T2555_Sachithra deshan_The business environment.pptx
2012 10 25 wa microent assn - co-ops 101
1. NW Co-op Development Center
Better Together:
How Co-ops Can Strengthen Small Business
Oct. 25th
, 2012
Teresa Young, Organizational Development Specialist
Eric Bowman, Cooperative Development Specialist
1063 S Capitol Way # 211
Olympia, WA 98501
360.943.4241
2. Presentation Overview
How Co-ops Can Strengthen Small Business
1. Intro
2. Co-op Business 101
3. Development Process
4. Six Case Studies
5. Q&A
3. NWCDC
The Center
a 501(c)3 nonprofit which provides development services
for new and existing co-ops
Our mission
to foster community economic development through the
co-op business model
We’re
a team of co-op developers with skills specific to start-up
and organizational business development
5. Business Entity Types
Choose your business Structure:
• Sole Proprietorship
• Limited Liability Company
• Cooperative
• Corporation
• Partnership
• S Corporation
6. Internationally Recognized Principles
1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for Community
8. Co-op Role
U.S. Facts:
– 250 purchasing co-ops procure for 50,000 businesses
– 3,000 farmer co-ops market 30% of farmers’ products
– 8,000 housing co-ops provide 1 m homes
– 7,500 credit unions provide services to 90 m members
– 1,000 rural electrics operate ½ the nation’s distribution
– 29,000 co-ops serve 43% of the population
Top 100 co-ops’ 2010 revenues = $194 Billion!
12. Advantages of Being a Co-op
• Net margins (i.e. surpluses) are returned to members
• Provide stable jobs where money is kept local
• Develop members rather than exploit them as a resource
• Less income tax expense
• Those who use the co-op own it, control it and benefit
from it.
13. Disadvantages of Being a Co-op
• Patronage record keeping
• Lack of capital investment; limited financing options
• Lack of technical assistance providers
• More cumbersome governance
• Not suited for ventures that require:
– Higher risk
– High return on capital
14. 1.Identify a need a co-op could meet
2.Form Steering Committee
3.Research Feasibility
4.Review Findings (Go/No Go)
5.Membership Drive
6.Planning and Financing
7.Begin Operations (Go/No Go)
Co-op Development Stages
16. Case Study Models
1. Shared services: Certified Guides Co-op
2. Worker: Circle of Life Homecare
3. Purchasing: Key Choice Collision Center
Network
4. Ag processing: Puget Sound Meat Producers
5. Artisan Gallery: NW Fine Woodworking
6. Worker: WAGES
17. • Management:
– Part time E.D.
– Also a guide
• Members: >45 guides
• Membership equity: $1,000
19. CGC Members
• Individual businesses (e.g. LLCs)
• 5 distinct certifications
• Career path:
– Start as employee with service
– Take on book of clients
– Go into business
– High admin costs
20. “The desert is calling - the Co-op can help you
build fall season work with permits in Moab
and Indian Creek”
21.
22. “A co-op is a business model that allows a group of
people (in this case guides) to combine their
resources to achieve their goals”
24. 2007 started organizing
2008 opened doors for
business with just 4
caregivers, volunteer staff
2012 gave out first
patronage checks
Doubled growth from 2011
and 2012
Now have 21 caregiver
members and paid staff
27. Purchasing Co-ops
• Retailer Co-ops
– Increase purchasing power
– Shared marketing
• Members are:
– independent and locally owned
– More competitive
28. Purchasing Co-ops
Generic start up:
• Year one operating: $375k
• Service fee on sales: 2%
• Volume: >$20m
• Co-op receives private rebates
29. Key Choice Collision Center Network
• Started with 18 non-competing auto body
shops in MN
• Based on NADA 20 Group model
• Info sharing:
– On process and products
– Individual technicians suffered from “we’ve
always done it this way syndrome”
34. Puget Sound Meat Producers Co-op
• 2007 ranchers, farmers, butchers, restaurants
owners came together to plan
• 2008 incorporated and started selling
ownership stock
• 2009 began operations
35. Plans Change
At start up:
Six paid staff, a manager, a site coordinator, a lead
butcher and several assistants
Now:
No employees
Contract butcher
PSMPC board members manage scheduling and
bookkeeping
36. Challenges
• 2011 only 20% of membership used the
Mobile Slaughter Unit
• Not feasible to take unit to each farm
• Animal prices are up at the farm gate
44. Incubated Worker Co-ops
Mission statement:
Women's Action to Gain Economic Security
(WAGES) builds worker-owned green
businesses that create healthy, dignified jobs
for low-income women.
45. WAGES
• Founded in 1994
• Today – approximately 90 women
• Five eco-friendly housecleaning co-ops
• Co-ops use LLC structure and distribution of
profits
• 80 hrs of training 50/50 between:
– preparation for ownership
– eco-friendly cleaning techniques
46.
47.
48.
49. Benefits
• Over 70% increase in household income
• All have checking accounts
• Health insurance
• Disability insurance
• Paid time off
51. So what can co-ops do for
microenterprises?
They can potentially increase:
• Income
• Efficiency
• Buying power
• Scale
• Support
52. Thank You!
Eric Bowman | eric@nwcdc.coop
Teresa Young | teresa@nwcdc.coop
Northwest Cooperative Development Center
1063 Capitol Way S # 211
Olympia, WA 98501
360.943.4241 | www.nwcdc.coop
Fostering community economic development through the
cooperative business model
Editor's Notes
<Remember: slooooooowwww and be natural> I appreciate the opportunity to be here… Very timely event!
<Go slow>
<…slowly…> Intro self and sectors
What does this mean: the equity owners of a co-op are the same people who: - democratically govern the business thru 1-member = 1-vote - are the beneficiaries of the services provided
Building blocks of economic cooperation Authority: - basic authority and responsibility imposed by law, in other words the incorporating statute - Bylaws and policy provide guidance and clarify authority Ultimate authority from 2 places: Comes from members and this overall system The co-op is theirs and without their desire to create and perpetuate co-op, the board wouldn’t exist Members place their needs, trust and Board of their choosing.
<ehm, breath> Co-ops are dynamic and relevant in today’s economy
<are you going slowly enough> Co-ops are defined by ownership In this collection of cooperative business’s logo’s, I see groups of people who had a need: - they could not meet individually and - which was unfulfilled by the traditional investor-owned private sector
To close on the general info…
<S.L.O.W.> Because co-op businesses are: - comprised of the community - they are representative of the community - and they are a part of the community Co-ops: - Keep profits, ownership and control local - Are less vulnerable to take-over and closure by outside decision-makers ; often stay long after others leave - Are trusted business partners; people like to deal with the producer Co-ops have an innate edge on investor-owned corporations and they have an opportunity to sell it!
