starting a co-operative
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Starting a Co-operativeA GUIDE TO SETTING UP A DEMOCRATICALLY CONTROLLED BUSINESS
Have you got a great business idea that you want to work on with others? Are you a community group or voluntary organisation that wants to start trading? Is your boss retiring and you are thinking you could take over the business? Do you want to start a business thats about more than just making profits?
ContentsWhy set up a co-operative? What is a co-operative? Types of co-operative Areas of co-operative activity What legal structure should be adopted? How to set up a co-operative Sources of advice Finance
The Co-operative PrinciplesCo-operatives are based on seven principles agreed by the International Co-operative Alliance: 1. Voluntary and open membership. Co-operatives are voluntary organisations, 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. 2. Democratic member control. Co-operatives are democratic organisations 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. In primary co-operatives members have equal voting rights (one member, one vote), and co-operatives at other levels are also organised in a democratic manner. 3. Member economic participation. Members contribute equitably to, and democratically control, the capital of their co operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any of the following purposes: developing their 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. 4. Autonomy and independence. Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, 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. 5. Education, training and information. 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. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation. 6. Co-operation among co-operatives. Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. 7. Concern for community. Co-operatives work for the sustainable development of their communities through policies approved by their members.
For many people in the UK their perception of the co-op will be defined by the local retail stores that they know and visit. But this view of co-operative enterprise in the UK only tells part of the story. There are over 4,000 co-operatives in the UK, creating and sustaining well over 195,000 jobs, with a collective turnover of 27billion per annum. Ben Reid, Chair of Co-operativesUK and Chief Executive of The Midcounties Co-operative
Starting a Co-operative
1 Why set up a co-operative?Co-operatives are a vehicle for people collectively doing it for themselves - whether thats responding to a market opportunity, or meeting an identified need that neither the market nor the public purse provides. They engage people in their own solutions and enable members to share the risks and development costs of the business. They also draw from the knowledge, skills and expertise that diverse members bring. Co-operatives provide their members with mutual support. They link members together so that they can help one another - perhaps by sharing ideas, costs, resources and equipment. In multi-stakeholder co-operatives workers, users and the community can be linked for mutual endeavour. Co-operatives are democratically owned and run, giving members real control over the direction of their enterprise and enabling all stakeholders to contribute to the success of the business. In worker co-operatives this can galvanise the creativity and commitment of the employees in a way many other businesses cannot. The members of consumer or community co-operatives are able to define the business that meets their needs and bring their skills and commitment to its success. Co-operatives are often very attractive to public service workers who want to be liberated to provide a high quality service.
Why do co-operatives interest the economic development community and government? Co-operatives keep the business - and the wealth it creates - local. They are owned by their members, so they tend to support the local economy. Co-operatives are more sustainable than other forms of small business - survival rates are higher and they create more jobs which are less likely to leave the local area when the business is successful. Co-operatives contribute to local community regeneration and supply chain development. Co-operatives encourage all-round personal development, including entrepreneurial and business skills in all their members.
Case study: Unicorn GroceryUnicorn Grocery is a worker co-operative based in Manchester, established by four people in 1996. Since then, it has grown to become one of the most successful wholefood shops in the UK. Like some worker co-operatives, Unicorn Grocery has a completely flat management structure - it operates an equal pay policy and, despite having nearly 50 members, it ensures that all of them are involved in the management of the business and that key decisions are made on a consensual basis. Unicorn Grocerys aim is not just to make a profit, but to make good, honest food accessible while promoting ethical, organic, fair trade and local produce. By demonstrating that there is a successful alternative model of trade the co-operative hopes to inspire others to set up similar ventures. Like other worker co-operatives in the wholefood sector, Unicorn Grocery is based on clear ethical principles. It works closely with regional, small-scale vegetable growers, it gives 5% of its wage bill each year to support co-operative, social and environmental projects, and it has a built an 85m2
living roof on its premises that consists of small low moisture plants, a pond with water plants and rubble left to self-colonise. Far from these principles making life harder for Unicorn Grocery to operate as a business, they are key to its success - when the owner of the premises Unicorn Grocery was leasing decided to sell up, loyal customers purchased 350,000 of loan stock bonds to enable Unicorn to purchase the premises.
Starting a Co-operative
What is a co-operative?A co-operative is a business that is jointly owned and democratically controlled by its members. Co-operatives are trading enterprises, providing goods and services and generating profits, but these profits are not taken by outside shareholders as with many investor owned business - they are under the control of the members, who decide democratically how the profits should be used. Co-operatives use their profits for investing in the business, in social purposes, in the education of members, in the sustainable development of the community or the environment, or for the welfare of the wider community. Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. The Co-operative Principles (see page 2) are guidelines by which co-operatives put their values into practice. Co-operation has always existed, but co-operative business became a significant social and economic force in the 19th century, when people engaged in self-help to ensure that their basic needs were met. Today the co-operative movement is a global force and employs approximately 1 billion people across the world. The UN estimates that the livelihoods of half the worlds population are made secure by co-operative enterprise. In Britain there are over 4,000 co-operatives ranging from small community-run enterprises and worker owned business to large consumer-owned businesses such as the Co-operative Group.
A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. The International Co-operative Alliance Statement on the Co-operative Identity, Manchester, 1995.
Case study: Harwich ConnexionsHarwich Connexions is a multi-stakeholder co-operative that provides accessible transport to its community in Harwich, Essex. The co-operative was formed in 2001 after the area was awarded 319,000 to provide accessible transport for the community. Although Essex County Council initially ran a project, it failed to recruit a transport co-ordinator, which led to local lobbying for the service to be transferred to the community. Harwich Connexions was set-up to take over the service, with users, workers and supporters as members who elect a board of directors. The co-operative now has nine vehicles, a full-time co-ordinator, three part-time drivers, an administrator, a handyperson, and numerous volunteer drivers. Since then the co-operative has expanded its services and has now taken over the management - and prevented the closure - of Harwich Tourist
Information Centre and a youth