PART TWO: FORMING A CO-OPERATIVE
The first steps
Once you decide that the co-operative model is right for your business or purpose, there are a number of important steps to get it off the ground. These will take a lot of your time, many meetings and no financial return while the co-operative is being established.
Your first task will be to find the right people to work with you; they will need to have similar ideas and interests, a mutual need, and the same commitment to the success of the co-operative as you have. The more people supportive of the co-operative the better.
It is crucial to ensure that the people who are considering forming a co-operative have a strong understanding of what a co-operative is, how it is governed, and are committed to actively contributing to it.
Starting any business or organisation, and especially a co-operative, can be challenging, but can also give you a great sense of achievement. Working with others of like mind will give you support and successfully getting through the start-up phase together will bode well for the cooperative’s future. You will share breakthroughs and frustrations together, and the reward of accomplishing something good for you and your community.
Always keep in mind that a co-operative is an organisation of people, and will need strong foundations for it to be successful. While hundreds of thousands of co-operatives have been successfully launched and go on to thrive, many do not survive the first five years, often due to insufficient planning, resources, co-operation and knowledge.
A co-operative that is well-organised from the start will operate more efficiently and encourage member participation and support. You will need to conduct a feasibility study to determine whether a co-operative business can work successfully. You will need to develop rules for governance, get the co-operative registered, be able to raise sufficient capital to get it started and running, and also develop a strong business plan.
It is important to get the co-operative registered for a number of reasons: the co-operative, not the individual members, will be liable for debts; the co-operative will have legal recognition; it will be able to continue regardless of changes in membership (subject to the minimum member requirement); it will be able to enter into loans and contracts; it will be able to sell and purchase property; and it may do by law all acts and things that an individual can do.
There are obligations attached to registering a co-operative. Directors have similar responsibilities (and face similar penalties) to company directors. The co-operative must keep proper financial records, membership records and registers. It can sue or be sued in its corporate name, and decisions must be approved by members if they have a significant impact on the co-operative.
A co-operative that is well-organised from the start will operate more efficiently and encourage member participation and support.There are plenty of resources available for people to learn about co-operatives and enterprise development. A good starting point is this manual, and the resources listed in Appendix A. It is also highly recommended that you talk to co-operative peak bodies as they are likely to know of resources, people and other co-operatives and associations in your community who may help you.
Talk to members of other co-operatives, as they have already been through the process. The 6th principle of co-operatives is “co-operation among co-operatives”, and you will find that members of other co-operatives will be willing to help you, as they have a strong commitment to the co-operative movement and desire to see it grow. Most local councils have an economic development unit which can be a great source of local information and contacts.