Comparison of Business Models
A co-operative is simply another type of business model. Co-ops exist to serve their members. For over 140 years, co-operatives have been a tool for individuals and communities to organize for their common benefit. Co-ops are democratic businesses owned by the people they serve, and they provide solutions to 21st century challenges.
CO-OPS DIFFER FROM OTHER BUSINESSES
Co-operative organizations differ from other businesses in three key ways:
- A Different Purpose: Co-ops meet the common needs of their members, whereas most investor-owned businesses exist to maximize profit for shareholders.
- A Different Control Structure: Co-ops use a system of
one-member/one-vote, not one-vote-per-share. This helps them to serve common interests and to ensure that people, not capital, control the organization.- A Different Allocation of Profit: Co-ops and credit unions share profits among their member-owners on the basis of how much they use the organization, not on how many shares they hold.
Click here to download a comparison chart of these business models: Co-operative; Corporation; Partnership and Sole Proprietor.Click here to download a comparison chart comparing the co-operative business model with an investor-owned business and a non-profit organization in the areas of ownership; voting; and sharing in the surplus.
How do co-ops differ from other businesses?A CO-OPERATIVE IS ESSENTIALLY...
- A union of people
- An organization of users
- Organized by people to serve people
- Controlled by its members
- 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
- Community-owned and controlled because of its ownership structure and control mechanism
- Less vulnerable to non-member and foreign interestA PRIVATE INVESTOR OWNED BUSINESS IS ESSENTIALLY...
- A union of capital
- Organization of investors
-Organized by entrepreneurs to attract capital and serve customers
- Controlled by those with a majority of shares
- An organization in which profit belongs to the corporation - and is primarily used to provide a return to shareholders
- Vulnerable to takeover by outside, foreign and multinational interests
Co-operatives have a long and successful tradition both in Canada and around the world and have proved amazingly flexible in meeting a wide variety of human needs. They have done so driven not by profit, but by a desire to bring fairness, equity and justice to the marketplace.a) Co-ops help people obtain goods and services that they may not otherwise be able to afford on their own. By pooling their purchasing power through a co-operative, members can obtain products and services they can afford. People from all walks of life can benefit from membership in a co-op.
b) Because co-ops are open to everyone regardless of income or social status, and each member has an equal vote, co-ops can be more accountable and inclusive than other enterprises.
c) Co-ops help build stronger communities. Since most co-ops are community and regionally based, investment in, and surplus revenue from the co-op stay within the local community. Every dollar invested in the local co-op, has a significant multiplier effect within the community.
d) Co-operatives enable communities to have a degree of self-determination that is less subject to outside forces. Community-based ownership also make co-ops less vulnerable to takeovers and closures by outside decision-makers.
e) Co-ops are more stable and durable than private businesses. The survival rate of co-ops after 5 years is 64% as compared to 36% for private firms. After 10 years, the survival rate of co-ops is 46% compared to 20% for private firms.
- courtesy BC Co-operative Association
