Suitability
There are different kinds of businesses and business structures that could address your need or opportunity. At this point, you will have to research whether a co-operative structure is right for you.
You must remember that a co-operative or credit union is still a business, but it is a unique type of business. It requires the dedication of its members to an on-going process that is democratic and serves the needs of its membership. Starting a
co-op takes time and dedication.
CO-OP SUITABILITY
Not only should a co-op be right for you, you have to be sure you're right for a co-op. Working in a co-operative doesn't mean you do everything together. However, you must be able to work together when making decisions, you must be willing to communicate, to share, to discuss and to find solutions that you and other members can accept. Together, you must be willing to share the risk and responsibilities.
Determine...
- Do you want to direct and share in the control of your business?
- What degree of control do you want? How much control do you want to share? Who do you want to share it with?
- What do you not want to direct and control? (For example: the wages, what to produce or what to sell)
- Who will be a part of the steering committee? (A small group that has enough time and energy to do most of the research and to make proposals to the full group.)
- Is there enough interest among your members (and potential members) to continue developing this business idea?
The Co-op Self Assessment
Develop an understanding of the marketplace, your potential members... and of YOU. This is a self-assessment in the truest sense. Starting any business requires taking risk. Eighty percent of small businesses fail. There are many reasons for failure including, poor planning, being overly optimistic, lack of adequate investment and cash, poor cost control, personal illness and plain bad luck.
THE CO-OP MODEL HAS A PROVEN SUCCESS RATE
Co-operatives generally fare better and have twice the survival rate - 40% of most other business models. (1). This is significantly better than business types such as sole proprietorship, partnership and corporation, but it still means over half of start-up co-ops fail.
Some of the reasons for the better survival rate for co-ops include more cautious and thoughtful decision-making, the emotional support members provide each other, pooling resources and talents, and support from other co-ops and federations.
MAKE YOUR PLANS...AND DO YOUR HOMEWORK
Like any good business, a co-op requires an excellent business plan, sufficient start-up capital, and the tenacity of its founders. There will be long hours, many meetings, and low pay in the
start-up phase. And, there will also be break-throughs, exciting developments and the internal reward of accomplishing something important to you and your community.
The main difference between a co-op business and a regular company is democracy. This is both the strength and potential weakness of the co-op structure. It's a strength because it offers people (members) more control over their lives and the potential for making better decisions collectively than individually. It's a weakness because democratic decision-making requires more time, more discussion, and the ability to listen and even change one's mind. This doesn't mean that every little decision has to be made by the group. Usually, only long-term policies are determined this way, while day-to-day business operations are clearly assigned to various employees, just like any business.
Over 760 million people are members of co-ops worldwide (2). They've joined together because they are able to achieve something as a group that they simply couldn't do as individuals.
After all that reflection, click here to download the Co-op Self Assessment.
(1) Co-operatives Secretariat, 'Survival Rates of Co-operatives in Quebec', Government of Canada and Quebec Ministry of Industry and Commerce, 1999.
(2) International Co-operative Alliance, 2000.