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2012 10 25 wa microent assn - co-ops 101

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Eric Bowman
Eric Bowman

This document discusses how cooperatives can strengthen small businesses. It provides an overview of the Northwest Co-op Development Center, which helps start and develop cooperatives. Cooperatives are defined as businesses that are member-owned, controlled, and benefitted. Several case studies of successful cooperatives are presented, such as purchasing cooperatives for collision shops and home health care cooperatives. Cooperatives are said to help small businesses by increasing income, efficiency, buying power, scale, and support.

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NW Co-op Development Center Better Together: How Co-ops Can Strengthen Small Business Oct. 25th , 2012 Teresa Young, Organizational Development Specialist Eric Bowman, Cooperative Development Specialist 1063 S Capitol Way # 211 Olympia, WA 98501 360.943.4241
Presentation Overview How Co-ops Can Strengthen Small Business 1. Intro 2. Co-op Business 101 3. Development Process 4. Six Case Studies 5. Q&A
NWCDC The Center a 501(c)3 nonprofit which provides development services for new and existing co-ops Our mission to foster community economic development through the co-op business model Were a team of co-op developers with skills specific to start-up and organizational business development
Co-ops 101 Investor owned: Sole proprietor: Co-ops are member: Owned Controlled Benefited
Business Entity Types Choose your business Structure: Sole Proprietorship Limited Liability Company Cooperative Corporation Partnership S Corporation
Internationally Recognized Principles 1. Voluntary and Open Membership 2. Democratic Member Control 3. Member Economic Participation 4. Autonomy and Independence 5. Education, Training and Information 6. Co-operation among Co-operatives 7. Concern for Community
Corporate Structure of Co-ops
Co-op Role U.S. Facts: 250 purchasing co-ops procure for 50,000 businesses 3,000 farmer co-ops market 30% of farmers products 8,000 housing co-ops provide 1 m homes 7,500 credit unions provide services to 90 m members 1,000 rural electrics operate 遜 the nations distribution 29,000 co-ops serve 43% of the population Top 100 co-ops 2010 revenues = $194 Billion!
Ownership Member-Owners can be Consumers Producers/Farmers Workers Other Businesses
Co-op to Co-op Supply Chain
Why Cooperate? to access resources not individually achievable
Advantages of Being a Co-op Net margins (i.e. surpluses) are returned to members Provide stable jobs where money is kept local Develop members rather than exploit them as a resource Less income tax expense Those who use the co-op own it, control it and benefit from it.
Disadvantages of Being a Co-op Patronage record keeping Lack of capital investment; limited financing options Lack of technical assistance providers More cumbersome governance Not suited for ventures that require: Higher risk High return on capital
1.Identify a need a co-op could meet 2.Form Steering Committee 3.Research Feasibility 4.Review Findings (Go/No Go) 5.Membership Drive 6.Planning and Financing 7.Begin Operations (Go/No Go) Co-op Development Stages
Any questions so far?
Case Study Models 1. Shared services: Certified Guides Co-op 2. Worker: Circle of Life Homecare 3. Purchasing: Key Choice Collision Center Network 4. Ag processing: Puget Sound Meat Producers 5. Artisan Gallery: NW Fine Woodworking 6. Worker: WAGES
Management: Part time E.D. Also a guide Members: >45 guides Membership equity: $1,000
Services to member: Negotiate permitted access Specialized insurance
CGC Members Individual businesses (e.g. LLCs) 5 distinct certifications Career path: Start as employee with service Take on book of clients Go into business High admin costs
The desert is calling - the Co-op can help you build fall season work with permits in Moab and Indian Creek
2012 10 25 wa microent assn - co-ops 101
A co-op is a business model that allows a group of people (in this case guides) to combine their resources to achieve their goals
Questions? Comments? Anything youd like to add?
2007 started organizing 2008 opened doors for business with just 4 caregivers, volunteer staff 2012 gave out first patronage checks Doubled growth from 2011 and 2012 Now have 21 caregiver members and paid staff
Memberships: $300 equity 3 mo probation Board approved Qualifications Responsibilities
Questions? Comments? Anything youd like to add?
Purchasing Co-ops Retailer Co-ops Increase purchasing power Shared marketing Members are: independent and locally owned More competitive
Purchasing Co-ops Generic start up: Year one operating: $375k Service fee on sales: 2% Volume: >$20m Co-op receives private rebates
Key Choice Collision Center Network Started with 18 non-competing auto body shops in MN Based on NADA 20 Group model Info sharing: On process and products Individual technicians suffered from weve always done it this way syndrome
Members: single location, sole proprietorships
Cooperation leads to higher efficiency Paint commonality saves on: Input costs Training Network problem solving Assists dealing with insurance companies Collective problem solving enabled lean manufacturing practices
Questions? Comments? Anything youd like to add?
2012 10 25 wa microent assn - co-ops 101
Puget Sound Meat Producers Co-op 2007 ranchers, farmers, butchers, restaurants owners came together to plan 2008 incorporated and started selling ownership stock 2009 began operations
Plans Change At start up: Six paid staff, a manager, a site coordinator, a lead butcher and several assistants Now: No employees Contract butcher PSMPC board members manage scheduling and bookkeeping
Challenges 2011 only 20% of membership used the Mobile Slaughter Unit Not feasible to take unit to each farm Animal prices are up at the farm gate
Member income is up 5-500%
Questions? Comments? Anything youd like to add?
Artist Co-ops Members: artists Artist-owned facilities Exhibition galleries Workshops Equipment
Splash Gallery
2012 10 25 wa microent assn - co-ops 101
Northwest Woodworkers Gallery Opened in 1980 Venue for superior handcrafted woodwork 21 active member-owners
Questions? Comments? Anything youd like to add?
Incubated Worker Co-ops Mission statement: Women's Action to Gain Economic Security (WAGES) builds worker-owned green businesses that create healthy, dignified jobs for low-income women.
WAGES Founded in 1994 Today approximately 90 women Five eco-friendly housecleaning co-ops Co-ops use LLC structure and distribution of profits 80 hrs of training 50/50 between: preparation for ownership eco-friendly cleaning techniques
2012 10 25 wa microent assn - co-ops 101
2012 10 25 wa microent assn - co-ops 101
2012 10 25 wa microent assn - co-ops 101
Benefits Over 70% increase in household income All have checking accounts Health insurance Disability insurance Paid time off
Questions? Comments? Anything youd like to add?
So what can co-ops do for microenterprises? They can potentially increase: Income Efficiency Buying power Scale Support
Thank You! Eric Bowman | eric@nwcdc.coop Teresa Young | teresa@nwcdc.coop Northwest Cooperative Development Center 1063 Capitol Way S # 211 Olympia, WA 98501 360.943.4241 | www.nwcdc.coop Fostering community economic development through the cooperative business model

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2012 10 25 wa microent assn - co-ops 101

  • 1. NW Co-op Development Center Better Together: How Co-ops Can Strengthen Small Business Oct. 25th , 2012 Teresa Young, Organizational Development Specialist Eric Bowman, Cooperative Development Specialist 1063 S Capitol Way # 211 Olympia, WA 98501 360.943.4241
  • 2. Presentation Overview How Co-ops Can Strengthen Small Business 1. Intro 2. Co-op Business 101 3. Development Process 4. Six Case Studies 5. Q&A
  • 3. NWCDC The Center a 501(c)3 nonprofit which provides development services for new and existing co-ops Our mission to foster community economic development through the co-op business model Were a team of co-op developers with skills specific to start-up and organizational business development
  • 4. Co-ops 101 Investor owned: Sole proprietor: Co-ops are member: Owned Controlled Benefited
  • 5. Business Entity Types Choose your business Structure: Sole Proprietorship Limited Liability Company Cooperative Corporation Partnership S Corporation
  • 6. Internationally Recognized Principles 1. Voluntary and Open Membership 2. Democratic Member Control 3. Member Economic Participation 4. Autonomy and Independence 5. Education, Training and Information 6. Co-operation among Co-operatives 7. Concern for Community
  • 8. Co-op Role U.S. Facts: 250 purchasing co-ops procure for 50,000 businesses 3,000 farmer co-ops market 30% of farmers products 8,000 housing co-ops provide 1 m homes 7,500 credit unions provide services to 90 m members 1,000 rural electrics operate 遜 the nations distribution 29,000 co-ops serve 43% of the population Top 100 co-ops 2010 revenues = $194 Billion!
  • 9. Ownership Member-Owners can be Consumers Producers/Farmers Workers Other Businesses
  • 10. Co-op to Co-op Supply Chain
  • 11. Why Cooperate? to access resources not individually achievable
  • 12. Advantages of Being a Co-op Net margins (i.e. surpluses) are returned to members Provide stable jobs where money is kept local Develop members rather than exploit them as a resource Less income tax expense Those who use the co-op own it, control it and benefit from it.
  • 13. Disadvantages of Being a Co-op Patronage record keeping Lack of capital investment; limited financing options Lack of technical assistance providers More cumbersome governance Not suited for ventures that require: Higher risk High return on capital
  • 14. 1.Identify a need a co-op could meet 2.Form Steering Committee 3.Research Feasibility 4.Review Findings (Go/No Go) 5.Membership Drive 6.Planning and Financing 7.Begin Operations (Go/No Go) Co-op Development Stages
  • 16. Case Study Models 1. Shared services: Certified Guides Co-op 2. Worker: Circle of Life Homecare 3. Purchasing: Key Choice Collision Center Network 4. Ag processing: Puget Sound Meat Producers 5. Artisan Gallery: NW Fine Woodworking 6. Worker: WAGES
  • 17. Management: Part time E.D. Also a guide Members: >45 guides Membership equity: $1,000
  • 18. Services to member: Negotiate permitted access Specialized insurance
  • 19. CGC Members Individual businesses (e.g. LLCs) 5 distinct certifications Career path: Start as employee with service Take on book of clients Go into business High admin costs
  • 20. The desert is calling - the Co-op can help you build fall season work with permits in Moab and Indian Creek
  • 22. A co-op is a business model that allows a group of people (in this case guides) to combine their resources to achieve their goals
  • 23. Questions? Comments? Anything youd like to add?
  • 24. 2007 started organizing 2008 opened doors for business with just 4 caregivers, volunteer staff 2012 gave out first patronage checks Doubled growth from 2011 and 2012 Now have 21 caregiver members and paid staff
  • 25. Memberships: $300 equity 3 mo probation Board approved Qualifications Responsibilities
  • 26. Questions? Comments? Anything youd like to add?
  • 27. Purchasing Co-ops Retailer Co-ops Increase purchasing power Shared marketing Members are: independent and locally owned More competitive
  • 28. Purchasing Co-ops Generic start up: Year one operating: $375k Service fee on sales: 2% Volume: >$20m Co-op receives private rebates
  • 29. Key Choice Collision Center Network Started with 18 non-competing auto body shops in MN Based on NADA 20 Group model Info sharing: On process and products Individual technicians suffered from weve always done it this way syndrome
  • 30. Members: single location, sole proprietorships
  • 31. Cooperation leads to higher efficiency Paint commonality saves on: Input costs Training Network problem solving Assists dealing with insurance companies Collective problem solving enabled lean manufacturing practices
  • 32. Questions? Comments? Anything youd like to add?
  • 34. Puget Sound Meat Producers Co-op 2007 ranchers, farmers, butchers, restaurants owners came together to plan 2008 incorporated and started selling ownership stock 2009 began operations
  • 35. Plans Change At start up: Six paid staff, a manager, a site coordinator, a lead butcher and several assistants Now: No employees Contract butcher PSMPC board members manage scheduling and bookkeeping
  • 36. Challenges 2011 only 20% of membership used the Mobile Slaughter Unit Not feasible to take unit to each farm Animal prices are up at the farm gate
  • 37. Member income is up 5-500%
  • 38. Questions? Comments? Anything youd like to add?
  • 39. Artist Co-ops Members: artists Artist-owned facilities Exhibition galleries Workshops Equipment
  • 42. Northwest Woodworkers Gallery Opened in 1980 Venue for superior handcrafted woodwork 21 active member-owners
  • 43. Questions? Comments? Anything youd like to add?
  • 44. Incubated Worker Co-ops Mission statement: Women's Action to Gain Economic Security (WAGES) builds worker-owned green businesses that create healthy, dignified jobs for low-income women.
  • 45. WAGES Founded in 1994 Today approximately 90 women Five eco-friendly housecleaning co-ops Co-ops use LLC structure and distribution of profits 80 hrs of training 50/50 between: preparation for ownership eco-friendly cleaning techniques
  • 49. Benefits Over 70% increase in household income All have checking accounts Health insurance Disability insurance Paid time off
  • 50. Questions? Comments? Anything youd like to add?
  • 51. So what can co-ops do for microenterprises? They can potentially increase: Income Efficiency Buying power Scale Support
  • 52. Thank You! Eric Bowman | eric@nwcdc.coop Teresa Young | teresa@nwcdc.coop Northwest Cooperative Development Center 1063 Capitol Way S # 211 Olympia, WA 98501 360.943.4241 | www.nwcdc.coop Fostering community economic development through the cooperative business model

Editor's Notes

  • #2: <Remember: slooooooowwww and be natural> I appreciate the opportunity to be here Very timely event!
  • #3: <Go slow>
  • #4: <slowly> Intro self and sectors
  • #5: What does this mean: the equity owners of a co-op are the same people who: - democratically govern the business thru 1-member = 1-vote - are the beneficiaries of the services provided
  • #8: Building blocks of economic cooperation Authority: - basic authority and responsibility imposed by law, in other words the incorporating statute - Bylaws and policy provide guidance and clarify authority Ultimate authority from 2 places: Comes from members and this overall system The co-op is theirs and without their desire to create and perpetuate co-op, the board wouldnt exist Members place their needs, trust and Board of their choosing.
  • #9: <ehm, breath> Co-ops are dynamic and relevant in todays economy
  • #10: <are you going slowly enough> Co-ops are defined by ownership In this collection of cooperative businesss logos, I see groups of people who had a need: - they could not meet individually and - which was unfulfilled by the traditional investor-owned private sector
  • #11: To close on the general info
  • #12: <S.L.O.W.> Because co-op businesses are: - comprised of the community - they are representative of the community - and they are a part of the community Co-ops: - Keep profits, ownership and control local - Are less vulnerable to take-over and closure by outside decision-makers ; often stay long after others leave - Are trusted business partners; people like to deal with the producer Co-ops have an innate edge on investor-owned corporations and they have an opportunity to sell it!
  • #19: Past project - CGC
  • #23: Past project - CGC