Starting a Cooperative

Starting a cooperative is a complex project. A small group of prospective members discuss a common need and develop an idea of how to fulfill it.

Depending on the situation generating the idea, a new cooperative may be welcomed with enthusiasm or may be met with vigorous competitive opposition. If opposed, leaders must be prepared to react to various strategies of competitors such as, price changes to retain potential cooperative members’ business; better contract terms or canceled contracts; attempts to influence lenders against providing credit; and even publicity, misstatements, and rumors attacking the cooperative business concept.

Regardless of the business climate for the proposed cooperative, leaders must demonstrate a combination of expertise, enthusiasm, practicality, dedication, and determination to see that the project is completed.

Top Reasons Cooperatives Succeed

A cooperative usually succeeds because it: (1) Meets member needs, including several members sharing a similar vision. (2) Fills a gap or need in the community.(3) Is owned and controlled by the member/users of the coop, who are the coop customers. (4) Returns profits to the members/users of the coop, creating benefit.(5) Shares the risks and rewards among several people rather than one. (6) Consists of checks and balances, i.e. a board of directors and manager. (7) Includes the talents of many members/users in one single business.

General Rules for Success

Several basic rules for successful formation of a cooperative apply to more than one step of the process and to continuing operations. Some rules are unique to the cooperative form of business. They include effective use of advisers and committees, keeping members informed and involved, maintaining good board/manager relations, following sound business practices, conducting businesslike meetings, and forging links with other cooperatives.

Visit NCDC’s website for more details on starting a cooperative business!

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