What makes your cooperative store successful

In terms of control, traditional corporations allot one vote for each share, which allows investors to purchase as many shares as they want to gain a certain number of votes. In a cooperative, each member is given only one vote, providing each member with equal voting rights. All members are expected to participate and share the responsibility of running the organization. Email Download My Ebook. One of the greatest benefits of having a cooperative model in business is the democratic style of management.

All the needs of members can be met without a single person dominating the decision-making process. This kind of structure typically makes the organization more stable. Members can come and go without having serious implications in the business. Shareholders, directors, and employees have no responsibility for the debts of the cooperative unless those debts are caused by negligence or fraudulent activities. The liability of the members is limited to the extent of their investment in the cooperative.

Generally, each type of cooperative comes with its own set of economic advantages. For consumer cooperatives , members are entitled to receive patronage dividends, which are determined by the amount the members spend on their products.

Members who work within the cooperative are also qualified to get significant merchandise discounts. Since cooperatives are member owned and controlled, they enjoy more autonomy compared to businesses controlled by investors. Plus, all members and shareholders have to be active in the organization so the load of work can be divided almost equally. Members are taxed once on their income from the cooperative itself, and not separately on an individual and corporate level.

For-profit cooperatives are generally taxed as normal companies but they can reduce tax exposure by issuing patronage dividends refunds issued to people purchasing their goods or services. The government also offers grants, loans and financial assistance to the cooperative societies.

The basic philosophy of cooperatives is mutual help. Basically, cooperatives help instill moral values among members for a better living. It promotes the spirit of tolerance, cooperation, and self-help. Cooperative business is well established in the United States. It has had its greatest growth in helping farmers with their marketing and purchasing problems, and in rendering special services. Cooperatives have been less successful in large cities, where modern large-scale stores were already selling goods at low prices, and where there is less neighborly feeling and fewer common interests.

Wherever people are being well served by regular business, cooperatives grow slowly or not at all. If, after the present war, business is forced into keen competition, resulting in small profits and good service to consumers, the development of cooperation will be discouraged.

On the other hand, widening of profit margins through price fixing or other causes will probably encourage the expansion of cooperative business. Whether cooperatives expand in the future will greatly depend upon how efficient they are. Few people will be likely to join unless co-ops offer something competitors cannot: better products, lower costs, and facilities and services at least as satisfactory as those of other businesses. Much will depend upon whether cooperatives can get first-class managers.

Important also is whether large numbers of people are familiar with and sympathetic toward the cooperative way. Probably cooperatives will grow most rapidly in farming communities, where people are already used to the idea, where cooperatives have existed for a long time and have given efficient service. In cities, too, the likeliest fields will be among those people who are already being served efficiently by cooperatives. These businesses are different from other types of companies, because they are formed and operate for the benefit of their members.

In that sense, they are nonprofits. These businesses run pretty much across the board in terms of size. Some are small buying clubs owned by members of local communities. Others are large Fortune companies. People usually join a cooperative for the benefits — to enjoy such things as the pooling of risk, the ability to make a large purchase in a group, to become empowered and feel like they are part of a meaningful company.

Cooperative businesses are organized for the purpose of improving the bargaining power of the individual members and the product or service quality provided by the members. They also aim to reduce costs incurred during the production process, to provide competition to larger companies with deeper pockets, to expand opportunities in the market and take advantage of them, and to obtain products and services that would otherwise be unavailable because for-profit companies see them as unprofitable.

Regular business ownership is based on what percentage of the business is owned by individuals, so it is prorated. A cooperative business is somewhat different. Ownership of a cooperative is based on how much equity each member has contributed. This is what makes a cooperative business so different from other kinds of businesses. With a cooperative, you need to use the products and services of the cooperatives to be able to invest in the cooperative.

Similarly, you cannot buy the products or use the services of the cooperative unless you are also an investor. It may seem like this is a chicken-and-egg problem, but it is typically solved upon the formulation of the cooperative. At that time, it is determined which comes first — the buying of shares or the purchase of products.

As far as control is concerned, there is, again, a difference from a regular business. In a regular business, each share is allotted a single vote. That means investors can purchase as many shares as they need to gain a certain level of control in the business.

In a cooperative, things are very different. Each member gets only a single vote, creating equality of voting rights.

All the members then participate in the running of the cooperative business and share the responsibilities involved. There are many cooperative advantages and disadvantages that you need to consider before you decide whether it is the right type of business for you. One of the greatest advantages of a cooperative company is the equality involved in its management and how democratic it is overall. The members can have all of their needs met without having to defer to a single person.

High street convenience stores are the most well-known type of co-op here in the UK, but they're not the only type of co-op. All co-ops are based on the same principles and they share a set of values. Learn more about the different types of co-ops and who owns them. The modern day co-op movement was founded in Rochdale, Lancashire in Since then, the co-operative model has spread across the world, impacting on the lives of over a billion people.

Co-operatives UK is the voice for the UK's thousands of independent co-ops.