Co-ops seeding co-ops

Co-opoly: The Game of Cooperatives

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If a cooperative is the best business model for your business, why not share that benefit with others? Imagine an entire economy of principled enterprises that serve member needs and advance democratic participation.

Cooperatives can grow the cooperative economy in several ways. One way is by growing themselves: increasing their membership, sales, locations, services, products and jobs. And co-ops grow the co-op economy when they do business with each other. Investment in cooperative loan, grant and equity funds also boosts cooperative economies.

Another method is for co-op businesses to seed the development of new cooperatives. For an existing co-op, a new co-op business in the local economy means new peers and more people understanding and committed to co-op principles and values; it can also mean an improved bottom line and more member benefits.

Several co-op development strategies emerge from a review of what co-ops around the country are doing to expand the co-op economy. These correspond well to research by David Ellerman on “enterprise creation” that starts from existing businesses.

Contents

Strategies

First, find what business or member needs could be met by a new co-op venture. Next, see if an opportunity could lead to a new cooperative enterprise.

Go up or down the supply chain

Go up or down the supply chain to improve sourcing of inputs, add value to services or products, enhance member benefits or solidify customer relationships.

Example: Maine Organic Milling

Wisconsin’s Organic Valley is a 1,630-member farmer-owned marketing and distribution cooperative for dairy, soy, juice, eggs, meat and produce. The co-op stepped in when dairy-farmer members in Maine lost the only organic feed mill in their state; it contributed management time and expertise to help those farmers pull together to buy and operate the mill for
themselves and other farmers as the Maine Organic Milling cooperative.

Spin off a business function

Spin off a business function to improve operations and increase opportunities for entrepreneurship.

Example: Inkworks Press and Design Action Collective

In Berkeley, Calif., the worker-cooperative Inkworks Press found that with changing business demands it was having increasing trouble managing printing and design work under one roof, so two members left to start Design Action Collective. The new co-op benefited from industry connections and reputation, as well as tried-and-trusted institutional models. Design Action still sends most print jobs to Inkworks, but it can also focus on design for the web and other new media. The change has also allowed Inkworks to become more streamlined and efficient.

Meet related or unrelated needs

Meet member, community, worker, or customer needs related (or unrelated) to your co-op’s business. This strategy requires active listening to stakeholders, which is a strength of co-ops as member-owned democratic businesses.

Example: Weaver Street Market

Carrboro, N.C.’s Weaver Street Market, a hybrid consumer- and worker-owned grocery store, helped form a co-op housing association in response to gentrification and rising housing costs. The co-op also gave space and support to start the city’s only community radio station.

Find new uses for the same product

Find new uses (and markets) for the same service or product.

Example: CCA Global

CCA Global Partners is based in Manchester, N.H. and St. Louis, but has 3,800 members nationwide. This marketing and purchasing co-op’s remarkable growth to a complex of 15 cooperatives stems in part from the realization that back-office services for independent carpet stores could similarly be provided to different markets, from lighting stores to bike shops to child-care centers.

Create a new product using the same methods

Create a new product using the same technology.

Example: Cheese Board Collective and Pizza Collective

Also in Berkeley, the Cheese Board Collective bakery once included pizzas in its product line; then it created the Cheese Board Pizza Collective, which could focus on pizzas full-time. The two cooperatives are now two divisions of the same cooperative corporation, operating autonomously under the same financial umbrella.

Reproduce

Create peers and partners for your business through “light franchising.” Co-ops regularly contribute informally to the birth of similar co-ops by sharing their incorporation documents, by-laws, and histories, as well as mentoring new managers, sharing training, or even disclosing unused feasibility studies.

Example: Arizmendi Association of Cooperatives

The Cheese Board Collective’s successful model served as the basis for the Arizmendi Association of Cooperatives, which has engaged in deliberate replication, or what they call “upside-down franchising,” by supporting the founding of five new collective bakeries since 1997.

Watch for Conversion Opportunities

As part of engaging with your co-op's members and community, you could be on the lookout for businesses or other institutions that would benefit from converting to a worker- or consumer-owned cooperative model. This could include established businesses whose owners are ready to move on or retire, young businesses that are growing and need committed buy-in from skilled employees, groups or networks that are collaborating in more informal ways, failing or shaky businesses that would do better in the hands of stakeholders, and nonprofit or volunteer enterprises ready to spin off independently or "graduate" to sustainable businesses.

Example: Pedal People and Valley Green Feast 

When the founder of Valley Green Feast, a local foods delivery business, needed to move on from her young business to a full-time job, a member of the cooperative Pedal People encouraged her to explore the collective model. With the help of the local cooperative association Valley Association of Worker Cooperatives, the business was transferred to a collective of three members, and is still going and growing.

Implementation

A wise first step is to engage your board, members, management and staff in a decision-making process to commit the organization to new co-op development. Encourage discussion of benefits and drawbacks, and address any concerns raised. Invite speakers with inspiring stories from other co-ops; study the success of cooperatives in co-op clusters or systems; write policy statements; and incorporate development into strategic planning by articulating benefits to the co-op and its members.

Motivation for co-ops seeding co-ops

Co-ops that engage in seeding new co-ops do it because they:

  • are putting cooperative values into action
  • have a vision of a thriving cooperative economy that guides their decisions
  • have a mission to grow the co-op economy
  • or simply see that it is in their members' best interests.

Resources available to existing enterprises for supporting new co-ops

Implementing any of the strategies above can take many forms, many of which do not involve direct expenditures of money:

  • providing pre-business financial support or start-up investment (this can sometimes be done by simply parking extra funds in a co-op development fund)
  • funding new feasibility and marketing studies
  • sharing old feasibility studies and business plans
  • partnering with cooperative development organizations
  • providing management, legal, or technical expertise (many co-ops support the volunteer work of staff or members -- this could be used for the benefit of new co-ops)
  • sharing industry sector and co-op knowledge and networks
  • supporting member or staff participation in steering committees and advisory boards
  • making supportive trade arrangements to buy or sell
  • using your own co-op's reputation as a guarantee
  • sharing unused space
  • selling or giving away used equipment
  • providing low-cost or free services, such as back-office services
  • engaging in education about options
  • inviting others to participate in trainings you are holding anyway for your co-op members, staff or board
  • conducting member surveys
  • engaging membership in supporting the new enterprise, either through patronage contributions, as patrons of the new enterprise, or as volunteers


See also

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