Is a new food co-op feasible?

Feasibility studies are critical for determining the likelihood of success for a new co-op; they take stock of available resources, attempt to measure the size and strength of community interest and support, and crunch the numbers.

The great news is, we can learn a lot by starting small and simple. A preliminary study could give us all the information we need to comfortably move forward into more committed activities.

The following is excerpted from a Feasibility FAQ published by Food Co-op 500 (notice how the process is organized using the organization's Four Cornerstones and Three Stages framework - outlined in a previous post).

It could help us think about how we might want to conduct our own study!

How soon should a start-up organizing team conduct a feasibility study?
A full feasibility study can be relatively expensive and most co-op organizing groups struggle to build up funds during the early stages of development.

Because of this, a less formal, Organizing Stage feasibility study is recommended as a first step.
This should be conducted as early as possible after you begin the organization process.

What is involved in an Organizing Stage feasibility study?
The early feasibility study is undertaken to justify the effort and expense of pursuing further
development and to assure early supporters that there is a good chance of future success.

This informal study will attempt to answer these questions:

1. Do we have a vision that resonates in our community?
2. Is there enough potential demand for the co-op’s goods and services to be profitable?
3. Do we have the people with time, skills and talent to see this project through to completion?
4. Will we be able to raise enough capital through members and lenders to finance our co-op?
5. Are there appropriate vendors, growers and distributors who are willing to sell to us?
6. Are there suitable locations for a retail grocery store available at affordable costs?

How can we get the information for the Organizing Stage feasibility assessment?
Much of the information can be collected by surveying the community and taking an impartial look at the local market:

1. Conduct a community survey
2. Talk to established co-ops about what made them successful
3. Research community, regional and state business development support options
4. Meet with commercial lenders to discuss your ideas and get feedback
5. Identify people and organizations with compatible missions that could become key supporters
6. Talk to local realtors about business property availability and costs
7. Tour all the local grocery stores and potential competitors, noting their strengths and
8. weaknesses
9. Consider hiring a professional consultant to guide you through early organizing, planning and feasibility assessment. The expense may seem high, but the time and effort you will save and knowledge gained will give you a huge head start.

Once you have collected as much information as possible, summarize it in a clear, concise report that you can share with organizers and supporters. Get feedback on your conclusions and do not be afraid to admit it when you are not able to make a clear assessment of one or more factors.

Organizing Stage Feasibility Checklist (organized by the Four Cornerstones)

Vision

• The co-op has written a clear and inspiring vision statement
• The vision has been shared with potential supporters and they are aligned with it
• The planned co-op will address unmet needs in the community/market area
  -There is a strong demand for the co-op’s planned offerings
  -Consumers do not currently have convenient access the co-op’s planned offerings
  -Existing stores do not represent significant competition to the co-op
  

Talent

• There is a group of at least 10 people (“core team”) willing to lead the effort to open a retail food co-op
• There are significantly more people willing to volunteer time on committees and special events
• The core team members are willing and able to spend several hours a week (or more) on behalf of the co-op
• High profile members of the community have expressed support for the co-op
• The co-op is willing to pay for the specialized expertise it will need
  -Legal review for incorporation
  -Community survey implementation/tabulation
  -Guidance for organizing and planning
• The co-op has the potential to attract and pay a skilled general manager and staff

Capital

• The co-op organizers have researched start-up costs and understand the financial requirements
• for a new retail food co-op
• A community survey indicates substantial interest in shopping at a new food co-op
• A community survey indicates significant willingness to invest in ownership
• The co-op is potentially eligible for business development grant or loan funds.
• Local lenders have expressed interest and/or support for the co-op.

Systems

• The core team has set up systems of accountability and reporting
• A contact and/or member database has been created and is maintained
• A business account has been set up and financial controls and records established
• There are distributors, vendors and local farms willing and able to supply the co-op with the
• types of products and services you intend to offer
• There are affordable sites available that are suitable for a retail grocery store

To learn what's involved in a full feasibility study -which comes further down the line - you can start by reading the entire Feasibility FAQ from Food Co-op 500.

Co-op Meeting - next Wed, Nov 4. RSVP!

Hi there-

Please check out the invitation to a small exploratory meeting we're having at Hal Holmes next Wednesday, November 4, 6-8 pm.

If you're interested in sharing your ideas and resources around what a food co-op could bring to Ellensburg, what might it look like, and how we could get started, you should come!

The posting is here, on our Facebook Page:
Exploratory Meeting: a food co-op for Ellensburg

If you have questions, contact Jessie Alan jessie.alan@gmail.com 360-303-5634.

Thx!

Profile on Kootenay Co-op

Excerpted from a 2002 Cooperative Grocer article on Kootenay Co-op, a highly successful co-op in Nelson, BC.

Highlights are mine.

What might be learned/modeled from them?

Kootenay Thrives on Local and Organic
By Lyn Cayo

Kootenay Country Store Cooperative is the heart of Nelson, British Columbia. What began more than thirty years ago as a buying club with a few member families has turned into the community's member-owned one-stop shopping experience, now grown to over $4,700,000 in annual sales... Located in a heritage building on Nelson's main street, Kootenay Co-op has 4,800 square feet of retail space, which includes a full service deli and 400 square feet dedicated to supplements. But the most striking feature of the store, and a probable reason for its success, is the produce section.

Featuring a 40' cooler and about 1,000 square feet of floor space, the produce section accounts for approximately 21% of the store's sales. The section staff take great pride in the quality of their produce and work closely with local growers to ensure premium local product is always available... with ongoing support from the staff, local growers have responded by growing diverse crops and additional quantities.

During the fall, 75% of the high quality produce in the store is local, with another 20% from elsewhere in British Columbia. A study done by Horizon Distributors shows that about 8% of the local market regularly spends its food dollars on organic foods, about four times the national average. This is certainly attributable to the excellent education and product selection at Kootenay Co-op.

Co-op staff have also worked with value-added producers to develop, package and promote new products. In the deli and on the shelves are products from more than thirty small businesses that have developed in the region with the co-op's support. Many of these businesses provide a livelihood for people who would otherwise be unable to remain in the area due to a lack of employment opportunities. With almost forty employees and the large number of small businesses it supports, Kootenay Co-op is a vital part of the local economy.

Kootenay Co-op grew out of the union of several multi-family buying clubs in the early 1970s. In 1975, the co-op was incorporated and shortly thereafter opened its first storefront in South Slocan, about 15 minutes west of Nelson.

In the fall of 1985, the co-op moved into Nelson and took over the Pantry House, occupying about 2,000 square feet total. With the move to Nelson, the store was opened to non-members and attracted a large number of customers who were used to shopping at the Pantry House.

In the spring of 1989 a major renovation increased the retail space to 1,400 square feet. After the co-op turned the plain, mismatched store into a cohesive unit, its customer base widened and sales increased dramatically. By 1991, the store had outgrown that location entirely, and made a five-block move to the other end of Baker Street. Some 1,200 square feet were leased to an organic bakery, but in 2000 the bakery was given notice that it would have to move, and the co-op expanded to fill the vacant space.

What does it mean to be a co-op?

Kootenay Co-op is incorporated as a cooperative in the Province of British Columbia. Kootenay Co-op is owned by its members, who are each required to purchase ten $5.00 shares. These shares are a "no interest investment" in the co-op; if members decide to, they may withdraw their shares at face value. In return for their shares, which give the co-op its capital base, members receive many benefits:

• on a monthly member appreciation day -- chosen by the members -- they receive 10% off most purchases;
• two annual bulk sales are offered for members only;
• volume discounts on several supplement lines are passed on to members;
• members are eligible for several in-store promotions;
• for the last four years there has been a patronage rebate of some significant portion of profit.

In addition, each member has one vote at general meetings and may sit on the board of directors. Most of the staff are members of the co-op, though this is not required.

The board of directors is elected by the membership; one director is a staff person and is elected by the staff. The co-op operates with a system of coordinators or department heads, who are overseen by a general manager. Although the GM reports to the board, she is basically part of the management team rather than holding a more typical executive position, which allows for a lot of flexibility and feedback.

Food Co-op 500's Startup Model: Four Cornerstones in Three Stages

I just listened to another of Food Co-op 500's recorded seminars on starting a food co-op - this one on the Four Cornerstones in Three Stages model, presented by Bill Gessner. Getting a co-op off the ground is very complicated; this model outlines the process simply and concretely. A good thing to anchor ourselves to, perhaps?

Ellensburg, we're just about to embark on Cornerstone 1, Stage 1. Can't wait to see what happens.

The Four Cornerstones:

1. Vision

• “The articulation of hopes and dreams of a founding group”
• Broad, Long-term, Inspiring
• Specific and Local
• Refined as the emerging co-op moves through the development stages
• Includes the co-op as a solution to a common problem or need
• Core values and purpose
• A vision of the process of developing a food coop
• Building a shared vision over time

2. Talent

• “Those invested in the co-op’s success”
• Champion(s)
• Steering Committee or Task Force or Founding Team
• Board of Directors
• Developer(s) (Usually external to the co-op)
• Management (Development Project Manager, Facility Project Manager, General Manager) and Staff

3. Capital

• “Financial resources necessary for all stages of development”
• Organizing
• Feasibility
• Business Planning
• Implementation
• Sustaining (recover and reinvest)
• Internal resources are used to leverage external resources
• Education: members responsibility to capitalize co-op

4. Systems

• “Organized, integrated, coordinated, and interdependent methods”
• Legal
• Governing
• Management & Human Resources
• Planning & Assessment
• Communication and Marketing
• Finance & Accounting
• Operations
• Membership
• Commitment to continuous improvement
• Systems become more complex through the stages

The 3 Stages

Stage 1: Organizing

Emerging Co-op: Brings about the organization
One or more people start with an idea
Recognition of a common problem or need that a food co-op could meet

Includes:

– Convening a core group
– Assessing common interest and needs
– Designating, supporting, and developing leadership
– Building a shared vision
– Committing time and money
– Possible Preliminary (informal) Feasibility Assessment

*Timeframe: typically 6-12 months *Recommended member recruitment milestone**:300 (yes, we need member buy-in this early on in the process!)

**all member recruitment milestones assume a food co-op of 6,000 square feet. This may be larger or smaller than what Ellensburg envisions for itself, so we may want more or fewer members at each milestone.

Stage 2: Feasibility and Planning
Emerging Co-op: Brings about the operation
An organized group with commitment, interest and capacity
Assesses feasibility: market potential, financial feasibility,
internal readiness and design feasibility

Includes
– 2A = Feasibility - deeper assessments of financial, market and organizational capacity

*Timeframe: typically 3-6 months *Recommended member recruitment milestone:450

– 2B = Planning – a business plan for financing and operations, preparing to hire general management, preliminary store design
*Timeframe: typically 3-6 months *Recommended member recruitment milestone:600

Builds commitment and capacity (both leadership and management)
Brings about a secured site for the operation


Stage 3: Implementation
Emerging Co-op: Brings satisfaction of member needs
Demonstrated capacity in all the cornerstones

Includes
– 3A = Preconstruction

*Timeframe: typically 3-6 months
The end of 3A is the POINT OF NO RETURN
Paid management staff typically come online at this time.
Site is finalized, as is all financing related to construction and opening

– 3B = Construction & Renovation
*Timeframe: typically 3-6 months

– 3C = Preparation for Opening
*Timeframe: typically 1 month *Recommended member recruitment milestone:1,000

– 3D = Sustaining - First Year and Beyond (and now the work begins!)

Co-ops Rock

Check out this "brief, edgy, and visual introduction to the cooperative movement" - and maybe share it with your friends when you ask them to join us!

http://coopsrock.coop/