To Start or Not to Start

So you’ve got a business idea and a group of interested people. Contrary to what you may think, what you don’t know can hurt you. Before you start your worker co-op, you should make sure the people in your group are compatible and your idea is feasible. These two factors can mean the difference between success and failure.

The People

The foundation of any worker coop is the solidarity of the members to one another and their commitment to the enterprise. Thus the first step in building your co-op is to develop and clarify the vision for the co-op’s future and how it relates to the needs and goals of the members.

The solidarity between the members must be reinforced by the organization and operations of the enterprise. This must be achieved by first recognizing the members’ common interests and then by addressing the special interest of any particular member in a way the still supports those common interests. For example some members may need flexible work hours to meet schooling or family obligations. While providing this to the member, the co-op must still ensure that the staffing requirements needed to succeed and provide excellent service to its customers are met.

A key element in ensuring members’ long-term commitment is to ensure their personal goals and the goals of the co-op are compatible. For example members may have substantially different long-term goals for the level of income they require. Because all worker co-ops must survive in the marketplace within the financial norms of the industry in which they operate, the co-op will have some built in limitations as to the level of incomes that it can generate for its members. If the members cannot accept this level of income, their commitment to the co-op will deteriorate and they will quit. Another area of differing goals that may undercut member solidarity and commitment is the future scope of the enterprise (how large it should grow) and the level of financial risk with which the different members are comfortable.

Although the examples above are far from comprehensive, they indicate that conflict can easily arise without everyone’s understanding and commitment to the co-op’s short and long term goals, as well as to the hard work and co-operation required to achieve them.

Since a worker co-op is run by its members, they must all be familiar with many aspects of the business in order to make informed decisions for the co-op to succeed. This means that the members must understand what the key success factors are for making the co-op’s democracy work (decision making) and for making the enterprise prosper financially. This requires an ongoing process of education and training in many areas, such as running effective meetings, making effective decisions, understanding the financial information of the business, etc. This type of training should not be seen as a discretionary expense but rather as a key investment in the most important factor in the co-op’s success, its members.

The Idea

Although people are the foundation of the co-op’s success, you want to try to make sure that their efforts will be in service of a viable enterprise. Developing you co-op will require a huge level of commitment and resources from the members, you must make sure it will be worth the effort. This requires completing a feasibility study to determine whether you should proceed with your business in the first place. Completing the feasibility study is the best way for the members to learn about all aspects of the business and industry in which they are going to operate. This process will enhance their commitment to the business or make them realize that it will not meet their needs and expectation and that they need to either modify the business idea or develop a new one altogether.

The following questions cover the most important elements of a feasibility study. Think about them carefully.

Co-op/business concept: What product or service do you want to market?

Market: Who, why, where and how many people are going to buy your product or service? How will you promote it? How will products be delivered to market? Who is your competition?

Price: What does it cost you to provide your service or product? What is the market willing to pay?

Production strategy: How are you going to produce your product? How long will it take? What equipment or facilities are needed? How will work be organized?

Financing: How much will it cost to get into business? How much money will be required to keep the business running? Where will the money come from – banks, credit unions, members, government assistance? How much will the co-op earn and how soon?

Abilities and experience: Assess the combined business and technical skills, knowledge, training and experience of your members? Do they need to be developed further?

To start or not to start…? Now look at the whole picture – risks, benefits, strengths and weaknesses. Are you excited? If you are, you’re ready to develop you business plan.