Create A Co-op

The reasons groups explore a new cooperative enterprise are diverse – perhaps small businesses want to pool their resources to access supplies at a lower cost, perhaps new farmers want to aggregate their products to reach new markets, or perhaps workers want to own their workplace in a democratic structure.

Can you do something better together than you can individually?

 

Cooperatives can develop as member-initiated efforts, incubated businesses by other organizations, or as conversions from existing businesses. (Bau, 2016)

Learn more about strategies for cooperative development and an incubated approach to cooperative development in this bulletin, “An Incubated Approach to Cooperative Development,” from the CFAES Center for Cooperatives.

The process of exploring and developing a new cooperative enterprise generally involves:

  • identifying the mutual economic need among a group of people or businesses;
  • understanding the marketplace, potential member use, and feasibility of an enterprise;
  • developing a business plan;
  • creating a governance structure and training leaders; and
  • acquiring capital and members.

(“How to Start a Cooperative,” 2012)

Hannah Scott, program director of the CFAES Center for Cooperatives shares an overview of the cooperative business model and considerations for developing a new cooperative in an online learning session, “Cooperative Farming Learning Series: Cooperation as a Business Model,” with the Ohio Ecological Food & Farm Association (OEFFA).

Often, the exploration or development process is guided by a steering committee of potential member-owners and early activities can include exploratory meetings among potential members, interviews or discussions with potential users, potential member surveys, and more. (“How to Start a Cooperative,” 2012)

A slide with text reading "Exploring the Mutual Need," with a Venn diagram labeled, "Exploratory meeting," "Potential Member Survey," and "Interview/Discuss with potential users."

Planning and Education Matters for Future Success

Does the planning process for a new cooperative really matter? Sometimes the process can seem overwhelming or overly-long, but research with emerging agricultural marketing cooperatives shows that planning and education can help co-ops succeed. In a study of 52 emerging agricultural marketing cooperatives:

Co-ops that spent significant effort on training for the board and manager were:

41% more likely to achieve membership growth

15% more likely to remain in business after 3 years, and

26% more likely to report a satisfied membership

 

Co-ops that secured sufficient equity before starting operations were:

36% more likely to be operating profitably after five years

 

Co-ops with sufficient business volume were:

22% more likely to remain in business after 3 years

39% more likely to experience member growth

25% more likely to be operating profitably after five years

38% more likely to report a satisfied membership

(Bruynis et al, 2001)

Assistance with Cooperative Development

Cooperative advocates studying the ecosystems that support robust cooperative growth cite the availability of financing, technical assistance, and market connections, as well as favorable policies, among other elements, as important conditions supporting cooperative growth. (Hoover & Abell, 2016)

An overhead image of people working on ideas.

Entrepreneurs can get technical assistance from cooperative development experts across the United States, including experts with the CFAES Center for Cooperatives at Ohio State. For example, the federal Interagency Working Group on Cooperative Development shares a listing of private sector partners in cooperative development.

Some Overall Considerations for Working Cooperatively

  • Who will be engaged? What is their role?
  • How will the group make decisions?
  • Will the group be formally organized? If so, how?
  • How can the group manage risk?
  • Is it feasible that working together will provide the intended benefit?

(Gilbert et al, 2014)

References