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Coop Presentation


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Introduces the different cooperative business models.

Published in: Business, Economy & Finance
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Coop Presentation

  1. 1. A People’s Business
  2. 2. Business Legal Setups <ul><ul><li>Sole proprietorship </li></ul></ul><ul><ul><li>Partnership </li></ul></ul><ul><ul><li>Corporation </li></ul></ul><ul><ul><li>Co-operative </li></ul></ul>This presentation is about the co-operative business setup.
  3. 3. A Co-Op Is Essentially … <ul><ul><li>A way to meet a specific need </li></ul></ul><ul><ul><li>A union of people </li></ul></ul><ul><ul><li>An organization of users </li></ul></ul><ul><ul><li>Organized by people to serve people </li></ul></ul><ul><ul><li>Controlled by its members </li></ul></ul><ul><ul><li>An organization in which surplus earnings (profit) belong to the user-members and are used to make the co-op stronger or returned to members as dividends </li></ul></ul><ul><ul><li>Community-owned and controlled because of its ownership structure and control mechanism </li></ul></ul><ul><ul><li>Less vulnerable to non-member and foreign interest </li></ul></ul><ul><ul><li>A co-op is a legal entity </li></ul></ul>
  4. 4. The Advantage of the Co-Op Model <ul><ul><li>Co-ops help people obtain goods and services that they may not otherwise be able to afford on their own. </li></ul></ul><ul><ul><li>Co-ops can be more accountable and inclusive than other enterprises. </li></ul></ul><ul><ul><li>Co-ops help build stronger communities since the investment stays in the community. </li></ul></ul><ul><ul><li>Co-operatives enable communities to have a degree of self-determination that is less subject to outside forces , less vulnerable to takeovers and closures by outside decision-makers. </li></ul></ul><ul><ul><li>Co-ops are more stable and durable than private businesses, have almost twice the 5 yr and 10 yr survival rates of private businesses. </li></ul></ul>
  5. 5. Different Kinds of Co-Ops <ul><ul><li>Worker Co-op </li></ul></ul><ul><ul><li>Consumer Co-op </li></ul></ul><ul><ul><li>Housing Co-op (Daycare, Healthcare, etc.) </li></ul></ul><ul><ul><li>Multi-Stakeholder Co-op </li></ul></ul><ul><ul><li>Producer or Marketing Co-op </li></ul></ul><ul><ul><li>Credit Union or Caisse Populaire </li></ul></ul>
  6. 6. Worker Co-Op <ul><ul><li>The member-owners operate their business together and make decisions about all the important issues including wages, production methods and finances. </li></ul></ul><ul><ul><li>The prime objectives are to provide employment to its members and to operate an enterprise in which control rests with the members. </li></ul></ul><ul><ul><li>Generally members must be individuals and employees of the co-operative. </li></ul></ul><ul><ul><li>Employment of non-members may be permitted.  </li></ul></ul>
  7. 7. Why Worker Co-Op? <ul><ul><li>To create or maintain their jobs. </li></ul></ul><ul><ul><li>To own and control their workplace. </li></ul></ul><ul><ul><li>To share overhead expenses. </li></ul></ul><ul><ul><li>To share the profits. </li></ul></ul><ul><ul><li>To pool talents and resources. </li></ul></ul><ul><ul><li>To start or buy a larger business than would be possible otherwise. </li></ul></ul><ul><ul><li>Strength in numbers. </li></ul></ul>
  8. 8. Consumer Co-Ops <ul><ul><li>Buys products in bulk and passes on the savings to the members. </li></ul></ul><ul><ul><li>Products or services </li></ul></ul><ul><ul><li>Members own their store and make decisions about what products to sell, where products come from and other key issues. </li></ul></ul>
  9. 9. Why Consumer Co-Op? <ul><ul><li>Bulk purchase = lower prices. </li></ul></ul><ul><ul><li>The profit margin is reduced. </li></ul></ul><ul><ul><li>The savings are passed-on to the members with lower prices. </li></ul></ul><ul><ul><li>Sometimes, it is the only way to have or keep a store or have a service. </li></ul></ul><ul><ul><li>Only way to “have a say”. </li></ul></ul><ul><ul><li>Consumer Co-ops have access to a network of co-op producers and wholesalers. </li></ul></ul>
  10. 10. Housing Co-Op <ul><ul><li>Gives members secure access to apartment units and houses, which they co-operatively own. </li></ul></ul><ul><ul><li>Is formed when people join with each other on a democratic basis to own or control the buildings in which they live.   </li></ul></ul>
  11. 11. Why a Housing Co-Op? <ul><ul><li>When housing is too expensive. </li></ul></ul><ul><ul><li>To work together for repairs and maintenance, keeping costs lower. </li></ul></ul><ul><ul><li>To reinvest in the complex and create safe common spaces: playgrounds, picnic or BBQ area, party room. </li></ul></ul><ul><ul><li>Savings are passed-on to the members with a lower monthly rent. </li></ul></ul><ul><ul><li>Daycare and healthcare co-ops in this group. </li></ul></ul><ul><ul><li>Usually not-for-profit Co-Ops. </li></ul></ul>
  12. 12. Multi-Stakeholder Co-Op <ul><ul><li>Include different types of members, with the rights of each class of membership set out in the co-op's Rules. </li></ul></ul><ul><ul><li>For example, a produce market co-op may bring together farmers, customers and workers within one co-op. </li></ul></ul><ul><ul><li>Each group must be represented on the Board and quorum by groups </li></ul></ul>
  13. 13. Why a Multi-Stakeholder? <ul><ul><li>To meet the needs of different groups. </li></ul></ul><ul><ul><li>Each group benefits. </li></ul></ul><ul><ul><li>pools talents and resources. </li></ul></ul><ul><ul><li>Savings in overhead costs. </li></ul></ul><ul><ul><li>Profits circulate amongst members. </li></ul></ul><ul><ul><li>Strong interest-based alliance. </li></ul></ul>
  14. 14. Producer/Marketing Co-Op <ul><ul><li>Allows members to share processing and packaging equipment and pool their marketing to reach more customers. </li></ul></ul><ul><ul><li>It sells the products of members who may be producers or service providers. </li></ul></ul>
  15. 15. Why a Producer/Marketing? <ul><ul><li>Lowers individual members start-up investment cost. </li></ul></ul><ul><ul><li>Lowers individual members operating costs. </li></ul></ul><ul><ul><li>It is more affordable to go/stay into business this way. </li></ul></ul><ul><ul><li>pooling marketing costs means wide exposure = more sales. </li></ul></ul>
  16. 16. Credit Union – Caisse Pop <ul><ul><li>Provides a full range of financial services to members. </li></ul></ul><ul><ul><li>Are provincially-regulated, deposit-taking financial institutions which operate on co-operative principles, are member owned, and are permitted to conduct business only with their members. </li></ul></ul>
  17. 17. Why Credit Union / Caisse? <ul><ul><li>Local / regional control. </li></ul></ul><ul><ul><li>Fees and services are decided by members. </li></ul></ul><ul><ul><li>Money earned stays under the control of members. </li></ul></ul>
  18. 18. 7 Principles of Co-Ops <ul><ul><li>Voluntary and Open Membership </li></ul></ul><ul><ul><li>Democratic Member Control </li></ul></ul><ul><ul><li>Member Economic Participation </li></ul></ul><ul><ul><li>Autonomy and Independence </li></ul></ul><ul><ul><li>Education, Training and Information </li></ul></ul><ul><ul><li>Cooperation among Co-ops </li></ul></ul><ul><ul><li>Concern for the Community </li></ul></ul>
  19. 19. Voluntary and Open Membership <ul><ul><li>Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination. </li></ul></ul>
  20. 20. Democratic Member Control <ul><ul><li>Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. </li></ul></ul><ul><ul><li>In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are organized in a democratic manner. </li></ul></ul>
  21. 21. Member Economic Participation <ul><ul><li>Members contribute equitably to, and democratically control, the capital of their co-operative. </li></ul></ul><ul><ul><li>At least part of that capital is usually the common property of the co-operative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. </li></ul></ul><ul><ul><li>Members allocate surpluses for any or all of the following purposes: developing the co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership. </li></ul></ul>
  22. 22. Autonomy and Independence <ul><ul><li>Co-operatives are autonomous, self-help organizations controlled by their members. </li></ul></ul><ul><ul><li>If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. </li></ul></ul>
  23. 23. Education, Training and Information <ul><ul><li>Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. </li></ul></ul><ul><ul><li>They inform the general public -- particularly young people and opinion leaders -- about the nature and benefits of co-operation. </li></ul></ul>
  24. 24. Cooperation among Co-Ops <ul><ul><li>Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional, and international structures. </li></ul></ul><ul><ul><li>Whenever possible co-ops do business with co-ops. </li></ul></ul>
  25. 25. Concern for the Community <ul><ul><li>While focusing on member needs, co-operatives work for the sustainable development of their communities through policies accepted by their members.   </li></ul></ul>
  26. 26. How Many People Does it Take to Start a Co-Op? <ul><ul><li>Worker Co-Op : </li></ul></ul><ul><ul><ul><li>Minimum 3 members to incorporate </li></ul></ul></ul><ul><ul><ul><li>Unlimited: as members decide. </li></ul></ul></ul><ul><ul><li>Other Co-Ops : </li></ul></ul><ul><ul><ul><li>Minimum 5 members to incorporate </li></ul></ul></ul><ul><ul><ul><li>Unlimited: as members decide. </li></ul></ul></ul>
  27. 27. Important Points <ul><ul><li>Starting a co-op is not “sitting on another committee”. </li></ul></ul><ul><ul><li>It is an important time commitment for every member of the group. </li></ul></ul><ul><ul><li>The work does not start and stop with meetings. </li></ul></ul><ul><ul><li>One person, one vote. Ensure all the voices are heard. </li></ul></ul><ul><ul><li>Listen, speak, discuss, decide and act. </li></ul></ul><ul><ul><li>Critical thinking is good – use it not to criticize but to arrive at the best idea / solution. </li></ul></ul><ul><ul><li>Meetings are used to coordinate individual efforts. </li></ul></ul><ul><ul><li>Members help each other learn, grow and stay motivated. As you progress, celebrate your accomplishments. </li></ul></ul><ul><li>Your work makes your future happen ! </li></ul>
  28. 28. First Step <ul><ul><li>What need will the co-op answer ? Define your objective </li></ul></ul><ul><ul><li>What skills, knowledge, time and resources (financial and equipment) can each member contribute ? </li></ul></ul><ul><ul><li>What skills, knowledge, time and resources (financial and equipment) are missing ? </li></ul></ul><ul><ul><li>Recruit compatible people to strengthen your core group. </li></ul></ul><ul><ul><li>The core group will become the founding Board of Directors of your co-op. </li></ul></ul>
  29. 29. Become Knowledgeable About Co-ops <ul><ul><li>Identify sources of information : </li></ul></ul><ul><ul><ul><li>Is there a co-op or credit union in your community ? </li></ul></ul></ul><ul><ul><ul><li>Check the Web. </li></ul></ul></ul><ul><ul><ul><li>Contact the Ontario Co-Op Association. </li></ul></ul></ul><ul><ul><ul><li>Contact Superior North CFDC. </li></ul></ul></ul><ul><ul><li>Read, think, ask questions, and bring your new knowledge to the group. </li></ul></ul>
  30. 30. Become Knowledgeable about “Governance” <ul><ul><li>This is about the “inner workings” of an organization : </li></ul></ul><ul><ul><ul><li>the decision making process, </li></ul></ul></ul><ul><ul><ul><li>the reporting process, </li></ul></ul></ul><ul><ul><ul><li>the role and responsibilities of each members, </li></ul></ul></ul><ul><ul><ul><li>the legal responsibilities, and </li></ul></ul></ul><ul><ul><ul><li>what will be the advantages to members. </li></ul></ul></ul>
  31. 31. Step Two <ul><ul><li>Keep an open mind ! </li></ul></ul><ul><ul><li>Research and write a Business Concept which will define the 5Ws. </li></ul></ul><ul><ul><li>You need to know what needs to be in place to make it happen. Investigate if your group can achieve its goals with a feasibility study. </li></ul></ul><ul><ul><li>The feasibility study is an analysis and evaluation of a proposed project to determine if it </li></ul></ul><ul><ul><ul><li>is technically feasible, </li></ul></ul></ul><ul><ul><ul><li>is feasible within your means, and </li></ul></ul></ul><ul><ul><ul><li>will be profitable. </li></ul></ul></ul><ul><ul><li>The results of this study are used to make a decision whether to proceed with the project, modify or table it. </li></ul></ul>
  32. 32. Step Three <ul><ul><li>Set-up your Co-op : </li></ul></ul><ul><ul><ul><li>Get legal and accounting advice </li></ul></ul></ul><ul><ul><ul><li>Agree on a name, bylaws and logo </li></ul></ul></ul><ul><ul><ul><li>Incorporate </li></ul></ul></ul><ul><ul><ul><li>Open an account with your local credit union or bank. </li></ul></ul></ul><ul><ul><ul><li>Setup your books, letterhead, cards, pamphlets, web, etc. </li></ul></ul></ul><ul><ul><li>You will need money to search the name, incorporate and take care of the basic administrative needs of the co-op. </li></ul></ul><ul><ul><li>Count on approximately $500 - $1000. </li></ul></ul>
  33. 33. Step Four <ul><ul><li>Do a business plan. This may come before or after you set-up your co-op. </li></ul></ul><ul><ul><li>A business plan is essential. Do not rush into action until the business plan is done. </li></ul></ul><ul><ul><li>It must include planning for marketing and implementation. </li></ul></ul><ul><ul><li>Members must agree and commit . </li></ul></ul>
  34. 34. Step Five <ul><ul><li>Do it ! </li></ul></ul><ul><ul><li>Implement your business plan. </li></ul></ul>
  35. 35. Where is the money coming from? <ul><ul><li>As with any start-up business, the cost is assumed by those who will profit from the business. Members finance their co-ops. </li></ul></ul><ul><ul><ul><li>initial investment from members in the form of a loan; </li></ul></ul></ul><ul><ul><ul><li>membership fees; </li></ul></ul></ul><ul><ul><ul><li>user fees; </li></ul></ul></ul><ul><ul><ul><li>sales; </li></ul></ul></ul><ul><ul><ul><li>“ share capital” (members buy shares) if so setup; </li></ul></ul></ul><ul><ul><ul><li>loan </li></ul></ul></ul><ul><ul><li>There may be nominal seed money. </li></ul></ul><ul><ul><li>Combination member investment / loan and grant if the co-op meets specific conditions. </li></ul></ul>
  36. 36. Where Will the Profits Go? <ul><ul><li>After the “costs of business” are met, the profits will be divided between co-op members and/or re-invested in the co-op, according to a formula set in the rules. </li></ul></ul><ul><ul><li>If it is a worker co-op: workers will be employees, drawing salaries. Co-op profits will be as above. </li></ul></ul><ul><ul><li>If it is a consumer co-op, prices will have been lower, benefiting members. Co-op profits will be as above. </li></ul></ul>
  37. 37. Co-ops are for … <ul><ul><li>Those who want to go into business but prefer not to shoulder the costs and the responsibility alone. </li></ul></ul><ul><ul><li>Those who want to invest to benefit from bulk purchases. </li></ul></ul><ul><ul><li>Those who believe in “people power”. </li></ul></ul>
  38. 38. Words of Wisdom <ul><ul><li>Setup properly – don’t rush, don’t cut corners ! </li></ul></ul><ul><ul><li>Keep up the administrative work. </li></ul></ul><ul><ul><li>Keep it “do-able”. </li></ul></ul><ul><ul><li>Build your co-op’s capacity: start according to your human and financial capacity. </li></ul></ul><ul><ul><li>How much can your afford ? Grow as you can afford it. </li></ul></ul><ul><ul><li>Work your co-op. </li></ul></ul>
  39. 39. What Is This? <ul><ul><li>Official colours of the cooperatives movement since 1925. </li></ul></ul><ul><ul><li>Reflects the values of the movement. </li></ul></ul>
  40. 40. For more information <ul><ul><li>Ontario Co-operative Association This presentation was built mainly using material from their website. It is the first stop to learn about Co-Ops in Ontario. Also see the fact sheets . </li></ul></ul><ul><ul><li>Ontario Co-Operative Corporations Act </li></ul></ul><ul><ul><li>Financial Services Commission of Ontario The FSCO is the registering body for Co-Ops and has start-up info and costs. </li></ul></ul><ul><ul><li>Agriculture, Food and Rural Affairs How to start up a Co-Op. </li></ul></ul><ul><ul><li>Superior North CFDC We can help you research your business concept, feasibility study and business plan, and approach friendly lenders, such as ourselves. </li></ul></ul>
  41. 41. Thank you for your attention Believe in yourself, in your friends, in your neighbours, in your community and let’s make it happen !
  42. 42. Prepared for Superior North CFDC  By Dyane Ménard 2008