With over 1 billion co-operative members world-wide, we know that the co-op model works and co-operatives are used to meet a diversity of community needs.
Starting a co-operative is a big job: from developing a business plan, finding start-up capital and members, to developing bylaws, policies and systems, there is a lot to plan before the doors even open for business. There are also big benefits to starting a co-op, whether it is providing a good or service for members, having a positive impact on your community, or people working collaboratively to achieve the co-op's goals.
Wherever you are at in the co-operative development process, there are many resources and tools available to understand where your group is at, identify next steps, and ensure that all essential planning is complete.
In addition to the Co-op Development Steps listed below, you may find our Self-Assessment Tool helpful. Our webinars also provide valuable information about developing and incorporating co-operatives.
Co-operative Development Process
Although every co-op will approach development in its own way, there are six key steps that successful co-operatives follow to get started.
Below is a summary of the process that many developing co-ops use. Some of the work will be done by a steering committee or the board, some may be done by members or volunteers - and some of the work may be done by a co-operative developer or other consultant. (printable PDF version)
Step I: Pre-Development
Pre-Development is the time to find other people in your community that are prepared to build the co-op with you. To start a co-operative you need at least five members (three, if it is a worker co-operative).
During Pre-Development, the group will need to:
- Identify what the need or opportunity is that the co-op can address:
- A need: Often communities lack certain services or products. A co-op can be formed to provide the needed service or product
- An opportunity: Sometimes changes in the community or workplace create new possibilities for services or products. Co-ops can be formed to use these opportunities
- Conduct a pre-feasibility assessment, to determine that there is a potential market and business rationale for your co-op idea – will you be able to attract enough members?
- Identify what resources are available in the community to help you and what professional assistance is needed to develop and launch the business
Step II: Building the Group and Establishing the Form
Now it’s time to decide:
- Is the co-op model the right model for the business?
- What services will the co-op provide to members?
- Who the members will be? What will be their obligations as members?
- Who will be members of the steering committee and the first members of the co-op?
- Whether non-members can be involved in the co-op, and if so, how?
Step III: Governance, Structure and Incorporation
This phase will help you decide on how the board and members will work together, what the roles are and how decision making will happen. This information will be gathered together in your bylaws.
This is the time to decide:
- The size, composition and authority of the board
- How the membership will be involved
- How members can join the co-op and how members can be removed
- How capital for start up will be raised
Step 3 is also when the co-op will be incorporated.
Step IV: Business planning and Financing
Now it is time to determine your co-op's:
- Financial plan
- Business plan
- Marketing plan
- Feasibility and sustainability
- How much financing will the co-op need for start up? Where will the capital come from? How will members invest?
Step V: Open for business!
Step 5 is about launching the business and there are many activities for this phase, including:
- Developing a 'critical path' of activities and timelines
- Hiring staff
- Purchasing equipment
- Putting financial systems in place
- Negotiating leases and other legal agreements
- Ensuring other legal requirements are in place, such as taxes, insurance, WCB, etc.
- Electing and training the board of directors
The group needs to be certain it is prepared for this step: have the necessary skills and technical help ready.
Step VI: Sustainability, Follow-Up and Mentoring
You’ve launched the business, but there is still more to do to solidify the development of the co-op:
- Recruiting new members
- Keeping existing members involved and informed
- Ensuring the business is running well – policies, contracts, and business performance are all functioning well
- The board and management are trained and working well together