Advantages and disadvantages of co-operatives

1. Co-operatives
Advantages and disadvantages

2. Advantages
 Each member has only one vote which makes it impossible
for one person to run the business according to his/her will,
and democracy will prevail.
 The co-operative is owned and controlled by its members.
 It is not based on profit-making principles but rather on
service-rendering principles to its members, and as such
members are sure of the highest quality of service at the
lowest possible prices.

3. Advantages
(continue)
 The members work together because they have the same
needs and goals. They are united around these goals and
needs and management comes from the members.
 Free business advisory services are available from the office
of the Registrar of Cooperatives.
 If the co-operative does more than 70% business with its
members, the tax is lower than that of other businesses.
 The co-operative is a voluntary organisation and thus easy to
form or end.

4. Disadvantages
 Longer decision-making process – decisions to be made can take
very long because of the principle that all members have voting
power.
 People do not work very hard, because the incentive to earn profits
is not present.
 Unfortunately we have a negative attitude because we have to be
motivated by profits and money instead of by the fact that we can
render a better service or conditions or even have a job. This is a
bad habit and attitude that should change.

5. Disadvantages
(continue)
 There is a possibility of conflict between members.
 Participation of members is required for success.
 Extensive record-keeping is necessary.
 There is less incentive to invest additional capital.
 Meeting both cooperative aims and business needs require complex
management.

6. Disadvantages
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 They can limit your choice of external financing.
 Employment benefits often can't match those offered by other
business types.
 Workers' cooperatives can enjoy tax incentives, such as employee
share schemes, but most small co-operatives find these too costly to
run.

7. Disadvantages
(continue)
 They can limit your choice of external financing.
 Employment benefits often can't match those offered by other
business types.
 Workers' cooperatives can enjoy tax incentives, such as employee
share schemes, but most small co-operatives find these too costly to
run.