The Keystone Development Center has a check list that we follow when working with groups forming cooperatives. It is loosely based on a checklist developed many years ago by Jerry Ely, who at the time was a cooperative developer employed by USDA. Any errors are not Jerry’s but are the responsibility of KDC. It is presented in the form of questions we ask ourselves. If the answer to the question is no, the recommended action is included. If the answer to the question is yes, we go to the next step.
Each cooperative has a different development process – it is inherently organic in nature. Sometimes these steps happen concurrently or in slightly different order. The basic steps, however, do not change. This checklist is used only as a guideline for KDC’s involvement.
The steps are categorized according to three stages of cooperative development: Organizing, Feasibility/Planning, and Implementation
Cooperative Development Checklist
Step 1 – Has the project idea attracted a committed group of people?
Assist the group in publicizing its efforts in order to attract additional individuals. If it appears that an adequate number of individuals do not support the project, KDC’s involvement ends.
Step 2 – Does the group work well together and are they willing to share the decision-making process?
Facilitate discussions to increase group cohesion. If it appears the group will not be able to work well together or that its leaders are not allowing democratic control, KDC’s involvement ends.
Step 3 – Does the group understand and accept cooperative business principles?
Educate the group about the cooperative business model and the rights and requirements of members. If the group is not willing to accept cooperative principles, KDC’s involvement ends.
Step 4 – Does the group understand the business development process and are they willing to take a step-by-step approach to moving forward?
Educate the group about the business development process. Suggest that members of the group obtain additional training from a small business development center (SBDC), Extension, or another source. If the group is not willing to take the time to learn about the business development process or not willing to accept the step-by-step approach, KDC’s involvement ends.
Step 5 – Has the group clearly identified the economic need to be addressed?
Assist the group to identify and define the economic need. If no economic need can be clearly defined, KDC’s involvement ends.
Step 6 – Has the group agreed on a mission statement that unambiguously states their reason for being and the goal they seek to achieve?
Assist the group to develop a mission statement.
Step 7 – Has the group established a steering committee to handle the day-to-day decisions related to the project?Assist the group to develop a steering committee. If the group is not willing to delegate day-to-day decisions to a steering committee, KDC’s involvement ends.
Step 8 – Has the steering committee identified an advisory group to provide technical assistance?
Assist the steering committee to identify other service providers who can be members of their “development team.” (SBDCs, Extension, PA Dept. of Ag., local economic development organizations, etc.)
Feasibility and Planning
Step 9 – Has the steering committee done an initial evaluation of the potential market for the product/service they seek to offer?
Assist the steering committee to plan and conduct an initial evaluation.
Step 10 – Has the steering committee surveyed potential producers to determine if the capacity exists to meet the likely demand for the product/service they seek to offer?
Assist the steering committee to plan and conduct a producer survey.
Step 11 – Has the steering committee prepared a feasibility analysis?
Assist the steering committee in conducting a feasibility analysis or identify other service providers/consultants who can do the feasibility analysis. If the feasibility is negative, KDC’s involvement ends.
Step 12 – Has the steering committee developed a business plan?
If the feasibility analysis is positive, assist the steering committee in preparing a business plan or identify other service providers/consultants who can develop the business plan. If a clearly defined business plan is not developed, KDC involvement ends.
Step 13 – Has the steering committee identified accounting legal services to assist them with business start-up activities?
Assist the steering committee in identifying the appropriate professional services.
Step 14 – Has the steering committee formally incorporated the business?
Assist the steering committee to incorporate the business (or refer the steering committee to an attorney who can do this for them).
Step 15 – Have the incorporators elected a board of directors and approved bylaws?
Work with the incorporators to develop an appropriate set of bylaws for the business. Assist the incorporators in planning and conducting an initial meeting at which directors are elected and bylaws are approved. NOTE: The incorporation step is way down on the list of development activities. We are constantly advising groups against incorporating too soon. Grantors and USDA have put in place incentives that are driving groups toward incorporation way too soon in the development process.
Step 16 – Has the board of directors established its tax status with the Internal Revenue Service and the Pennsylvania Department of Revenue?
Assist the board to establish its tax status (or refer the board to an accountant who can do this for them).
Step 17 – Has the board of directors established a banking relationship, including opening a checking account?Encourage the board to establish a banking relationship and to open a checking account and other appropriate accounts.
Continuing Support? As the business becomes operational, continue to provide appropriate technical assistance and link the business to other service providers as needed.