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Starting a Cooperative

January 14th, 2012 | Posted by Edible Economy Admin in General

Would you like to know more about what it takes to start a cooperative? You might be interested in taking a look at this presentation developed by the non-profit Cooperative Development Services (CDS) on steps for starting a cooperative. The Edible Economy Steering Group has also drafted a proposed timeline for a producer cooperative in Central Illinois. A sample survey for gathering input from potential cooperative members has also been posted to our website.  Additional information is available on our Links page under “Cooperatives.”

Here is a quick overview of the steps involved in starting a cooperative:

  1. Create a steering committee: the “dream team. “  Responsibility: To create the vision for the project and to hold it in trust for its future owners.
  2. Complete pre-feasibility analysis to increase the knowledge of the steering committee about the potential venture. This might involve internet research, visits to other similar businesses, gathering of other industry information and so forth.
  3. Incorporate to provide a “corporate shield,” providing the steering committee with legal protection from personal liability for reasonable business decisions.
  4. Perform business development to assess the viability of the business concept
    • Feasibility Study to determine if there is at least one set of conditions under which the goal can be achieved. Includes Market Feasibility: Market analysis, competitive analysis; Operational Feasibility: Management, labor, site suitability, materials supply, and other aspects of operations; Technical Feasibility: Proprietary technology, “tried and true”, intellectual property; Financial Feasibility: Pro Forma statements, including projected balance sheets, income statements, cash flow statements, sources and uses of funds, financial assumptions, and Return on Investment/payback.
    • Business Plan to describe the business and “the way” that the organization is intended to operate, including: A description of the company, business structure, owners and management; Assessment of the market, market entry strategy and competitors; Description of products/services, their attributes, and the value proposition to customers; Description of operations and systems; Financial projections, including sources and uses of funds, balance sheets, income statements, cash flows and ROI/payback.

    • Update Articles & Bylaws to ensure congruity between the organization’s base documents and its approved business plan.

  5. Perform education and outreach to support the business development process by increasing the knowledge and awareness of potential members.
    • Capital development to raise resources to support the business development process.
    • Co-op education to provide initialunderstanding of the co-op business model, and help potential members determine if this model appeals to them.
    • Awareness building to grow the potential, knowledgeable membership basefor the organization.
  6. Equity Drive to raise required equity (as described in the business plan) to capitalize the business. A “Go/Stop” Step: Insufficient equity is a “Stop” and requires the return of escrowed equity contributions. Sufficient equity allows the organization to break escrow, take on debt, and move to implementation.

  7. Cooperative formed!

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One Response

  • Avatar of Bernard Bernard says:

    Greetings!

    I am glad to find this project and wish you all much success.

    Re the last point #7 Co-op formed! – Yes and then the fun begins!

    Some resources that I can offer that relate to worker cooperatives, but which may be applicable to your project.

    See for info on co-op development DVD

    See for info on the developing grassroots economy in the San Francisco area, where urban ag is a major sector. Many links and inspiration guaranteed!

    Good luck and best wishes,

    -bernard



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