal retirement law and so you would form a trust and sell at least 30% of the company share to the ESOP. This is ideal for a bigger company that has some resources, but if you sell that 30% of shares, the selling share holder can defer capital gains taxes indefinitely. If you sell 100% of the shares, and the company converts to an S corp, that company is tax exempt. Once any loans are paid off, the profits go into peoples retirement accounts so when they retire or leave the company, the company has a  few years to pay them out and people retire with really nice nest eggs. 


Q. What about employees that don’t plan on staying that long?


You can have a small ESOP account that’s paid off when you leave. You may not be fully vested if you don’t stay long enough. Usually, there’s some incentive to stay through vesting. It might take five years to vest, but you get a lot of incentives with this. The main issue is with communicating to younger workers that there’s an advantage to staying longer.  

However, like I was saying before, some ESOPs are run democratically and some aren’t, but they all have the opportunity to keep jobs in communities and help people build wealth. 

Employee Ownership Trust (EOT). This is a newer form of employee ownership. This is the predominant form of employee ownership in the UK, but it’s been pretty rare here in the U.S. until the last five or ten years. We now have at least 14 EOTs and the 14th is here in North Carolina. It’s good for a smaller company that doesn’t want to become a co-op. 

There are some benefits to using an EOT. You could potentially set it up as a perpetual trust so that it can never be sold away from the employees, which is a great motivator for its use. 


Q. Would it be possible and advantageous for someone to use an ESOP for a smaller business?


 The general rule of thumb is that you need to have at least 20 employees and pretty sizable profits to be able to afford an ESOP. Because it’s regulated by Federal retirement law, there are a lot of things that you have to do to startup and maintain your ESOP. Ultimately, it’s a great option for a big company that has about $10 million or more in sales. A good example of this would be King Arthur Flower, WAWA, Publix, etc. 

Another thing I help people with is Management Buyout. There were a few businesses that were about to close down and I talked to them about the possibility of helping to fund their key managers to buy the business. We don’t want an economy that is all Amazon, Walmart, and Google. They’re great, but we need local businesses that are locally owned and controlled. 


Q. What are you able to do for those Baby Boomer companies that don’t have anyone in the line of succession?  


This is why I work with partners to start the North Carolina Employee Ownership Center, which is a part of a network of employee ownership centers around the country. This is such a key moment for these centers with all these Baby Boomers retiring, they call it the Silver Tsunami and it’s the largest wealth transfer in history. We really want as much wealth as possible to go to the workers so we started the center to get the word out in North Carolina that selling to your employees through an ESOP or Worker Co-op or an EOT could be a good method. 

What I tell small businesses is to start thinking about succession early. It’s exciting when you’re doing a startup and you’re getting going. Many don’t want to think about what’s down the line, but I encourage people to make a plan. Think about where you want to be and where you want the business to in 5-10 years and think about the options. If there’s a strategic buyer, you could sell to them. If there’s a business partner, you could sell to them, or you think about how your employees might feel about owning the business if you proposed selling to them. 


Q. What are the things we should be thinking about when starting up?


Think about where you want to go. There’s a visioning exercise that I like to do with people; I tell them to put themselves five years in the future and write a little plan to themselves stating what you’re proud of having done and accomplished in the last five years. 

More concretely, think about how many employees you want to be optimal, because when you add them, you’re adding a layer of administration and management. I teach people how to have crucial conversations with one another  and I encourage people to think about what kind of culture they want and what they’re trying to achieve through their business. Young people want to work with businesses that have bigger missions. 

Do some reflecting and ask yourself the following questions: Why am I here? What is my purpose? How many people do I want working with me? How can I create a culture that’s effective? And what kind of exit would I want when I work a co-op?


Q. What are some of the common threads that contribute toward building a larger mission? 


I was just leading a small business workshop yesterday on attracting, hiring, retaining, onboarding, and mentoring talent. People are no longer tolerating toxic work environments. 

  1. Clarity- Very small businesses don’t have a lot of systems. I encourage them to write a simple job description with a simple checklist that states the employees duties are, so it’s super clear. Then list the benchmarks that they need to master certain skills by (1 month, 3 months, 6 months, a year etc.)
  2. Feedback- You want good feedback. You want to give feedback right away. Tell them what’s working well and what’s not. You also want to ask employees how you can improve the workflow or environment. 

Use these simple systems to get everyone on the same page. 


Q. What is open book management?


Open book management is an operating system where we try to have clear communication from the bottom up and create the voice for people on every level so everybody is engaged and aligned and when we reach our goal, everyone is rewarded. 

To operationalize that, we make the analogy of a sports game because business is basically a game. We’ve got our goals, objectives, rules and our score. And it’s fun! We teach everybody basic financial literacy, which is great for work as well as your personal life. To demystify the numbers, a lot of us may have had bad experiences in math class and numbers, but there’s no reason why people shouldn’t be able to understand a basic financial statement. It’s the core of a business.

At the Great Game of Business, we do a lot of things for our clients: 

Teach people the profit and loss statement. That’s how much we’re bringing in ini revenue, how much it costs to do business and our other expenses. Then, there’s the bottom line. Are we profitable or are we operating at a loss? 

Teach the importance of cash. It’s just like your checkbook where you bring in money, you have to pay your bills, and hopefully you have something left over so you can save or do something fun. People that are a part of the Great Game of Business, Open Book Management, get great at saving and accomplishing their own goals and paying off their debt, which is very exciting to see! 

We set everything up around the scoreboard. This is a condensed profit and loss statement and we want line of sight. We teach people that you have to execute things properly and what you do really matters. When you don’t take care to do things right for your customer and in a timely manner, it affects the business, which affects their reward; their pay. 

Weekly huddles. Just like in football, we’re checking the score, the game conditions, planning the next play and getting the team fired up to go out and do their best! 

We forecast forward.  Right now, my teams are forecasting the second week of August. We always want to know how the month is going to end. It’s all of us together thinking, strategizing, and cheering each other on. We do commits every week to state what we’re going to commit to doing that will move the needle forward. We also do shoutouts! We give honor and appreciation where it’s due and that’s what helps build that great culture.

Work with individual departments. We find out what it is that is needed to move the needle forward in each department. 

We play mini games. We do this when there’s something that is bugging clients or if there’s a habit that they want to build. We always win as a team. We don’t stress winning as individuals because we want to win as a team. 


Q. Can you give a simple example of how to give enough line of sight and define how transparent companies should be?


We never share salaries except in an aggregate, which gives people some peace of mind. In general, we’re very open. If it’s an employee owned business, it can be totally transparent. When transitioning a business, we have to know the bottom line to know if we’re winning or losing, so it’s not in the owners best interest to hold their numbers so close to their chest. 

My business is a certified B Corporation, which means that it is actually accountable to all the shareholders, which includes the environment, the people, the community, etc. 


Q. How are you successful in getting capital to employee groups? How do the employees actually make these purchases?


There’s a great new fund called Apis & Heritage, which is a Black led fund investing in Black led businesses and those with over 50% BIPOC employees. They are 100% focused on ESOP exits and they’ve been able to raise even more money than they had planned. Todd Leverett and his partner are national leaders in getting capital and getting larger businesses to convert to ESOPs. 

On the Co-op side, there are some capital out there: the Leaf Fund, The National Cooperative Bank. We were able to tap some of those funding sources. 


Q. What are some practical questions that a business that is interested in this should be asking in order to lead them down this trajectory in terms of structuring? 


  • What is the size of the business? I would then look at topline sales, profitability, and the number of employees. If you’re $10 million and up and you’ve got 20 employees, you can definitely look into an ESOP and there’s a wonderful network of ESOP service providers who can help in the North Carolina Employee Ownership center has relationships with many of them in our state and can point you in the right direction. 
  • How engaged do employees want to be? Some employees are very excited about being highly engaged in governing the business and would love to be in an ESOP or co-op. You could run a co-op with minimal employee engagement and you’re probably going to have some sort of ESOP communication committee. 


If you’ve got employees that just want to come to work, but not necessarily manage it, and you’re a bigger business, the ESOP is a fantastic option for you. 

2 worker co-ops that I was engaged with, the owner had already stepped out of operations and the employees were running it, which made them well suited to become worker co-operatives. In a business that isn’t run like my aforementioned example, you want to think ahead. 


  • Who’s running the business?
  • What training do they need to be ready to run it?
  • How are you going to develop people? Or do you need to bring in someone else to lead the business?
  • Talk to the employees about what they want. Sometimes employees would love to be a part of an ESOP or worker co-op and a part of the business long term, but if you don’t tell them what you’re thinking, they might go somewhere else. 


Q. Where do the people who are thinking about engaging in this world start as far as resources?


Of course I’m to promote the North Carolina Employee Ownership Center. We spend a lot of time building our website and library of videos, so there is basic information that you can go to and read about worker co-ops, employee ownership trusts, ESOPs and get a sense of some of the things you need to think about. Check out our success stories. 

October is employee ownership month and Wednesday October 19th from 4-6 PM at Canteen Still life in Winston Salem is when we will showcase four businesses that became employee owned in 2021 (Shopbot, Sow True Seed, The Cactus Group, and Contech) Three out of four of those are located here in Durham. 


Q. What are the opportunities to use some of these models and tools in advancing equity and wealth in the Black community? 


 Democracy at Work Institute is doing a lot of great work to advance equity and we have a partnership with the Greater Durham Black Chamber at the North Carolina Employee Ownership Center. We really need to let people know that these tools are out there. 

Getting people to think about succession planning so you don’t just shut your business down if there’s a health crisis, etc. There’s also the power of co-operatives. We are truly stronger together because if there’s a need, we can pool our resources together and build something. 

We’ve been thinking about how we could bring sole proprietors together to form co-operatives. One example is a business that I don’t think is ready to announce yet, but they’ve had a janitorial business for many years and they worked with some other associated contractors to do landscaping, business and architectural repair, etc. and they’re bringing everyone together. It’s a Black owned business that will be a large co-op of at least 20 people that will give them the ability to build equity and wealth where they otherwise wouldn’t have. 



Q. Are they all forming a larger entity of subcontractors that will be owners of this entity, but still run their individual segments of their business?


They’re going to own a business together. They’re going to bring all their skills, assets, and contacts together and do business. They’re also talking about running some smaller retirement communities that are affordable for the Black community.  


Q. What are some barriers people may have to overcome to move into this space? 


Systemic barriers. There are systemic barriers to accessing capital for the Black community. We’re starting to see funds like Apis & Heritage and there’s a lot more movement in that area than there once was.  

Mental barriers. The more we can hold a bigger and brighter picture of what's possible, the more efficiently we can transform this economy from one that’s based on exploitation to one that’s built on cooperation. That’s the big picture of where we’re going. 


Q. How do we connect with you?


There are many ways you can reach me. I’m available at [email protected] or on my website at You can also reach me on LinkedIn or through the North Carolina Employee Ownership Center website, but you also may catch me in person at Provident1898. 


Click to watch the full interview below!

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