Co-op Training Module III

1. Co-op Training Module III Co-op Training Module IIIDeveloping a Co-operative In Newfoundland & Labrador

2. Training Modules Overview Module #1: Introductory module covering the basics of the co-operative business model: the co-operative business structure; an introduction to co-operative development; an overview of co-op legislation and regulations; etc. Target Audiences: Community groups, individuals, government agencies with no, or limited, knowledge of co-operative enterprise.

3. Training Modules Overview Module #2: Deals with the role of co-ops in the CED process; how co-ops are developed and financed; role of the Regional Co-op Developer’s Network; how co-op development can be included in regional planning processes. Target Audiences: Zone boards, community business development centres, municipal organizations and board & staff of other CED agencies.

4. Training Modules Overview Module #3: Is a “hands on” participatory activity where participants learn how to identify co-operative opportunities; the stages in the co-operative development process; and the process of taking potential co-operative from “idea to operation”. Target Audiences: Existing and newly developing co-operatives and/or groups considering opportunities that may result in the establishment of new co-operative enterprises ,

5. Review of Co-op Basics What is a Co-operative? A legally incorporated business, owned by its members who use its services. Like other businesses a co-op: Requires start up capital/equity Generates revenue to cover its costs Must provide quality services Can distribute profits back to its owners Can retain profits for future needs Goal is financial self sufficiency Provides limited liability for member owners Can borrow money/sign contracts Pays business taxes

6. Review of Co-op Basics Who are Co-op Members? They are: Individuals who access retail, financial, housing & health care services Business operators who benefit from bulk purchasing, sharing facilities & joint marketing activities CED and other nonprofit groups that share equipment, office space, etc. to reduce operating costs

7. Review of Co-op Basics Member Benefits & Obligations Benefits Access to quality services at reasonable cost Control of a business that places priority on their needs Sharing of surplus profits that remain in the community Stable service delivery & and longer business life Priority on local employment Obligations Use their co-op’s services Buy shares & maintain their equity investment Attend AGMs and other membership meetings Be informed and engage in the decision making process

8. Review of Co-op Basics Co-operative Principles & Values Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education, training, and information Co-operation among co-operatives Concern for community

9. Review of Co-op Basics Opportunity Identification: Key Questions Would the recipients of the services (potential co-op members) be better served by owning and having direct control of the enterprise? Will the services provided by the co-op enterprise provide a clear and direct benefit for the member–owners that would justify their investment in the enterprise? Are there available sources of technical, advisory and financial support to help with the co-op enterprise development process?

10. Co-op Development: A Unique Process A Legislated Operational Framework Co-ops are legal corporate entities under provincial & federal legislation The “Co-operatives Act” protects the unique aspects of the co-op business structure and operations & the rights of member/owners Co-op legislation provides more safeguards to protect the interests of members and those who conduct business with a co-op than private sector legislation

11. Co-op Development: A Unique Process Co-ops are Different From Private Enterprise Owners benefit from use of the co-op’s services Not seeking a financial return on their investment Decision making is democratic – one member/vote Not based on number of shares held Profits are allocated based use of the co-op’s services Not based on number of shares held A co-op’s business assets are owned collectively by local members Cannot be used for private gain Co-ops have stated social as well as economic goals Profit is not the only concern

12. Co-op Development: A Unique Process Different Purpose Private Sector: seeks to maximize profitability for investors Co-operatives: seeks to provide members with needed services at the lowest possible cost Different Control Structure Private Sector: amount of invested capital dictates the level of voting control Co-operatives: each member has one vote, irrespective of amount of capital invested

13. Co-op Development: A Unique Process Allocation of Profits Private Sector: profits distributed as dividends on invested capital, regardless of use of products or services Co-operatives: profits allocated to members as rebates on proportional use of products and services, not on the amount of capital invested

14. Co-op Development: A Unique Process Essential Conditions for Success A co-op must: Meet the needs of its members Be economically viable with secure financing Have strong member patronage & participation Deliver top quality services at reasonable cost Make board/staff/member education a priority Hire competent & committed management/staff Have strong leadership and a succession plan. Have a positive relationship with the community Buy & hire local as much as possible Be adaptable to changing business environments

15. Co-op Development: A Unique Process Co-ops Generate Profits for the Community Co-ops distribute profits based on the members use of services, not on the amount of capital invested Co-ops often use part of their profits to support other community development projects Historically, profits generate by large private sector operations (i.e. fisheries, retail, etc) are not retained in the local economy/province Co-operative maximize retention of profits to the benefit of its members and the local economy Some co-ops (i.e. Fogo Co-op) direct funds from profitable activities to less profitable ones to maximize community employment opportunities

16. Co-op Development Process Initiating the Developing Process Initial meetings of co-op proponents Formation of a Steering Committee Proposed business services /products are identified Development of a co-op concept paper and initial business viability assessment Enlist the support and participation of the NLFC & other key development stakeholders

17. The Co-op Development Process Building the Co-op’s Structure Steering Committee (& RDN Member): Identify/recruit potential members Identify potential funding sources Develop the co-op’s By-Laws Draft operational Policy & Procedures Manual Initiate the development of a Business Plan

18. The Co-op Development Process Developing the Business Plan Steering Committee must be actively engaged in the process Seek advice on selecting the appropriate consultant Set clear targets for equity investments by members Consult with potential funding partners on their information needs Make sure plan is realistic and demonstrates that the enterprise can be self-sustaining

19. The Co-op Development Process Incorporating & Launching the Co-operative Early engagement & consultation with the Registrar of Co-operatives Advice & guidance of NLFC and RDN member will help ensure approval of incorporation Once incorporated, steering committee evolves into the co-ops Provisional Board Board ensure “doors” are ready to be opened (re: operations, administration, physical plant and equipment , etc) Board organizes the Co-op’s first annual meeting during the first year of operations

20. The Co-op Development Process Ongoing Operations “New” Board is elected & meets regularly to address ongoing operational & administrative requirements Training needs of Board, Management & Staff are identified and addressed Board establishes committees to share workload (i.e. Executive, Finance, Member Relations, etc) Communications with members, partners and the local community becomes a priority Operational/Financial success requires full member participation and support

21. 7 Phases of the Co-op Development Process Phase 1: Opportunity Identification Marketing & Promotion of the Co-op Model Informed Response to Public Inquiries Introductory Presentations/Workshops Phase 2: Development of the Business Idea Initial Concept & Market Assessment Initial Agreement re Co-op Model & Objectives Development of Concept Paper Initial Assessment - Project Financing and Feasibility Development of Initial Budget Estimates

22. 7 Phases of the Co-op Development Process Phase 3: Building the Co-op Group Confirmation of Co-op Structure & Membership Establishment of Steering Committee Agreement on Tasks & Time Lines Phase 4: Confirming Business Feasibility Group Consensus - Potential Feasibility Development of Business Plan* Recruitment of Members Initiated Agreement on Member Equity Contributions Potential Financing Sources Confirm

23. 7 Phases of the Co-op Development Process Phase 5: Co-op Incorporation Draft By-laws and Business Plan Completed Provisional Board of Directors Confirmed Articles of Incorporation Completed Documents and Fee Submitted Registrar Confirms Incorporation Phase 6: Business Start Up Banking/Accounting Procedures in Place Member Equity and Business Financing in Place Staff Hired (if required) Operational Policies/Procedures Developed Opening Ceremonies - First AGM Held

24. 7 Phases of the Co-op Development Process Phase 7: Ongoing Co-op Operations Policies and Procedures Manual Monitoring of Operations Regular Board Meetings Ongoing Policy Development Development of Business/Community Networks Membership in Provincial/Regional Centrals

25. Forming the Steering Committee Steering Committee Functions Oversees the research and other activities required to assess the merits of establishing the co-operative Establishes Sub-Committees, assigns specific tasks & activities, sets deadlines and monitors committee progress Decide strategies and develops recommendations related to the proposed Co-op Ensures effective coordination and communication among the community stakeholders and partners Supervises the implementation of strategies and actions required to ensure the successful incorporation and start-up of the co-operative

26. Forming the Steering Committee Name of Sponsoring Agency Place of Meeting Date & Time of Meeting AGENDA Welcome and introductions Opening remarks and overview of issues to be addressed Presentation on results of initial research and recommendations Presentation by NLFC on the “Co-operative Option” General discussion on merits of the proposal Establish a Steering Committee and setting the Terms of Reference Other Business Next meeting

27. Forming the Steering Committee Notice of Public Meeting Monday, January 31, 2011 At 7:00 P.M. at the Community Centre Public Discussion: Formation of a Community-Based Co-operative Enterprise

28. First Steering Committee Meeting Steering Committee Functions Oversees the research and other activities required to assess the merits of establishing the co-operative Establishes Sub-Committees, assigns specific tasks & activities, sets deadlines and monitors committee progress Decide strategies and develops recommendations related to the proposed Co-op Ensures effective coordination and communication among the community stakeholders and partners Supervises the implementation of strategies and actions required to ensure the successful incorporation and start-up of the co-operative

29. Concept Paper Outline Introduction Describe the Industry circumstances and rationale as to why it makes sense to move forward with the formation of this co-operative at this time. Co-operative Services What direct services will the co-operative provide for potential members from a short term and long term perspective? Co-operative Benefits What will economic or social benefits will be provided for co-operative members, the industry sector and/or the community?

30. Concept Paper Outline Co-operative Members Who are the individuals, enterprises or other agencies that are proposing the formation of the new co-operatives? Who else is being encouraged to consider joining and benefiting from the services to be provided? Operational Structure What is the proposed organizational and operational structure for the co-op in the early start-up phase and what would be the long term objectives in this regard. Co-op Compared to Other Business Structures What makes this co-operative different from industry associations and/or non-profit agencies that may be operating in the business or social sector in which the co-op will be operating?

31. Concept Paper Outline Existing and Potential Development Partners What agencies have assisted with the early stages of the development of the co-operative up to now and what other agencies may be approached to potentially assist with future development activities. Facilities and Location What facilities (buildings, processing equipment etc.) will the co-operative require for business start-up in the short term and what will be the longer term requirements? Where will the facilities be located? Operational Costs What is the general estimate of short term costs relating to business startup and what are the projections for the longer term

32. Concept Paper Outline Member Shares and Financing What will be the value of member shares and how many are required to be purchased to address the co-ops initial financial requirements? How much additional business financing will be required and what potential sources for this financing are being considered? Timelines What are the projected time lines for incorporation of the co-operative and start-up of business operations? Key Issues to be Resolved Are there key membership and/or industry issues that need to be resolved prior to proceeding with incorporation of the co-op or subsequent to business start-up? Is there a plan to have these issues addressed?

33. Sub-Committee Functions/Activities Primary Committees Member Recruitment Marketing & Promotion Incorporation & Other Legal Require Business Plan/Feasibility Assessment

34. Sub-Committee Functions/Activities Member Recruitment Identify potential members in the community/region who share common goals, needs and challenges Develop an information paper (concept) identifying and clarifying all the issues and concerns that potential members may have Contact various support agencies who may be able to assist with reaching out to potential members (i.e. NLFC; Regional Developers Network; local REDBs; community groups, etc) Develop a communications outreach strategy (i.e. media contacts; community/public meetings); Contact local service groups (i.e. fishermen’s’ committees; agricultural associations, etc) who may be willing to partner with you to develop your ideas

35. Sub-Committee Functions/Activities Marketing & Promotion Identify the market area in which the co-op intends to produce, sell, and market its goods, services and products Identify potential partners ( Co-op Atlantic; local co-operatives, etc) who may assist the co-op in the distribution and retailing of your services and products Identify funding agency support (i.e. ACOA, INTRD, etc) to hire business consultants to develop a marketing & promotional plan Liaise with the NLFC and Regional Developers Network to identify best practices in develop a marketing and promotional strategy

36. Sub-Committee Functions/Activities Incorporation & Other Legal Requirements Request the assistance of the NLFC and the Regional Developers Network to help develop appropriate Co-operative By-Laws and in completing the Incorporating documents and other Co-operative Legislative requirements Liaise with the Registrar of Co-operatives at various stages of developing the Co-op By-Laws Research (internet, etc) other similar co-ops in the province and other jurisdictions on various approaches to developing By-Laws Liaise with federal and provincial regulatory agencies on the various licences and permits required for the co-op facilities and other operational activities

37. Sub-Committee Functions/Activities Business Plan/Feasibility Assessment Develop a preliminary outline/plan of the co-operative’s short, medium and long term needs, activities and requirements Prepare rough estimates of this outline Contact relevant support agencies (NLFC, RDN, IBRD, etc) to review your plan and provide advice on whether it is realistic, achievable, and feasible. Identify funding agency support to hire business consultants to develop a formal business plan Ensure that you are fully engaged with the consultants on the development of the business plan through its various phases and that you have a thorough understanding of the final report and that it address your needs

38. Co-op Business Plan Template Elements THE CONCEPT: VISION, MISSION, PURPOSE AND VALUES MEASURABLE OBJECTIVES SITUATIONAL ANALYSIS MARKETING PLAN PRODUCTION ORGANIZATION AND PEOPLE FINANCES OWNERSHIP

39. Second Public Meeting Public Meeting to Review the Reports Of the XYZ Co-operative Steering Committee Community Centre August 10, 2011 AGENDA Welcome and introduction of special guests Review and discussion of the minutes of the 1st Public Meeting Steering Committee Reports  General Discussion on report findings and merits of the Co-op Option Comments from key stakeholders (NLFC, REDB, Municipality, etc. Conclusions and Recommendations “Where to from here” – Next Steps Next meeting

40. Second Public Meeting Notice of 2nd Public Meeting Monday, January 31, 2012 At 7:00 P.M. at the Community Centre Public Discussion: Report on the Merits of Establishing a Community-Based Development Co-operative

41. Co-op Launch & Start-Up Phase 5: Co-op Incorporation Draft By-laws and Business Plan Completed Provisional Board of Directors Confirmed Articles of Incorporation Completed Documents and Fee Submitted Registrar Confirms Incorporation Phase 6: Business Start Up Banking/Accounting Procedures in Place Member Equity and Business Financing in Place Staff Hired (if required) Operational Policies/Procedures Developed Opening Ceremonies - First AGM Held

42. Co-op Launch & Start-Up Phase 7: Ongoing Co-op Operations Policies and Procedures Manual Monitoring of Operations Regular Board Meetings Ongoing Policy Development Development of Business/Community Networks Membership in Provincial/Regional Centrals

43. Co-op Launch & Start-Up Developing the Business Plan Steering Committee must be actively engaged in the process Seek advice on selecting the appropriate consultant Set clear targets for equity investments by members Consult with potential funding partners on their information needs Make sure plan is realistic and demonstrates that the enterprise can be self-sustaining

44. Co-op Launch & Start-Up Incorporating & Launching the Co-operative Early engagement & consultation with the Registrar of Co-operatives Advice & guidance of NLFC and RDN member will help ensure approval of incorporation Once incorporated, steering committee evolves into the co-ops Provisional Board Board ensure “doors” are ready to be opened (re: operations, administration, physical plant and equipment , etc) Board organizes the Co-op’s first annual meeting during the first year of operations

45. Co-op Launch & Start-Up Ongoing Operations “New” Board is elected & meets regularly to address ongoing operational & administrative requirements Training needs of Board, Management & Staff are identified and addressed Board establishes committees to share workload (i.e. Executive, Finance, Member Relations, etc) Communications with members, partners and the local community becomes a priority Operational/Financial success requires full member participation and support

46. Workshop Evaluation & Feedback Comments, suggestions, feedback? Ideas on how to improve the workshop? Were your expectations met? Where to from here?