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  Keystone Development Center

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Steps to Starting A Cooperative - Webinar

1/26/2016

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Please enjoy this webinar hosted by Margaret M. Bau - a Cooperative Development Specialist 

Below, find an outline of Margaret's steps to start a member initiated cooperative business
 

How To Start A Member Initated Co-op

A Member Initiated Cooperative is dreamed up and explored by future members
  1. Idea - Could a group effort address the issue?
  2. Explore the idea - What is the business concept? Is a co-op structure the best way to meet the need?
  3. Gather Information
  4. Learn About Co-op Structure
  5. Discuss Mission and Values
  6. Identify Resources
  7. Define Business Concept
  8. Ask Key Questions​
    1. Is this a sound business idea?​
    2. Is the co-op model the best structure?
    3. Is the idea worth the time, resources and energy?
  9. Hold an Exploratory Meeting
    1. Present the Concept
    2. If there is interest, form a Steering Committee of individuals with valuable community skills
    3. Ask for earnest money to cover organizing expenses – this is a good indicator of commitment

  10. Decision Point: If proposal is realistic, the co-op is a possible solution, and people have shown interest, proceed to feasibility study. If not – STOP!

  11. Conduct a Feasibility Study – Is the concept viable?
    1. Industry analysis
    2. Market potential
    3. Technical Aspects
    4. Capital Requirements
    5. Financial Projects
    6. Scenarios
    7. This should be an independent analysis, conducted by a third party

  12. Decision Point # 2: If concept seems viable and after thorough review the steering committee wishes to pursue the business, then proceed to conducting a business plan. If not, STOP!

  13. Conduct a Business Plan Details of your venture, conducted internally using information from feasibility study
    1. Description of product
    2. Marketing Plan
    3. Marketing Plan
    4. Operations
    5. Management and organization
    6. Financial Plan
    7. Equity and Capitalization

  14. Decision Point # 3 If market potential is sufficient, member participation is sufficient, and capitalization chances seem reasonable, then proceed to incorporation. If not, STOP!
    ​

  15. Legal and Policy Documents
    1. Draft bylaws and articles of incorporation and review by a co-op attorney
    2. Select incorporators – usually from within the steering committee to serve as interim board
    3. Incorporate with a state
    4. Develop policies and controls​
      1. Accounting checks and balances
      2. Personnel policy handbook
      3. Membership agreements
      4. Board policies
  1. Organizational Meetings
    1. Present findings of feasibility study and business plan
    2. Adopt bylaws
    3. Elect Board of Directors
    4. Collect Member Equity
  2. Funding Your Co-op
    1. Membership Equity – initial and/or annual
    2. Transaction Fees – per unit retains (surcharge on units sold) or hourly withholding (worker co-ops)
    3. Equity Drive ​
      1. Assign common stock to members
      2. Assign preferred stock to member and community investors
    4. Subsidized Loans, Grants
    5. Market Rate Loan
  3. Business Start-Up
    1. Receive Tax ID number
    2. Board and business insurance
    3. Any required Licenses
    4. Workers compensation
    5. Hire a manager, who will hire other employees
    6. Acquire facilities and equipment
  4. Begin Operations!
  5. Ongoing Considerations
    1. Board training – foster long term thinking​
      1. Model good board behavior and policies
      2. Strategic plan
      3. Annual manager review
      4. Board self-evaluation​
    2. Member Education and Involvement
    3. Annual Membership Meeting
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  • Home
  • About
    • Our Team
    • Board of Directors
    • Partners
    • Annual Reports
  • Services
    • Education & Training
    • Intensive Technical Assistance
    • Funding Your Project
    • IT Support
  • Our Clients
    • Client List
    • Client Highlights
    • Client Biographies
    • Map of Cooperatives
  • News & Events
    • Calendar
    • Join Our Newsletter!
  • Resource Center
    • About Co-ops
    • Frequently Asked Questions
    • KDC Sequence of Events
    • Rural & Urban Food Systems
  • Contact
    • Request Assistance
    • Join Our Team!