2026 Business Plans? Maybe It’s Time To Consider Employee Ownership

Every progressive business should be well down the road of thinking about a 2026 business plan, and how they should harness the results from 2025 and move forward with a revised strategy for the new year. However successful the past 12 months have been and whatever challenges you are currently facing, a new calendar year opens up a new reporting period and provides the opportunity to start afresh with new goals and objectives. Although a transition to employee ownership is a major change to the business and requires the business to currently satisfy eligibility criteria alongside a varied set of positive circumstances, it can be managed relatively seamlessly and provides a number of benefits for all parties.

A switch to employee ownership should be a discussion topic on your agenda when planning a business strategy for 2026, if your business is profitable and financially stable, has a solid leadership structure in place and has a positive culture of collaboration and unity. Fundamentally, if the business owner is ready to sell the business and wants to retain the ethos and principles of the business, then employee ownership is a great way to do this.

The benefits of employee ownership

Forming an employee ownership trust (EOT) could be a compelling element of a successful 2026 business plan as it offers a number of potential benefits. First, how does selling a business to an EOT benefit the employer and the current business owner?

• Succession planning – The business owner is able to seamlessly transition the structure of the business and ensure continuity in terms of culture and what the business stands for. This enables the legacy of the owner and founder to be positive and means the employees will be more likely to accept the change. A factor in making this work, however, is ensuring there is a good management structure in place with potential leaders ready to step up and embrace new authority and responsibilities.
• Tax advantages – A seller can enjoy considerable tax advantages to selling their business to an EOT.
• Retirement planning – Selling a business to an EOT will normally mean the seller receives an annual dividend, rather than a lump sum. This is a good way for the existing business owner to fund their retirement, while also leaving the business in good and trusted hands.

Now, how does forming an EOT help the business itself?

• Stability – In day-to-day practice, employees will see little change in a business becoming owned by an EOT. This helps to manage change and also prevents a mass exodus of employees caused by a fear of change. Overall, this means the business will continue to function as it always has.
• Productivity – Businesses that have transitioned to an EOT often report a positive financial impact straight away. This is because employees are engaged and feel valued and are working together towards a common cause. Having visibility of the bottom line and what is required to meet certain targets will boost employee performance and productivity levels.
• Employee quality – Promoting a business as employee-owned and demonstrating how a positive culture prioritises employee empowerment and shared goals, will help to make the business more attractive in the employment market. In time this will start to attract a better quality of candidate to new roles.

Finally, what are the benefits of an EOT to the employees of the business?

• Ownership – Employees will indirectly own a share of the business and this inevitably results in employees taking greater ownership for the success of the business. This offers the employees a sense of pride and empowerment.
• Job security – The main objective of an EOT is to continue the founding principles and objectives of the business. This means that employees can expect their jobs to be safeguarded and the long-term viability of the business to be prioritised. Changing the business ownership structure does not necessarily mean the business has to go in a completely different direction, and continuity is often the key to the success of an EOT.
• Financial benefits – There is a direct link between company performance and the financial rewards an employee receives, which means that employees will share in the success of the business above and beyond their normal salaries. Most EOTs award employees with an annual profit share, and progress towards the targets which trigger this can be made visible and tracked throughout the year.

How to incorporate employee ownership into your 2026 business plan

Planning towards a switch to employee ownership can easily become part of your 2026 business plan, and involves a number of tasks which you should have good visibility of already. The first steps in becoming an EOT should involve:

• A feasibility study – Seek professional advice on the compatibility of your business in becoming an EOT. Discuss this internally with your senior team also.
• Valuation – Obtain a formal valuation of your business.
• Communication – Agree with your senior team that becoming an EOT is viable and beneficial and then start to float the idea to employees with a careful and strategic communications plan.
• The deal – Work with specialist advisors on employee-ownership and navigate the legal and regulatory requirements of becoming an EOT.

If employee-ownership is an attractive element of your 2026 business plan and you need specialist advice from experienced experts who have been on the journey already, contact our team at the Employee Ownership Advisor.