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.