Is a co-operative model best for your business?

People form co-operative businesses for a number of reasons:

  • to provide a service that is not available
  • to increase their power in the marketplace, or decrease the power of others
  • to keep profits and control of a business within a community
  • to keep a community or business alive.

It is important to consider carefully whether the co-operative model is the right vehicle for what you plan to do. There are a number of other options, including partnerships, incorporated associations and limited liability companies. These options should also be explored.

Co-operatives have similarities to other businesses, but have special challenges because they are owned and controlled by the users and the benefits flow back to the users. It is their principles, collective dedicated effort, and group decision-making that give direction to the business.

While distributing co-operatives do give profits back to their members, non-distributing cooperatives don’t, so consider what the members expect back from their co-operative when choosing a co-operative model for your business.