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Although no business start-up is completely linear, the following steps are generally involved in developing a co-operative

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Develop the Co-operative Business Idea

Step 1

  • co-op roadAssemble a group of interested people
  • Identify the needs to be met:
    • job creation
    • meeting a need in the marketplace
    • meeting a need in the community
  • Identify professional assistance needed to launch the business:
    • co-op developer (call CECNB for help)
    • feasibility study, business plan and financial consultant
    • accounting or legal consultant
    • others

Step 2

  • Conduct a pre-feasibility study
  • Identify available technical and financial assistance
  • Identify the best legal framework to use, i.e. non profit, for-profit
  • Define the intended benefits members, (eg. quality, price) and characteristics, i.e.:
    • products and services offered (consumers’ co-op)
    • or products and services marketed (producers’ co-op)
    • or salaries and working conditions (workers’ co-op)
  • Evaluate the project’s potential to attract the minimum number of members required.

If this study is not conclusive, the group should re-evaluate its business idea. If this study shows that the planned co-operative is feasible, the group can proceed to the second phase.

Co-ordinate the Pre Co-operative’s Activities

Step 3

  • Hold an organizing meeting
  • Choose the corporate name of the co-operative and the location of its head office
  • Define the co-operative’s mission (objectives, purpose)
  • Elect a temporary board of directors and secretary to the board
  • Officially submit an application for incorporation as a co-operative from the NB Financial and Consumer Services Commission (or Industry Canada, if you are incorporating federally)

Step 4

  • Conduct a viability study
  • Obtain financing for the viability study from such sources as internal financing from members, grant, technical assistance or business start-up loan
  • Define the strategic objectives
  • Evaluate the costs of start-up and operations
  • Evaluate various start-up financing options
  • Do a preliminary projection of budget and cash flow (revenue and expenditures, investments by members, loans, grants, etc)

If this study concludes that, although the planned co-operative looks feasible it would not be financially viable, the group should consider terminating the project. If the study shows that the new co-operative will be financially viable, the group can proceed to the third phase.

Organize and Start Up the Co-operative

Set up ad hoc committees to distribute the workload among the members of the temporary board of directors. For example:

  • planning committee
  • training committee
  • committee to draft by-laws

Step 5

  • Decide on the association’s structure and define the various categories of members, if necessary (consumers, suppliers, workers)
  • Determine the roles and responsibilities of the various democratic bodies (general meeting, board of directors, committees)
  • Establish the articles and by-laws
  • Recruit members
  • Organize and offer a program to train members in the administration and management of a co-operative, the chairing and running of annual meetings (eg. “parliamentary procedure”), the operation of a committee or board.

Step 6

           a. Plan the operation of the enterprise
  • Draw up an organization chart
  • Develop an operational workplan for the first year of activities
  • Make arrangements with suppliers as required
  • Devise and implement an accounting system
  • Define the duties and responsibilities of each position
  • Develop a salary policy
           b. Plan and organize the enterprise’s start-up financing
  • Determine the value of the membership share to become a member
  • Determine the value of the share capital on start-up and during the first three years of operation
  • Prepare the preferred share by-laws (if applicable)
  • Prepare the loan by-laws (if applicable)
  • Draw up the overall financing plan for the first three years of operation
  • Draw up the business plan
  • Negotiate the capital contribution of external financial partners (if necessary)
  • Apply for a government start-up grant (if they are available and if required)
  • Negotiate medium term credit union or bank loans and a line of credit
           c. Recruit and train the enterprise’s staff
  • Select and recruit CEO/General Manager  (other employees are the responsibility of chief executive officer, except in the case of a worker co-operative where recruitment decisions are usually made collectively)
  • Organize and offer a staff training program that includes information about being a co-op
           d. Ensure the legality of the enterprise’s operations
  • Take care of the legal formalities and obtain the legal authorization necessary to start up the enterprise’s activities, i.e. HST, Canada Revenue Agency, business number, worker compensation, etc

Step 7

  • Hold the initial general meeting
  • Adopt the by-laws
  • Appoint an external auditor
  • Elect the members of the board of directors, and of any other committees (if the general meeting has the power to do this)

 

To print the 7 steps please click here.

For more information on building and maintaining a co-op, please visit our Resources page.