S U P P O RT I N G N E W F O O D C O - O P S

CORNERSTONES

ACCOMPLISHMENTS & PROGRESS SINCE 2005

C H A L L E N G E S & B A R R I E R S L E S S O N S L E A R N E D

WHAT HAVE WE ACCOMPLISHED?

• 64 new retail food co-ops since 2004• Hundreds of inquiries• Over 50 Seed Grants and Sprout Loans• 100 Active and engaged startup efforts

BUILDING THE SYSTEMS

• Documentation & Data• Resources• Training• Networks

• Experience and Feedback

P6: COOPERATION AMONG COOPERATIVES

• NCGA and the Development Co-op

• Regional Associations

• Commitment from co-op boards and managers

• Co-op loan funds

• Cooperative Development Centers

COMMUNITY SUPPORT RISES

• 500 - 1,000 – 2,000 founding members

• Million dollar loan and share campaigns

• USDA support through development centers & other programs

• Community economic development grants & loans

WHAT WORKS

• Co-ops larger than 3,000 sq. ft. retail

• Co-ops with natural food/local food emphasis

• Co-ops that organize their community and do excellent business plans

• Professional support

CHALLENGES

• The Natural Foods industry matures

• Outliers

• Intriguing Ideas

• Conflicting advice

• Changing legal and financial regulation

DO YOU MISS THE 80’s?

• Competition• New regulations/increased enforcement• Expectations• Sophistication• Product differentiation• Food Co-op perceptions and recognition

STILL WORKING ON…

• How to serve low-income communities?

• How to organize where co-ops are not

understood?

• When is “volunteer” member labor acceptable?• Can/should we invest limited resources in risky

and unproven efforts?

• How do we define “retail food co-op?”

D E T E R M I N I N G S A L E S P O T E N T I A L

MARKET STUDIES

AN ESSENTIAL PLANNING TOOL

• Analyze local market• Demand• Competition• Geography

• Analyze (or help identify) potential sites• Desirable characteristics• Location• Potential weaknesses

• Project sales volume• At opening• Through maturity

PROVIDES

• Assurance to owners & lenders• Realistic baseline for financial projections• Guidance for planning location and size• Overview of competition• Recommendations for products and services

HOW TO GET A GOOD MARKET STUDY

• Not a do-it-yourself project• Use a professional who understands co-ops• Provide clear assumptions• Follow through with your plans

FOLLOW UP

• Ask questions!• Update study when:• Major competitive changes occur• Site options change• Business plan changes• After 2-3 years

W H AT T O LO O K F O R ( A N D W H E N )

SITE SELECTION

WHY GOOD MAY NOT BE GOOD ENOUGH

• The right location• Access• Cars• Mass transit• Pedestrian

• Parking• Visibility• Appropriate neighbors• Size and flexibility• The building itself

S T E P S , T I M E L I N E , T O O L S & B E N C H M A R K S

STAGE 3 IMPLEMENTATION

OVERVIEW OF STAGE 3

• Stage 3A - Preconstruction can last 3-6 months or longer, and require a budget of $80,000 - $100,000.

• Stage 3A ends when the contingencies of the lease (or purchase) are removed, the sources & uses budget is fully financed, and the final decision point is reached and crossed over (no turning back).

OVERVIEW OF STAGE 3

• Stage 3B is the construction stage and typically lasts as long as the preconstruction stage (3-6 months).

• The budget for Stage 3B represents ½ to 2/3 of the total Sources & Uses budget.

• Stage 3C (one month) is Preparing for Opening and Stage 3D (forever) is Sustaining.

The budget for these stages includes the remaining funds in the Sources & Uses budget.

TOOLS & RESOURCES

• Sources & Uses Budget• Professional Support• Attorney for capital instruments• Architect• Store planner• Inspectors• Consultants for GM hiring, board training, operations

• Distributors, Brokers and Suppliers• Co-op Community

SAND TRAPS

• Is the board ready to manage a GM?• Have you promoted the co-op store to the

market?• Do you have your working capital?

W H AT T O E X P E C T & H O W T O B E R E A DY

OPENING & BEYOND

TRANSITIONS

• The board delegates operations to the manager.• Celebrate and keep the momentum!• Monitor vigilantly• Expect setbacks, staff turnover, equipment

breakdowns …• What will you do if the cash runs out?• Be prepared, and willing, to get help• Invest in your future- capital, education, community