co-op training module iii co-op training module iii developing a co-operative in newfoundland &...

Co-op Training Module III

Co-op Training Module IIIDeveloping a Co-operative In

Newfoundland & Labrador

Training Modules Overview

Module #1: • Introductory module covering the basics of the co-operative

business model: the co-operative business structure; an introduction to co-operative development; an overview of co-op legislation and regulations; etc.

• Target Audiences:• Community groups, individuals, government agencies

with no, or limited, knowledge of co-operative enterprise.


Module #2:• Deals with the role of co-ops in the CED process; how co-

ops are developed and financed; role of the Regional Co-op Developer’s Network; how co-op development can be included in regional planning processes.

• Target Audiences:• Zone boards, community business development centres,

municipal organizations and board & staff of other CED agencies.


Module #3:• Is a “hands on” participatory activity where participants

learn how to identify co-operative opportunities; the stages in the co-operative development process; and the process of taking potential co-operative from “idea to operation”.

• Target Audiences:• Existing and newly developing co-operatives

and/or groups considering opportunities that may result in the establishment of new co-operative enterprises

,

Review of Co-op Basics

What is a Co-operative?A legally incorporated business, owned by its members who

use its services. Like other businesses a co-op:– Requires start up capital/equity – Generates revenue to cover its costs– Must provide quality services– Can distribute profits back to its owners– Can retain profits for future needs– Goal is financial self sufficiency– Provides limited liability for member owners– Can borrow money/sign contracts– Pays business taxes


Who are Co-op Members?• They are:

– Individuals who access retail, financial, housing & health care services

– Business operators who benefit from bulk purchasing, sharing facilities & joint marketing activities

– CED and other nonprofit groups that share equipment, office space, etc. to reduce operating costs


• Member Benefits & Obligations• Benefits• Access to quality services at reasonable cost • Control of a business that places priority on their needs• Sharing of surplus profits that remain in the community• Stable service delivery & and longer business life• Priority on local employment• Obligations• Use their co-op’s services• Buy shares & maintain their equity investment• Attend AGMs and other membership meetings• Be informed and engage in the decision making

process


• Co-operative Principles & Values• Voluntary and open membership• Democratic member control• Member economic participation• Autonomy and independence• Education, training, and information• Co-operation among co-operatives• Concern for community


• Opportunity Identification: Key Questions• Would the recipients of the services (potential co-op

members) be better served by owning and having direct control of the enterprise?

• Will the services provided by the co-op enterprise provide a clear and direct benefit for the member–owners that would justify their investment in the enterprise?

• Are there available sources of technical, advisory and financial support to help with the co-op enterprise development process?

Co-op Development: A Unique Process

• A Legislated Operational Framework• Co-ops are legal corporate entities under provincial &

federal legislation• The “Co-operatives Act” protects the unique aspects of the

co-op business structure and operations & the rights of member/owners

• Co-op legislation provides more safeguards to protect the interests of members and those who conduct business with a co-op than private sector legislation


Co-ops are Different From Private Enterprise• Owners benefit from use of the co-op’s services

– Not seeking a financial return on their investment• Decision making is democratic – one member/vote

– Not based on number of shares held• Profits are allocated based use of the co-op’s services

– Not based on number of shares held• A co-op’s business assets are owned collectively by local

members– Cannot be used for private gain

• Co-ops have stated social as well as economic goals– Profit is not the only concern


Different Purpose• Private Sector: seeks to maximize profitability for investors• Co-operatives: seeks to provide members with needed

services at the lowest possible cost

Different Control Structure• Private Sector: amount of invested capital dictates the level

of voting control

• Co-operatives: each member has one vote, irrespective of amount of capital invested


Allocation of Profits• Private Sector: profits distributed as dividends on invested

capital, regardless of use of products or services• Co-operatives: profits allocated to members as rebates on

proportional use of products and services, not on the amount of capital invested


Essential Conditions for Success• A co-op must:

– Meet the needs of its members– Be economically viable with secure financing – Have strong member patronage & participation– Deliver top quality services at reasonable cost– Make board/staff/member education a priority – Hire competent & committed management/staff– Have strong leadership and a succession plan.– Have a positive relationship with the community– Buy & hire local as much as possible– Be adaptable to changing business environments


• Co-ops Generate Profits for the Community• Co-ops distribute profits based on the members use of

services, not on the amount of capital invested• Co-ops often use part of their profits to support other

community development projects• Historically, profits generate by large private sector

operations (i.e. fisheries, retail, etc) are not retained in the local economy/province

• Co-operative maximize retention of profits to the benefit of its members and the local economy

• Some co-ops (i.e. Fogo Co-op) direct funds from profitable activities to less profitable ones to maximize community employment opportunities

Co-op Development Process

• Initiating the Developing Process• Initial meetings of co-op proponents• Formation of a Steering Committee• Proposed business services /products are identified• Development of a co-op concept paper and initial business

viability assessment• Enlist the support and participation of the NLFC & other key

development stakeholders

The Co-op Development Process

• Building the Co-op’s Structure• Steering Committee (& RDN Member):

– Identify/recruit potential members– Identify potential funding sources– Develop the co-op’s By-Laws– Draft operational Policy & Procedures Manual – Initiate the development of a Business Plan


• Developing the Business Plan• Steering Committee must be actively engaged in the

process• Seek advice on selecting the appropriate consultant• Set clear targets for equity investments by members• Consult with potential funding partners on their information

needs• Make sure plan is realistic and demonstrates that the

enterprise can be self-sustaining


• Incorporating & Launching the Co-operative• Early engagement & consultation with the Registrar of Co-

operatives• Advice & guidance of NLFC and RDN member will help

ensure approval of incorporation• Once incorporated, steering committee evolves into the co-

ops Provisional Board • Board ensure “doors” are ready to be opened (re:

operations, administration, physical plant and equipment , etc)

• Board organizes the Co-op’s first annual meeting during the

first year of operations


• Ongoing Operations• “New” Board is elected & meets regularly to address

ongoing operational & administrative requirements• Training needs of Board, Management & Staff are identified

and addressed• Board establishes committees to share workload (i.e.

Executive, Finance, Member Relations, etc)• Communications with members, partners and the local

community becomes a priority• Operational/Financial success requires full member

participation and support

7 Phases of the Co-op Development Process

• Phase 1: Opportunity Identification– Marketing & Promotion of the Co-op Model– Informed Response to Public Inquiries– Introductory Presentations/Workshops

• Phase 2: Development of the Business Idea– Initial Concept & Market Assessment – Initial Agreement re Co-op Model & Objectives– Development of Concept Paper– Initial Assessment - Project Financing and Feasibility– Development of Initial Budget Estimates


• Phase 3: Building the Co-op Group– Confirmation of Co-op Structure & Membership– Establishment of Steering Committee– Agreement on Tasks & Time Lines

• Phase 4: Confirming Business Feasibility– Group Consensus - Potential Feasibility – Development of Business Plan*– Recruitment of Members Initiated– Agreement on Member Equity Contributions– Potential Financing Sources Confirm


• Phase 5: Co-op Incorporation – Draft By-laws and Business Plan Completed– Provisional Board of Directors Confirmed– Articles of Incorporation Completed– Documents and Fee Submitted – Registrar Confirms Incorporation

• Phase 6: Business Start Up– Banking/Accounting Procedures in Place– Member Equity and Business Financing in Place– Staff Hired (if required)– Operational Policies/Procedures Developed– Opening Ceremonies - First AGM Held


• Phase 7: Ongoing Co-op Operations– Policies and Procedures Manual– Monitoring of Operations– Regular Board Meetings– Ongoing Policy Development– Development of Business/Community Networks– Membership in Provincial/Regional Centrals

Forming the Steering Committee

• Steering Committee Functions• Oversees the research and other activities required to

assess the merits of establishing the co-operative• Establishes Sub-Committees, assigns specific tasks &

activities, sets deadlines and monitors committee progress• Decide strategies and develops recommendations related

to the proposed Co-op• Ensures effective coordination and communication among

the community stakeholders and partners• Supervises the implementation of strategies and actions

required to ensure the successful incorporation and start-up

of the co-operative


• Name of Sponsoring Agency• Place of Meeting• Date & Time of Meeting• AGENDA• Welcome and introductions• Opening remarks and overview of issues to be addressed• Presentation on results of initial research and

recommendations• Presentation by NLFC on the “Co-operative Option”• General discussion on merits of the proposal• Establish a Steering Committee and setting the Terms of

Reference• Other Business• Next meeting


• Notice of Public Meeting

• Monday, January 31, 2011 • At 7:00 P.M. at the Community Centre• Public Discussion: Formation of a Community-Based Co-

operative Enterprise

First Steering Committee Meeting

• Steering Committee Functions• Oversees the research and other activities required to

assess the merits of establishing the co-operative• Establishes Sub-Committees, assigns specific tasks &

activities, sets deadlines and monitors committee progress• Decide strategies and develops recommendations related

to the proposed Co-op• Ensures effective coordination and communication among

the community stakeholders and partners• Supervises the implementation of strategies and actions

required to ensure the successful incorporation and start-up of the co-operative

Concept Paper Outline

• Introduction• Describe the Industry circumstances and rationale as to

why it makes sense to move forward with the formation of this co-operative at this time.

• Co-operative Services• What direct services will the co-operative provide for

potential members from a short term and long term perspective?

• Co-operative Benefits• What will economic or social benefits will be provided for

co-operative members, the industry sector and/or the community?


• Co-operative Members• Who are the individuals, enterprises or other agencies that

are proposing the formation of the new co-operatives? Who else is being encouraged to consider joining and benefiting from the services to be provided?

• Operational Structure• What is the proposed organizational and operational structure

for the co-op in the early start-up phase and what would be the long term objectives in this regard.

• Co-op Compared to Other Business Structures • What makes this co-operative different from industry

associations and/or non-profit agencies that may be operating in the business or social sector in which the co-op will be operating?


Existing and Potential Development Partners • What agencies have assisted with the early stages of the

development of the co-operative up to now and what other agencies may be approached to potentially assist with future development activities.

Facilities and Location• What facilities (buildings, processing equipment etc.) will the

co-operative require for business start-up in the short term and what will be the longer term requirements? Where will the facilities be located?

Operational Costs• What is the general estimate of short term costs relating to

business startup and what are the projections for the longer term


Member Shares and Financing• What will be the value of member shares and how many

are required to be purchased to address the co-ops initial financial requirements? How much additional business financing will be required and what potential sources for this financing are being considered?

Timelines• What are the projected time lines for incorporation of the

co-operative and start-up of business operations? Key Issues to be Resolved• Are there key membership and/or industry issues that need

to be resolved prior to proceeding with incorporation of the co-op or subsequent to business start-up? Is there a plan to have these issues addressed?

Sub-Committee Functions/Activities

• Primary Committees• Member Recruitment• Marketing & Promotion• Incorporation & Other Legal Require• Business Plan/Feasibility Assessment


Member Recruitment• Identify potential members in the community/region who

share common goals, needs and challenges• Develop an information paper (concept) identifying and

clarifying all the issues and concerns that potential members may have

• Contact various support agencies who may be able to assist with reaching out to potential members (i.e. NLFC; Regional Developers Network; local REDBs; community groups, etc)

• Develop a communications outreach strategy (i.e. media contacts; community/public meetings);

• Contact local service groups (i.e. fishermen’s’ committees; agricultural associations, etc) who may be willing to partner with you to develop your ideas


Marketing & Promotion• Identify the market area in which the co-op intends to

produce, sell, and market its goods, services and products• Identify potential partners ( Co-op Atlantic; local co-

operatives, etc) who may assist the co-op in the distribution and retailing of your services and products

• Identify funding agency support (i.e. ACOA, INTRD, etc) to hire business consultants to develop a marketing & promotional plan

• Liaise with the NLFC and Regional Developers Network to identify best practices in develop a marketing and promotional strategy


Incorporation & Other Legal Requirements• Request the assistance of the NLFC and the Regional

Developers Network to help develop appropriate Co-operative By-Laws and in completing the Incorporating documents and other Co-operative Legislative requirements

• Liaise with the Registrar of Co-operatives at various stages of developing the Co-op By-Laws

• Research (internet, etc) other similar co-ops in the province and other jurisdictions on various approaches to developing By-Laws

• Liaise with federal and provincial regulatory agencies on the various licences and permits required for the co-op facilities and other operational activities


Business Plan/Feasibility Assessment• Develop a preliminary outline/plan of the co-operative’s short,

medium and long term needs, activities and requirements• Prepare rough estimates of this outline• Contact relevant support agencies (NLFC, RDN, IBRD, etc) to

review your plan and provide advice on whether it is realistic, achievable, and feasible.

• Identify funding agency support to hire business consultants to develop a formal business plan

• Ensure that you are fully engaged with the consultants on the development of the business plan through its various phases and that you have a thorough understanding of the final report and that it address your needs

Co-op Business Plan Template

Elements• THE CONCEPT: VISION, MISSION, PURPOSE AND VALUES• MEASURABLE OBJECTIVES• SITUATIONAL ANALYSIS• MARKETING PLAN• PRODUCTION• ORGANIZATION AND PEOPLE• FINANCES• OWNERSHIP

Second Public Meeting

Public Meeting to Review the Reports Of the XYZ Co-operative Steering Committee

• Community Centre• August 10, 2011• AGENDA• Welcome and introduction of special guests• Review and discussion of the minutes of the 1st Public Meeting• Steering Committee Reports • General Discussion on report findings and merits of the Co-op

Option• Comments from key stakeholders (NLFC, REDB, Municipality,

etc.• Conclusions and Recommendations• “Where to from here” – Next Steps• Next meeting

Second Public Meeting

Notice of 2nd Public Meeting

Monday, January 31, 2012At 7:00 P.M. at the Community CentrePublic Discussion: Report on the Merits of

Establishing a Community-Based Development Co-operative

Co-op Launch & Start-Up

• Phase 5: Co-op Incorporation – Draft By-laws and Business Plan Completed– Provisional Board of Directors Confirmed– Articles of Incorporation Completed– Documents and Fee Submitted – Registrar Confirms Incorporation

• Phase 6: Business Start Up– Banking/Accounting Procedures in Place– Member Equity and Business Financing in Place– Staff Hired (if required)– Operational Policies/Procedures Developed– Opening Ceremonies - First AGM Held


• Phase 7: Ongoing Co-op Operations– Policies and Procedures Manual– Monitoring of Operations– Regular Board Meetings– Ongoing Policy Development– Development of Business/Community Networks– Membership in Provincial/Regional Centrals


• Developing the Business Plan• Steering Committee must be actively engaged in the

process• Seek advice on selecting the appropriate consultant• Set clear targets for equity investments by members• Consult with potential funding partners on their information

needs• Make sure plan is realistic and demonstrates that the

enterprise can be self-sustaining


• Incorporating & Launching the Co-operative• Early engagement & consultation with the Registrar of Co-

operatives• Advice & guidance of NLFC and RDN member will help

ensure approval of incorporation• Once incorporated, steering committee evolves into the co-

ops Provisional Board • Board ensure “doors” are ready to be opened (re:

operations, administration, physical plant and equipment , etc)

• Board organizes the Co-op’s first annual meeting during the

first year of operations


• Ongoing Operations• “New” Board is elected & meets regularly to address

ongoing operational & administrative requirements• Training needs of Board, Management & Staff are identified

and addressed• Board establishes committees to share workload (i.e.

Executive, Finance, Member Relations, etc)• Communications with members, partners and the local

community becomes a priority• Operational/Financial success requires full member

participation and support

Workshop Evaluation & Feedback

• Comments, suggestions, feedback?• Ideas on how to improve the workshop?• Were your expectations met?• Where to from here?

co-op training module iii co-op training module iii developing a co-operative in newfoundland &...

Documents

coop development

coop training module

coop enterprise

community slide

process slide

cooperative business

overview of coop legislation

business taxes slide