What makes a cooperative

Leaders learned the importance of having a preparedness strategy and the ability to organise and manage work in a way that expedites the decision-making process. They also learned But many former and current chief executive officers can attest that achieving this goal But beyond IT departments where, for example, the majority of software developers employ Agile techniques , adoption is not as widespread.

Skip to main content. Leadership Success Requires Re-Training Most people look at traditional corporations as the business paradigm, where the priority is maximizing shareholder or investor returns, argues Miner. Co-ops Hire for Culture-Fit If managers have to fully buy into co-op values to be successful, then so do all employees. Financing a Co-op Can Be a Challenge Because of their unique member-owned structure and often small startup size, co-ops typically find it difficult to raise money the traditional way through bank loans or private equity, according to Miner.

Governance Can Be Tricky Co-operative enterprises have governing bodies such as boards and—in the case of worker co-ops—worker councils, but their structure varies widely depending on type of co-op and context. Browse leadership courses for executives -- Kate Rodriguez is a former senior career search researcher and government analyst who covers career development and higher education marketing for The Economist Careers Network.

Tags Leadership Management Business Models. Related blog posts Browse all posts. Read More. By Terri Williams. People who join cooperatives or who are among the founding members of a co-op often have the same shared values, meaning they are willing to work together towards a common goal.

One of those goals is to create a better world by working together and by shifting the focus of the business to place people over profit to build a more inclusive economy. The people who benefit from the products or services of a cooperative business own the cooperative business. In the case of a grocery co-op, the people who shop at the store are owner-members. In the case of co-op housing, the people who live in a particular building are members of the cooperative that owns the building.

Just as the stockholders or shareholders of a business have a say in how the business is owned and operated, the member-owners of a co-op have a say in how the cooperative is run. The crucial difference is that in the case of other types of corporations, how much of a say or how much control an owner has over the company is determined by how large their ownership stake is. As equity and equality are among the founding principles of a cooperative, each member-owner of a co-op gets one vote.

The opinion of one co-op member does not have more weight than the opinion of another co-op member. Cooperatives often elect a board of directors. The responsibilities of the board of a co-op include ensuring that the cooperative is working towards achieving its mission, setting up operational policies for the co-op and hiring any outside managers or other employees. They are typically elected to the board by a member vote. Some board members also serve as officers, such as president, vice president, secretary and treasurer.

Board officers have additional responsibilities and duties, which are usually described and outlined in the by-laws of the cooperative.

The International Co-Operative Alliance adopted seven cooperative principles in These guiding values are based on a set of principles known as the Rochdale Principles, which were first created in The cooperative principles create guidelines for co-ops to follow and allow co-ops to put their values into action.

Cooperatives can be large or small, can exist in a range of industries or sectors and can take multiple forms, based on who the member-owners of the co-op are. A few examples of cooperative types include:. A cooperative business can operate in nearly any industry or sector, but you are more likely to see co-ops in the following areas :. Why do co-ops exist? Cooperatives often have a strong commitment to their community and a focus on strengthening the community they exist in or serve.

When a co-operative does well financially or economically, the community served by the co-op benefits, not just a small group of shareholders. Co-ops offer multiple benefits to their members and the community around them.

From a business point-of-view, cooperatives offer their members the benefit of limited liability. The structure of a co-op means that its shares can be transferred from one owner to another. If a member moves out of the area, dies or no longer wants to be part of a cooperative, they can sell their stake or membership in the co-op to someone else. The cooperative itself will survive even once all of the original members have moved on.

From a social justice and democratic point-of-view, cooperatives matter today because they help to rebalance power and dilute the concentration of wealth. In the U. The cooperative model is one that creates shared prosperity, allowing more people to participate in the economy. Consider the usual challenges like market issues, operating costs and availability of financing. In some cases, local or state governments may provide financial and technical assistance in conducting a feasibility study.

All cooperatives have to be incorporated under the appropriate state statute. Select a legal counsel to draft or review the articles of incorporation and bylaws. Your cooperative can start out with very basic bylaws and just refine them after developing the business plan.

Prepare a detailed business plan that will serve as a blueprint for the development and initial operation of the organization and as supporting documentation for members, financial institutions and investors. A typical business plan includes an executive summary, description of the company, market analysis, product research and development, marketing and sales plan, organizational structure, and financial data.

This cash injection can come from a variety of sources. Most of the time members invest some of their own money. Many cooperatives apply for a business loan while some may be eligible for start-up grants. The amount of capital needed to get up and running varies. The amount and type of financing needed by the co-op and the means to get it should be included in the business plan.

Set up an office and hire staff if applicable. Then open the doors and start providing goods and services in response to member needs.

At this stage you should have a viable business up and running. A cooperative offers a flexible model for new businesses. It can be set up by employees, consumers, local residents and organizations.

Unsure if this is the right business model for your company? Check out our guide for more information on the best business structure options for small businesses. Abi Orencia has extensive experience in SEO, social media management, ecommerce, and other areas of digital marketing. Outside of work, Abi enjoys traveling, hiking, and almost any kind of outdoor activity.

Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Fit Small Business content and reviews are editorially independent. We may make money when you click on links to our partners. Learn More. Co-op Ownership and Control Unlike in business ownership, which is based on the percentage of the business a person owns, ownership in a cooperative is based on equity contribution or how much of the products or services the member purchases.

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