By Jowanna Daley
A quick look at co-ops to help you determine if this model is right for your life coaching business.
My son recently joined a cooperative business (co-op), and I was intrigued to learn more about them. In the process, I remembered being in a co-op in college, but I didn’t understand what it was back then. So I set out to do some research that might help you better understand this model and whether it is a good choice for your life coaching business needs.
What Is a Co-op Business?
Co-op businesses are owned and run by a group of people who use them to achieve common goals. Members typically share in its profits and losses, value, and determining how the co-op is run. They can fall under various categories. Here are three of the most common:
1. Producer Co-Ops
This type of cooperative unites businesses that produce similar types of goods or services, and it is a model commonly used in agriculture. Think Ocean Spray and Organic Valley. It can help members effectively negotiate prices and access larger markets and/or assist in processing member products to add value and increase returns.
2. Consumer Co-Ops
A consumer cooperative is owned and operated by its customers. This model provides members with goods and services at a fair price and gives them a voice in the operation of the business. Examples include Willy Street Co-op, REI and UW Credit Union.
3. Worker Co-Ops
In a worker cooperative, employees are also owners and share profits and losses. These businesses typically are created to address the needs of workers who have been marginalized or have difficulty finding traditional employment.
Worker co-ops can provide workers with job security, a say in business decisions, and an amplified voice in the workplace. They also help to build community and promote social and economic justice. Here are just a few: The Cheese Board Collective, CA; Bristol Brewing Company, CO, and Evergreen State College Cooperative, WA.
Seven Guiding Principles of Co-ops
Cooperatives are great for organizations that believe in bettering their members and the surrounding communities. The seven principles of a cooperative are explained below.
- Voluntary and Open Membership: Cooperatives are voluntary organizations open to all people who can reasonably use the service and accept membership responsibilities without gender, social, racial, political or religious discrimination.
- Democratic Member Control: Cooperatives are democratically controlled by their members, who actively participate in setting policies and making decisions. Men and women equally share control of co-ops at all levels.
- Member Economic Participation: Members contribute equally to and democratically control the capital of their cooperatives. At least part of that capital is usually the common property of the co-op. Members vote for leaders, but all primary members have equal voting rights.
- Autonomy and Independence: Cooperatives are autonomous, self-help organizations controlled by their members. They do not have the typical “profits above all else” investors to worry about.
- Education, Training, and Information: Cooperatives provide education and training for members, elected representatives, managers, and employees. They inform the general public about the nature and benefits of cooperation.
- Cooperation Among Cooperatives: Cooperatives serve their members effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
- Concern for Community: Cooperatives work for the sustainable development of their communities through policies and programs that address social, economic, environmental and cultural needs.
Advantages & Disadvantages
Cooperatives are common in industries where it is difficult to form a monopoly. For example, in the agricultural industry, there are many types of produce coming from many farms. Co-ops also can be helpful in industries with small businesses that individually struggle to compete against larger ones.
There are many benefits to forming a co-op including:
- Since co-ops are democratically run, all members have a say in how the business is operated.
- Cooperatives are usually more equitable and sustainable than traditional business models because they are interested in long-term viability more than short-term profits.
- Since co-ops are owned by their members, they are more likely to survive difficult times.
- Cooperatives offer a more democratic alternative to traditional businesses since their members decide how to run the co-op.
- Cooperatives care about the community and can provide needed jobs and economic stability in rural and underserved communities.
Of course, there are also some risks and disadvantages:
- Limited scale: Cooperatives are typically much smaller than other types of businesses.
- Limited resources: Cooperatives often have limited resources, restricting their ability to grow and compete.
- Limited decision-making power: Cooperatives often lack the ability to make decisions quickly and effectively.
- Limited ability to raise capital: Cooperatives often have difficulty raising capital to grow and expand.
- Difficulty scaling: Cooperatives typically cannot grow as quickly as other types of businesses.
- Vulnerability: Cooperatives often face member dissention.
- Loss of individual initiative: In a cooperative society, people are more likely to defer to the group, leading to a lack of creativity and innovation.
- Clustering: In a cooperative society, people are more likely to cluster around like-minded people, leading to a lack of diversity and loss of creativity.
- Limited resources: In a cooperative society, people often cannot pool their resources, resulting in a lack of growth and innovation.
- Inefficiency: In a cooperative society, people are not motivated to be efficient because they work for the benefit of the group over productivity.
What About a Life Coaching Co-op?
Yes, it’s certainly possible! If you want to make your life coach business co-op, you need to register as a cooperative with your state. In some states, this can be done through the secretary of state’s office, while in other states, you may go through the department of commerce or agriculture. You’ll also need to create bylaws and governance documents for your cooperative and identify and recruit co-op members.
Cooperatives are built on principles we believe in as life coaches. To minimize risks, ensure you have your agreements in order and the skills necessary to run the business among the members. One of the most challenging parts of running a life coaching business is the actual administration and financial management—so don’t forget to look for people with business skills, too.
Jowanna is a business and personal coach, consultant, freelance blogger, and personal brand photographer. Jowanna uses her 20-plus years of business, information technology, business analysis, and project management experience to serve solopreneurs, microbusinesses, and professionals through consulting, coaching, training, and workshops. She is also a freelance blogger who serves corporate and non-corporate clients. Visit her website at https://www.jowannadaley.com/about/.