Cooperative Can Shorten Their Time To Launch By Adapting This Minimally Viable Cooperative Technique.
It takes the average cooperative 4-6 years of planning and implementation to open its doors. It takes a traditional grocery store 6-12 months to find a location and open a full grocery store. Using the techniques listed below, Cooperatives can start having an impact while working toward a fully stocked food cooperative in a similar time frame.
The Problem: There is no existing rapid development process for building food cooperatives. Food cooperatives have a difficult time finding funding and membership in under-resourced communities. Also, Food cooperatives have a difficult time retaining human capital in the early stages of the launch process due the project being lead by volunteers. Therefore it has taken 4-6 years to start a food cooperative in most cases. To be competitive, food cooperatives must reduce startup timeline must match traditional timelines. We need a method which allows food coops to launch rapidly while simotanously driving membership and fundraising efforts. While the method below doesn’t reduce startup timeline to 6-12 months, it allows immediate impact, fundraising and membership to happen simotaniously. If agggressive, the timeline to a fully functioning cooperative can be cut down to 2 years and make traditional funding easier to obtain.
Solutions: Mininally Viable Food Cooperative
A cooperative can manifest itself in many forms. The definition of a cooperative is any business that operate for the benefit of its members. What often happens is that Food Cooperatives need 3 million USD to launch a business with no proof of business model. No financial bodies want to touch unproven business models. The Minimal Viable Food Cooperative route allows the food cooperative to increase membership, revenue and prove their model and social impact before applying for traditional financing or grant.
Step 1: Non-Profit Buying Club (Limited Products)A buyers club or buying club is a club organized to pool members’ collective buying power, enabling them to make purchases at lower prices than are generally available, or to purchase goods that might be difficult to obtain independently. A food buying club allows the immediate growth of members/buyers before making a large investment. It is important that the mission is centric and buying clubs focus on the end goal of working on a fully funtional food cooperative. Only advance to becoming a food hub when membership levels are high enough to support it. The purpose of the buying clubs is to increase memberships, provide immediate impacts and build a strong stable team who believe in your cause.
Goal: 500-1000 Members
Why Non-Profit?: Because non-profits can own for-profits businesses but not the inverse. Non-profits can also fundraise easier.
Step 2: Food Hub/Farmers Market (Limited Product)
A food hub is the next level of buying groups, large amounts of product are aggregated and distributed from a single location. The food hub primary purpose is to increase membership, collect data, understand distribution practices and become profitable. It is important to reinforce to your membership, that this food hub is a small stop during the process. The food hub must become a center of community food operations and be data-driven. Only open a retail shop when there is a strong understanding of customer needs, price points, logistics and demand for expanded offerings.
Goal: 2000 Members
Step 3: For-Profit Small Cooperative (Expanded Selections)
When that you have the financials to present to the bank or community loan body, some money in your chest and membership A small cooperative offering basic good and a expanded selection of fruits, meats and vegetables. This can be considered a butcher shop with expanded fruit, vegetable and basic needs offerings.
Goal: 4000 Members
Financial Goals: $250,000
Step 4: Fully Stocked Food Cooperative
By this time your team are experts in food logistics and store management. You are experts in human resources and should have found an expert board of directors. You’ve probably moved to different locations and found cheaper ways to do things. You’ve made a tons of mistakes but mitigated them without going bankrupt. You have a proven business model, a proven team and tons of experiences.
Track Everything! Investors like knowing your history. Investors like knowing how you solved common problems.
Stay On Mission! Everything you do should be with the goal of moving to the next step of the process. Be aggressive in finding new members, capture more of their expendable food income and increasing their involvement in the project.
Recruit.Recruit.Recruit! There are many jobs to be had when operating a food business. Get people involved early-on with a small task and increase responsibility as fits.
Growth-focused! Dedicate a team to growth and another team to servicing. Growth must be the central aspect of the cooperative project. If servicing become the central task, it’s very easy to get stuck.
Unless we do it, it won’t happen.
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