Six steps for setting up a cooperative

The six steps approach has been published for the first time by European Youth Forum in 2014 in a chapter of Money Grows on Trees

The approach is specifically targeted at youth organisation looking to found new cooperatives, but it is valid also for any other kind of cooperative.

Step 1. Identifying needs - What are your aims

First of all, needs of the youth organisation or the needs of members should be identified. This is an important step, as it will help structure the cooperative in later stages. Needs of the youth organisation may include income generation. A structure of a cooperative, however, may also be linked to the youth organisation’s current activities, thus focusing on, for example, education, food and nutrition, reaching out to people or other.
At the end of this step, the youth organisation should know if setting up a cooperative is right for them.

Step 2. Getting your cooperative together

In this step it is important to consider issues, which were raised in step 1.
Start by informing youth organisations about cooperatives and why this business model is the appropriate model for the intended activity. It is important to keep members involved throughout the entire process: a cooperative is always a group project and motivated partners are needed in order to set the cooperative up.
The identification of synergies and motivated teammates is crucial for this step.

Step 3: Generating business ideas

Now that a motivated team has gathered, it is time for creativity. The key is to come up with a viable business idea that respects and falls in line with members’ identity. The business idea should rely on the available resources and skills and may include selling goods, such as baked goods or crafts, renting bicycles, or other. Alternatively, business ideas may include the provision of services, which fulfil needs in the community, such as solving youth unemployment, care for the elderly, migration, countering environmental challenges, etc.

Perhaps one of the most important elements to be considered in this step is the long-term business objective: a business idea based on the long-term provides more guarantees for sustainable activities and income.

Step 4: Planning the business

Now, how can a business idea be turned into a viable business? This step includes aspects, which complement the long-term business prospect. This fourth step includes market research, budgeting and members’ identity.

The market survey

There is an idea for a cooperative (book shop café, educational services, or other). At this stage it is important to get an in-depth understanding of customer’s feelings and preferences in order to determine, which products and services the cooperative should offer and how the cooperative should market these products and services. Compare the idea with existing businesses in the area. Dialogue with the community, in which the organization is embedded, is fundamental. An idea could be to organize a survey among potential beneficiaries or clients, such as students, other youth organisations, etc.

The budget

Capital needed for cooperatives in the start-up phase vary according to different national laws and types of activities. Cooperatives require some level of member financing usually in the form of cooperative shares. In addition, cooperatives may need additional financing in the start-up phase. Loans can come from funds for social economy, cooperative or commercial banks or may come from specific cooperative financial institutions, which are generally managed by cooperative federations. Other sources may be public programmes.

The cooperative members’ nature

The nature of the members can vary across a wide range and depends on their role. There are thus various types of cooperatives. For example, a worker cooperative suits a cooperative where staff owns the cooperative. Or, a consumer cooperative means that users or consumers of the business decide main orientations. Thirdly, a cooperative may include staff, beneficiaries, public authorities, Non-Governmental Organizations (NGO) and/or other (youth) organizations. This, we will define as multi-stakeholder cooperatives. Members’ nature will determine who holds the power of decision-making and control of the cooperative.

Step 5: Contact a business support structure

A motivated team has been assembled, a business idea has been generated and steps for realizing the idea have been identified. Now, consider support mechanisms. In almost all European countries there are cooperative unions and federations that provide business support for the development of the business structure. These organisations will provide relevant information and advice that is needed in order to start a cooperative, for example:

  • Legal support
  • Support for the development of your business plan
  • Creation of a commercial strategy
  • Access to funds
  • Training (cooperative governance, human resource development, etc.)
Step 6: Setting up the structure

This last step includes official registration according to national law. The newly registered cooperative may consider becoming a member of a cooperative federation from which they may receive advisory support that goes beyond the start-up stage.

Coopstarter contact points are available to offer support, get in touch!.

About the project

We are a group of agencies from all over Europe providing support to new cooperative start-ups.
Discover more about the project and the partners

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