PART ONE: UNDERSTANDING CO-OPERATIVES
Why they can fail
When co-operatives fail, it is often due to the lack of commitment and unity of members, or the economic environment in which they operate. Around half of newly formed co-operatives do not survive the first five years. Failure can be the result of:
- Inability to balance benefits to members with retaining/raising sufficient capital to invest in the business.
- Low returns, poor market, or poor product or service.
- Idealistic, impractical, poorly stated or conflicting objectives.
- Inadequate planning or research.
- Inability of members to co-operate or offer sufficient support.
- Large users who seek more control.
- Lack of communication and co-operative education.
- Failure to use and control competent consultants or management.
- Hijacking by management or some of the membership.
- Directors not comprehending the needs and motivation of members.
- Ignorance of legislation and legal obligations.