MAKE IT IN LA: Tell us about what you are up to!
Tomás Durán: We help manufacturers grow. One of our key programs helps retiring owners of manufacturing firms transition ownership of their business to key employees; which saves jobs, preserves the owners legacy and gives the enterprising managers an opportunity to grow the company.
MAKE IT: What inspired the organization?
TD: Bruce, Nora (our General Manager) and I believe there is great value and opportunity being overlooked in our collective backyards. Southern California was built on manufacturing, it has been the traditional gateway to the middle class and we have the greatest concentration of manufacturing jobs in the U.S. We believe the coming wave of retiring baby boomers represents an opportunity to move some entrepreneurs from working class into the ownership class and as a source for good paying entry level jobs with a low bar to enter. We want to use our skills and experience to help make that happen.
Bruce Dobb: We developed a viable solution for addressing the issue of loss of manufacturing jobs by promoting employee buy-outs. Our Transfer of Ownership Program (TOP) recycles and repurposes community-based small manufacturing companies by transferring ownership from retiring owners to long term employees and other key insiders.
MAKE IT: Who do you serve? Who is your audience?
BD: We focus on older manufacturing and distribution companies in urban and inner city communities.
MAKE IT: Tell us about how you support the community. What is your business model and what kind of services do you provide?
TD: We provide business planning, access to capital, and succession planning. We speak the language of bankers, equity investors, and people who run subsidized loan programs that support job creation. We basically translate what these manufacturers need into the language that those people understand and find compelling. And in that process, we might find that an owner is nearing retirement and there might be an opportunity for succession planning.
MAKE IT: And how do you get compensated?
BD: We get paid by doing those kinds of loans and business planning. For the succession plan, if the owner can identify a manager that might buy the company, we get paid a small consulting fee for helping structure the deal.
MAKE IT: It seems to be a huge issue, that manufacturing businesses are shutting their doors, and our incredible industrial base is at risk. What’s causing this issue?
TD: It’s the “Silver Tsunami” of baby boomers that are going to retire as owners and operators. We’re on the verge of losing a lot of institutional knowledge because people are going to retire and we haven’t replaced that fast enough.
BD: In 2011, the leading edge of the baby boomer generation reached retirement age, and over the next 18 years, 80 million more will join them. Baby boomers own 12 million small businesses in the US and fewer than 30% of them have a succession plan. Since 2013 retirement has been one of the top reasons for selling a business. The trend of baby boomers selling their business is here and it’s expected to grow greatly over the decade.
MAKE IT: What happens when there isn’t a succession plan?
TD: As Bruce just mentioned, less than 1 in 3 owners have a succession plan. Most of the business owners are depending on the sale of the business to fund their retirement. If they are able to sell the business to an outside party, it is often an assets only purchase or liquidation and the jobs are lost. In Southern California the value of the real estate makes it more challenging to save jobs when an owner retires. For example, if the firm has real estate that is valued much higher than the business, the owner may just liquidate and sell the land.
MAKE IT: How would you convince an owner to sell rather than liquidate, and what top three tips might you share with them?
TD: Manufacturing differs from retail or commercial businesses because the tenure of the employees is much, much longer. Many of the businesses we talk to have employees that have been with the firm for decades. This longevity translates into personal relationships where their families have grown up together and they have shared many milestones; birthdays, graduations, quinceaneras, weddings, etc.
MAKE IT: What’s next?
TD: We have incredible infrastructure. There is nowhere else in the country that has the means to build and distribute like Los Angeles. We need to support manufacturing as a region. Meanwhile there is a new drive to authenticity. The younger generation is questioning the traditional path. So I think the opportunity to revitalize manufacturing is there. We just have to change the narrative.
BD: The market is ripe for our TOP program, and I’m excited to see it help business owners and grow jobs.
MAKE IT: How can readers get involved and how can they learn more about Concerned Capital?
TD: You can find us online at http://www.concernedcapital.org/
About Bruce Dobb
Bruce Dobb is a partner of Concerned Capital, a boutique investment firm that helps businesses find government incentives to transition to new ownership. He holds an MBA & was Chief Credit Officer for the Valley Economic Development Center. Bruce secured the financing for hundreds of companies in Los Angeles following the Northridge Quake and helped save or create over 6,000 jobs since arriving in LA in 1979 as a Small Business Advisor to Gov. Brown. American Apparel, Mel Cast Litho, ETO Doors and Southwest Moulding are among his manufacturing/distribution clients.
About Tomás Durán
Tomás has more than 15 years of economic development experience in low income communities of Southern California. He applies his finance, new market tax credits, and redevelopment skills to develop creative and innovative economic development solutions for private businesses. Prior to this role, Tomás worked as a Program Manager for the Whittier Redevelopment Agency and Vice President of Real Estate for Genesis LA Economic Growth Corp. In addition to CC, he teaches a class as a part time instructor for the Price School of Public Policy at the University of Southern California. Tomas also serves on the board of Friends of Uptown, a local nonprofit, as well as on the advisory boards for Dudley Ventures Community Investment and Lowe Economic Development Corporation. Tomas has a master’s degree in Planning from the University of Southern California.