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8+ SAMPLE Co-operative Business Plan in PDF

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The co-operative model business plan

This appendix provides a model business plan outline. Make the plan your own. Your cooperative is unique in many ways so you don’t want the business plan to look just like everyone else’s; you want it to be an expression of your co-operative’s unique structure, products, plans, principles, values, environment and people.

The business plan itself does not need to have all the sections listed in the Table of Contents below, but you should put some effort into every section listed in it to have the co-operative well prepared before it is open for business.

Following the title page, the business plan should, at a minimum, have an executive summary, co-operative overview, market analysis, and plans for marketing, operations, production and finances.

Executive summary 

Write the executive summary after you have finished the rest of the business plan. It’s an overview of the business plan, highlighting the main points and putting them into context. Consider organising the executive summary in the same order as the business plan.

The executive summary is placed at the start of the business plan to entice the reader to read the entire business plan, making it one of the most important sections.

It is not new information; it is a summary of information which is discussed in more depth throughout the business plan.

The executive summary should be able to stand on its own, and succinctly explain in one or two pages the distinctive characteristics of the co-operative and its products and why it will be successful.

It may include:

• the reason(s) the business plan has been written
• an overview of the co-operative and its market opportunities
• a description of the products or services
• a summary of its expected financial performance.

Complete it with conclusions and recommendations and a summary of how you’ve arrived at your conclusions.

Another way of looking at what the executive summary says is: What is the problem? What is the solution? What will be the outcomes?

Introduction 

This section provides background information about the co-operative and could very briefly describe the co-operative type, when it was formed, who formed it and why, its location, mission, vision, values and principles, objectives and strategy to achieve them, industry, products and services, target market, development stage and achievements to date, summary of members and management, and capital raised to date.

The mission statement should say what you do, how you do it, and why you do it.

The vision statement should be somewhat loftier – describing what you want the co-operative to be in the long-term; it should be a “planned wish”.

The objectives state what the co-operative wants to achieve, usually within a certain timeframe, and are guided by the mission and vision. Objectives are business, social and financial objectives. They should be measurable, and there should be both short-term and long-term goals.

Values are statements about why the co-operative is in business, and who it serves. Values consider the social and environmental factors which the co-operative will be mindful of in achieving its objectives.

The introduction may also explain why the business plan is being written, and for whom. If it is written to support an application for finance include the name of the bank or other financier, the amount of funding sought, the term of the loan, the use of the loan, how it will be repaid, and the security the co-operative will provide.

Make it brief; one to two pages should do.

The co-operative 

Co-operative structure

Outline the co-operative’s structure. Remember that many people do not understand the democratic and social principles of co-operatives, so briefly explain how it works, its rules, and how it will support your business and social objectives.

Describe the location, size and capacity of premises and any warehouse facilities. If the premises are leased state the cost of rent and length of the lease; if they have been purchased, state the value of the property. Explain how long the co-operative has been at the premises, if there is a strategic advantage in its location and, if any renovations or extensions are required, what they will cost.

Registrations and licences

List the registrations and licences that the co-operative has. If others are needed, explain what they are and when they will obtained.

Describe the insurance that the co-operative has and will be getting. It could include cover for premises, contents, workers’ compensation, liability, professional indemnity, business interruption, and motor vehicles.

Plant and equipment

Itemise the plant and equipment that the co-operative has and needs. If the business plan supports an application for funds, explain the importance of acquiring the equipment and provide details of quotes for their supply and installation. Consider listing the equipment in two tables: the first table showing the equipment already acquired and its cost and written down value; the second table listing equipment to be acquired, its value and when it is planned to be purchased or leased.

Products and services

In simple terms, describe the features of the products and services the co-operative currently provides, and those to be developed in the future. You may like to include photographs. Explain how they are different to others available in the marketplace, and why customers will buy products or services from your co-operative instead of from a competitor.

Describe the key components or raw materials used in making products, where they come from, and whether there are any restrictions on supply or agreements with suppliers. If there are likely to be price fluctuations, you might explain how they will be dealt with. You may wish to explain if there is a backup supplier available.

If it’s a new product under development, explain the progress made in research, product design and development, what tests are required and have been done, and any regulations applicable or licences or approvals that are needed. List any intellectual property protection sought to avoid duplication by competitors. Provide a timetable.

If there has been product testing in the marketplace, explain the results. Describe plans to upgrade the product or service or increase the range on offer. Describe quality assurance controls to be instigated.

If the co-operative provides a service, explain what it is, why it is needed, and how it is or will be delivered, monitored and improved.

If you have a product inventory, list the items in a table, or include an inventory list in the appendices.

You may wish to include here how you are going to minimise shrinkage of inventory due to theft, damage, loss or accounting errors.

Current performance

If the co-operative has already been trading, include a short summary of the co-operative’s turnover, gross profit and net profit for the current year and last year. More detailed information will be put into the financial section of the business plan. If the co-operative hasn’t begun trading yet, use the projected financial figures.

Members and directors

If the business plan is being written to assist you to ask for finance, use this section to show that the people who own and run the co-operative are competent and qualified. Give an overview of the number of members, active membership provisions, who the directors are, and the offices they hold.

Include a summary of their skills, qualifications, experience and industry knowledge. Consider including résumés in the appendices.

Key personnel

If you plan to engage employees or already have staff, list the positions, names (if already employed) and skills of employees, and whether their employment is full-time, part-time or casual. Résumés for managerial positions could be included in the appendices. If your cooperative is fairly large, draw an organisational chart which shows who reports to whom, and the positions they hold, and include it in the appendices.

Co-operative advisors

Include the business names and addresses of professional advisers who have helped to establish and grow the co-operative. These might be bankers, solicitors, financial advisors or planners, insurance agents, accountants, chambers of commerce, another co-operative or a co-operative peak body. This section shows that your co-operative is supported by a professional  team.

Risk management

List the risks, in order of likelihood that they could occur, that the co-operative faces. State the impact the risk could have, how likely it is to occur, and what action you will take to prevent or minimise the risk to the co-operative. Key risks may include property damage, theft, electrical outages, pollution, legal liability, injury, loss of data, shifts in the economy, loss of customers, loss of suppliers, security, theft of copyright or inability to raise capital.

Operational plan

A new co-operative should explain how the co-operative will be run: the daily routines, people and functions that will make the co-operative run smoothly and successfully. Keep in mind the democratic nature of your co-operative and its social purpose; make it the focus of your actions. Directors and managers should use the operational plan to lead and inspire members and staff.

Break your operational plan down into actionable steps so it will easier to implement. Identify what each task is, who will do it, when it will be done by, and how you’ll know it has been done. Attention to detail will make the co-operative’s operations run more efficiently.

The operational plan might include ways in which you intend to devise and implement operating, accounting and management systems required for the first year of activities. Plan for staff selection and recruitment, duties and salary policies, performance monitoring, training, health and safety policies, technologies, record-keeping, banking, taxation, accounts payable and receivable, meeting legal obligations, finding suitable premises and office equipment, use of professionals, service to customers, orders and delivery management, promoting innovation, further research and development, meeting schedules, developing a co-operative culture, appropriate management style, working with members and directors, conflict resolution, compliance with regulations and inspections, and alliances with other co-operatives.

Existing co-operatives will need to consider many of the same issues, but have the advantage of having procedures already in place. They should develop an operational plan to improve the day-to-day operations of the co-operative, reduce overheads, plan for growth, alleviate risk and increase efficiency.

Production plan 

The production plan will describe how the co-operative will manufacture, procure products or provide services, and provide the final product or service to customers.

It will describe:

• the complexity of the manufacturing
• the equipment and tools required
• the cost of raw materials and labour per unit
• the cost to produce a product or deliver a service
• the number of hours of production daily or weekly
• the number of units to be produced or the number of services to be delivered
• average selling price
• managing inventory levels
• forecast number of days stock is to be held
• cost control
• manufacturing staff requirements
• source and delivery partners and contract terms
• the time taken to produce the required stock levels
• environmental plans
• disposal of waste.

Quality assurance is crucial, whether the co-operative is providing a product or service. The co-operative relies on the loyalty of members and/or customers for repeat orders, so it needs to provide value for money and consistently high quality products or services. A strong quality assurance system will consider employee motivation and skills, standards and testing, feedback from customers, and minimising waste and product returns.

The market 

This is an important section of the business plan, as it demonstrates that you have done your homework and it is likely that your product or service will be accepted by customers. There’s not much point in having a great product if you don’t have a market.

Much research is involved: you’ll need to understand who your customers will be, what will make them spend their money on your products or services, who your competitors are, what environmental factors could affect you, and how you are going to sell and promote your product or service. There are many places to go for information – try the Australian Bureau of Statistics, government departments, councils, Regional Development Australia, trade and professional associations, chambers of commerce and consumer organisations.

Find which ANZSIC code is used for your business. ANZSIC is used by the government to produce and analyse industry statistics. ANZSIC codes for all industries are found at www.abs.gov.au .

An industry sector contains a range of other businesses which supply similar services or products. Provide an overview of the industry sector the co-operative is in, such as the size, growth, key clients and markets, the largest providers, and demand and supply trends that affect the industry now, or may in the future. Describe any other relevant factors that drive the industry, such as innovation, regulations, seasons, financial and technical issues, distribution and supply and whether the industry is new or mature.

Provide a summary of where the co-operative is positioned within that industry, and its vulnerability to competition and trends.

The environment

Describe important trends and issues that could affect your co-operative’s operations and identify how you plan to deal with them.

Issues may include changes of government, international relations and trade, employment, environment and competition regulations, taxation legislation, new policies and laws, consumer protection, and industrial relations.

Issues may include interest rates, government spending, consumer confidence, unemployment, exchange rates, inflation, national and state economic growth, global economic outlook, materials availability, import substitution and skills shortages.

Issues may include demographics, education, standards of living, multiculturalism, housing availability, fashion, health awareness and income distribution.

Environmental

Issues may include environmental awareness, waste, pollution, energy, climate change and water.

Technological

Issues may include efficiencies, obsolescence, NBN, costs, savings, research, innovation and social networks.

Market research

It’s crucial to understand the marketplace and your customers, whether they are likely to buy the co-operative’s products or services, and possible ways to motivate them. There are two types of research you can do that will help with this: primary research, done by observing competitors, meeting with potential customers, or by survey; and secondary research, which is gathered from existing data.

What you will research will depend on what your products and services are, who your customers are, where your market is, and the level of competition in the marketplace.

Your market research might include:

• customer profiles and characteristics – age groups, gender, occupation, income, location, buying habits
• customer preferences, needs and expectations
• target markets
• the customer fit, and demand for products and services
• your fit, barriers to entry and influence on the market
• product specifications, acceptance and new opportunities
• product pricing and sales forecasts
• market size (units and value)
• market growth and trends
• market segmentation and definition
• competitor analysis
• advertising and promotional opportunities
• seasonal variations
• methods of distribution.

Describe the research you have done, and what it has revealed.

Competitors

Do not underestimate your competition. You need to understand and describe who your competitors are and the effects they will have on the co-operative’s business. Provide details of their market share, resources, products and target market, strategies, strengths and weaknesses.

Explain where the co-operative fits within the industry, what level of market share you expect, any barriers to entry and how you will address them.

Also describe how the competitors are likely to react at your co-operative’s entry into the market and the co-operative’s response strategy.

Competitive advantage

Describe what is different about your products or services compared to those of competitors. Explain why customers are likely to buy enough of your products or services to make the co-operative sustainable.

• Do you have a different target market?
• Is there an unmet need in the target market you can fulfil?
• Do you offer something different or new?
• Does your product or service have superior quality or features?
• Will the co-operative advantage work for you?
• If your product or service is unique, describe difficulties competitors will have in copying it, giving a lead time from product launch to when a competitor can duplicate your product.

List the co-operative’s internal strengths and weaknesses.

Then list the external factors that could affect the co-operative’s activities – the opportunities (e.g. market trends) and threats (e.g. competitors, economic uncertainty).

Describe how you can capitalise on the strengths and opportunities, and reduce the effect of weaknesses and threats.

Target markets

Describe the target markets for your product or service. Who are your customers? If you already know who they are, list the major clients if they agree to this information being made available to external parties. If you don’t have major clients, or there are potentially many of them, you should define the markets you will be selling to.

How have you identified your target markets? What are the characteristics of the target markets? Are your customers a certain age or gender, do they live in a particular location, have a certain type of job, ethnicity or income level? Are they members of the co-operative? What are their needs and preferences? How big is your target market? How often will they buy from you? Why and how will they buy your product or service? Are they end-users?

Consider if there are different segments to your target market. For example, would both students and professionals buy your products? Each segment may have different needs, and may be willing to pay different prices. If you understand the needs of each segment, you can adapt your marketing mix to provide what each segment wants.

Product pricing and terms

In determining the prices of your products or services, consider the costs to produce, or to deliver services, your customers’ sensitivity to the price and to price changes, and what the price reveals about the product’s value or quality. Will you offer quantity discounts, or discounts for repeat sales? Will co-operative members receive a discount or rebate?

Describe the expected payment terms for customers, e.g. direct customers pay cash while distributors and members pay within 30 days from invoice date.

Product sales, margins and distribution

If your co-operative is new, estimate the number of products or services to be sold in the first year, and consider using a table to show your estimates. If the co-operative is already established, use both past and projected performance levels. You may wish to break the table down into weeks or months. The table can form the basis of sales volume records and pricing over time, and identify changes to help you to plan future sales targets and purchases of raw materials.

Describe how your products will be distributed – whether through direct sales, online marketing, direct mail, agents, wholesalers, representatives, retailers or consignments. Describe commissions or other fees involved.

Estimate the cost of other expenses such as shipping, warranties, contracts and liabilities.

Strategic alliances

List strategic partnerships the co-operative has, or plans to form, with other co-operatives or businesses.

These may be to work together in major ventures, or on market access, supplies or other resources. Provide information about the arrangements.

List key suppliers, and describe their history and reliability, location, what and how much they can supply, credit policy and delivery details, and the cost and availability of materials.

Marketing plan 

Explain your marketing objectives – what you aim to achieve and what you will do to achieve them. Ensure they can be measured and evaluated. An example might be “to obtain 20% of market share by the end of the first year”, or “to ensure 50% of our target market recognise our brand, and 10% buy our products”. Then determine what marketing activities will help you achieve your aim.

Determine your marketing strategies and activities for each month of the first year to create awareness and sales. This is your marketing mix, and relates to product, place, price, promotion, people and process.

Product strategy : consider the products’ qualities, consistency, features, adaptability, packaging and design, how the customers will perceive the products’ features, and how you will market them.

Place strategy : consider distribution channels, location of retail outlets, the geographic area your products will be available in.

Price strategy : consider the selling price to various customers and markets, including discounts for quantity and early payment.

Promotion strategy : consider what advertising, selling, sales promotion, trade shows, website, media and public relations activities you will undertake to differentiate your product and make consumers aware of your product or service.

People strategy : consider who will sell the product and delivery it. People may include staff, strategic partners and agents.

Process strategy : this is the strategy where you plan, target, cost, develop, implement, document and review the systems to attain the other aspects of the marketing plan. You’ll plan to have the right product, in the right place, at the right price, in the right quantity, at the right time for the right customers.

The finances 

Often the last part in the business plan, the finance section is important as it demonstrates the likely financial viability of the co-operative, and is vital information for anyone considering investing in the co-operative.

It shows what financial resources are needed to set up and operate the co-operative, forecasts of the co-operative’s performance based on expected sales levels, and it details the timing and the amount of investment needed from external sources.

Commencement capital – new co-operatives

List the amount of capital that has been raised and will be raised from members, and funding confirmed from other sources.

List the costs to start the co-operative (below) in a table, and show the month when the costs are expected to be paid.

• Set up the co-operative: these costs might include accounting and legal fees, registration of the co-operative and domain name, website, insurances and licences.
• Set up the premises: these costs might include a bond and advance rent, fit-out, electricity connection, telecommunications connections and stationery.
• Purchase plant and equipment: these costs might include machinery, tools, office furniture, vehicles, telecommunications, computers and software.
• Start of operations: these costs might include advertising, raw materials and supplies, wages, interest – and working capital to tide the co-operative over until it trades sustainably.

Subtract the set-up costs from the confirmed capital raised; the balance is the amount of borrowings you will require.

Financial objectives

List the co-operative’s financial objectives and how long you expect to take to achieve them. These may be profit targets, investment levels, returns to members and debt repayment.

Assumptions

Explain the key assumptions made in developing your financial forecasts:

• sales and purchases forecasts
• the time it will take to collect from debtors
• the time it will take to pay creditors
• interest rates
• time between manufacture and sale
• timing of member contributions
• timing of external capital injections
• increasing membership.

If the co-operative has already been trading, describe its financial history, including equity, debt and profit levels.

Include at least four key financial ratios:

• Debt equity ratio = total liabilities/members’ equity
• Return on investment = % of interest over total loans received, and % dividend over members’ capital injected
• Break-even point = the sales volume level where revenues and expenses are equal and provide no profit or loss. This will change each year with changes in costs, income, and interest levels.
• Working capital = current assets – current liabilities

Monthly cash flow forecasts

The cash flow forecast demonstrates how and when cash comes into and goes out of the co-operative. Hopefully it also shows that income from sales will pay for bank loan repayments and other expenses. It will show you when you need an injection of cash to cover monthly bills, and when you need to conserve cash to pay for upcoming bills.

For the first year of trading, present monthly cash flow forecasts. After the first year, show yearly forecasts for at least two years.

Monthly income and expenditure forecasts

Also called profit and loss forecasts, and forecasts of financial performance, income and expenditure forecasts show the co-operative’s projected income less expenditure, resulting in a profit (or loss) over a specific period of time. For the first year of trading, provide monthly or quarterly forecasts, and annually for the following two years.

Just a few quick tips for the financially challenged – income is usually from sales, and expenditure is usually the costs to run the co-operative and interest payments. Loans (liabilities), purchased equipment and inventory (assets), capital injections from members (equity) are all items for the balance sheet.

When you receive an invoice it is an expense, even if you haven’t paid it yet; so it is shown in the month the expense was incurred. Show all items as GST exclusive (i.e. without GST).

Balance sheet forecasts

The balance sheet, also known as the statement of financial position, shows the co-operative’s net worth at a particular point in time – usually the last day of the financial year. Assets are usually objects and cash the business owns, liabilities are usually debts owed, and equity is the capital contribution and accrued profits. Assets minus liabilities equals equity.

Provide balance sheet forecasts for three years.

Financial plan

Describe your plans for the co-operative’s financial viability. What is the total investment required for start-up? What are your short and medium-term investment plans? Where will funds come from? Have they been confirmed? How much comes from each source, and what conditions do funds come under (e.g. interest rates, repayment terms)? What security is offered?

When is the co-operative expected to make a profit? What level of sales is required to make a profit? When will members see a return? How much are profits expected to grow each year? How will costs be kept down? If non-distributing, will you retain surpluses, and where do you plan to donate excess surpluses?

Do you have an exit strategy?

A note on financial management

This note on financial management is not meant for inclusion in the business plan, but nevertheless is very important. (A summary of the financial management systems used could be included in the financial plan.)

Members (and investors) need to know how the co-operative is performing and need to receive regular accurate reports. Systems must correctly identify, measure and communicate financial information.

You need to understand and abide by accounting principles.

Complete, accurate, and up-to-date financial records must be kept. These may be handwritten, or on computer spreadsheets, but we recommend that unless the co-operative is very small, you should use financial software. Such software doesn’t replace an accountant, but usually knows what to debit and credit, and has a useful help function.

Develop strong systems for handling cash. Provide numbered and dated receipts for money received. Provide numbered and dated invoices (tax invoices if the co-operative is GST registered) for purchases and to others who owe you money.

Every month, reconcile your expenses paid and income received with the bank statement. Produce a balance sheet and profit and loss statement to help you keep an eye on finances and to allow you to plan and control the co-operative. Watch your creditor and debtor levels; ensure you collect money owing and pay expenses when due.

The strategic plan

A strategic plan is usually a long-term plan for the next three to five years. It explains the goals and objectives to be reached, and the path to achieve them. It’s a bit like a GPS for a very long journey, if you zoom out and ignore the minor roads.

Focus on a small number of key priorities. Too many priorities will mean you lose focus on the major objectives.

Make the priorities easy to translate into action plans, and have clear timelines to achieve outcomes.

Information that might distract from the business plan’s flow should be included as appendices. Provide a summary of the information within the business plan, and more detail in the appendices. It’s also a good place to include information that is not part of the business plan. Start a new page for each appendix.

Appendices might include the following:

• Disclosure statement.
• Co-operative rules.
• Past three years’ financial statements.
• Directors’ and key staff members’ résumés.
• Pictures of products, premises or location.
• Forecasts of purchases and payments to creditors.
• Forecasts of sales and debtor collections.
• Letters of support.
• Promotional materials.

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MSU Extension Product Center

Starting a cooperative and developing a business plan: phase 2.

Questions about this information? Contact us . June 04, 2015

Updated from an original article written by Mark Thomas, Michigan State University Extension.

Having enough interest in starting a cooperative is just the first step, developing a viable business plan, when implemented, that meets the identified needs is the second.

In my first article on starting a cooperative I noted that the purpose of starting a cooperative was recognition of the need to solve problems or meet needs of the marketplace with goods or services. A steering committee should be formed to determine if there is data to support the feasibility of the cooperative. This committee should present its findings to potential members and let them make the decision to move forward with the development of a cooperative. The development of a business plan is then critical, as it will map out the necessary steps for a successful enterprise.

The feasibility study will lay the foundation for the business plan. It contains market information about the potential members’ usage and how a cooperative would differentiate itself from existing competition (if any). Additionally, financial viability and management expertise will be spelled out, as well as facilities needed and potential locations. Having this study prepared in an expert manner will insure the business plan is on solid footing s moving forward.

The business plan is a road map to launching a cooperative and will allow the Board of Directors to know where they want to be and how to get there. Having a professional who is familiar with cooperatives to assist with the preparation of the business plan is a good idea and can avoid and voids problems in the future. It should include the preparation of three years’ projections (pro-forma) of cash flow, operating statements and beginning and year-end balance sheets. These will be used to paint the picture of the capital needs and potential sources of funds to meet the asset needed. Additionally financial planning should include funding the operating until profitable.

The steering committee should study the legal aspects of cooperatives and have an understanding of the duties necessary. At this point employment of legal counsel to develop the articles of incorporation, specific to the State should be undertaken. They can also assist with bylaw development and they should be in sync with the purpose and scope of how the cooperative will operate.

The steering committee should now be ready to hold a fourth member exploratory meeting. It is essential to have a large turnout of the identified potential members. Direct contact, newspaper articles, web postings and any other method of “spreading the word” about the meeting should not be overlooked. The meeting is conducted to present the business plan to potential members. The business plan will tell the story of the potential cooperative. Why the steering committee supports the development and how it will benefit the community of interest at large should be spelled out. Financial details regarding membership investment requirements should leave no doubt in the minds of the potential members that their assets will be at risk.

With full disclosure of the information regarding the risks and possible returns of the cooperative, the potential members conduct a vote to continue or not. If the vote is in the affirmative, the cooperative can hold its first meeting at which two items of business need to be conducted:

• Approve the bylaws
• Elect a Board of Directors

Michigan State University Extension educators working with the MSU Product Center’s Michigan Cooperative Development Center can provide assistance with helping guide groups of potential cooperatives through this process. 

This article was published by Michigan State University Extension . For more information, visit https://extension.msu.edu . To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters . To contact an expert in your area, visit https://extension.msu.edu/experts , or call 888-MSUE4MI (888-678-3464).

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Home > Business > Business Startup

How to Get a Business Cooperative Started

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A business cooperative is an enticing alternative to the standard capitalism model, offering a democratic management style, lower risk of debt, and other social and economic benefits. Cooperatives also give small-business owners more control over their organization and come with certain tax advantages.

In this article, we’ll define a cooperative business, offer examples of worker cooperatives, and discuss how to get a business cooperative started.

• What is a business cooperative?

Business cooperative examples

• Steps to starting a business cooperative

The takeaway

Business cooperative faq.

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What is a cooperative business?

A business cooperative (co-op), is an organization or enterprise owned by its members. While a traditional business serves the interests of investors, founders, or board members, a co-op services the interest of its customers or workers. Most co-ops are established to fulfill an economic need, such as providing products, services, or bargaining power that is otherwise unavailable to a certain group of people.

Business cooperatives come in many forms, such as housing co-ops, food co-ops, credit unions, and agricultural co-ops. However, many large corporations are also cooperatives, including Ace Hardware, REI, and Land O’Lakes dairy.

Here are some other well-known cooperatives in the US.

• Navy Federal Credit Union: The largest credit union in the US, serving military servicemen and government employees
• Alliant Credit Union: A credit union based in Chicago, Illinois, originally founded by employees of United Airlines
• Dairy Farmers of America: A marketing cooperative owned and operated by dairy farmers across the US
• Associated Wholesale Grocers: The nation’s largest food co-op, which supplies independent grocery stores across the country
• People’s Food Co-op: A Portland, Oregon-based food co-op with a focus on sustainability
• Berkeley Student Cooperative: A housing co-op for students of UC Berkeley

How to start a business cooperative

Since co-op founders usually organize cooperatives based on a specific need or problem, the first step in starting one is to identify that need. Once this is done, the group should take the following actions to officially establish the co-op:

1. Establish a steering committee.

A steering committee is a group of people that represents the members of the organization. This committee should create a timeline for coordinating the logistics of the co-op. They should also establish the co-op’s values and mission, as well as gauge the overall level of interest in the co-op.

2. Conduct a feasibility study.

Once the steering committee is established, the group should conduct a study to consider all possible challenges and obstacles the co-op might face. This study should look closely at opportunities for financing, operating costs, and other factors that influence the market.

3. Create articles of incorporation.

Every cooperative must have articles of incorporation and bylaws that govern the organization. These bylaws should be made by a legal counsel and can be changed and enhanced over time.

4. Draft a business plan.

Like a traditional business, a co-op should have a detailed business plan that guides the company as it grows. The plan should include a market analysis, a marketing plan, product research, and a description of the co-ops goals and objectives.

5. Get financing.

Most co-ops need cash flow for day-to-day operations. This cash often comes from member investments, but some co-ops use a business loan to finance their organization in the early stages.

6. Begin operations

At this point, the co-op can hire a manager and employees, secure a facility, and open its doors. It’s important for members to remain committed to and aligned with the goals of the organization to ensure long-term success.

A worker cooperative offers a number of benefits to small-business owners, including a democratic management style, less debt risk, and member dividends. To set up a business cooperative, a setting committee must conduct a feasibility study, establish articles of incorporation, create a business plan, and secure financing.

Would you like to learn more about starting a business cooperative? Check out Business.org for How to Start a Small Business: Must-Have Checklist to Spark Success .

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Some cooperatives are not designed to make a profit and instead operate at cost. If a cooperative does make a profit, the members who purchase goods or services generate that money. Those profits are typically returned to the members as a refund or put back into the organization.

Safety stock is a term used to describe the excess inventory business owners choose to keep in hand in the event of an increase in demand or supplier delay.

Here are the steps to starting a worker cooperative:

• Establish a steering committee.
• Conduct a feasibility study.
• Create articles of incorporation.
• Draft a business plan.
• Get financing.
• Begin operations.

A cooperative (co-op) is a type of business organization that exists to benefit its members rather than outside investors. The co-op is owned and run by the members, and any profits are divided among those members. Most cooperatives are organized to reduce costs, fulfill an unmet need, improve the quality of a product or service, or improve bargaining power.

What are some cooperative business examples?

There are many types of cooperative business organizations, including mutual insurance groups, credit unions, electrical power co-ops, housing co-ops, and retail co-ops, such as Ace Hardware or REI.

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How to start a co-operative: a step-by-step guide.

Starting a co-op? This article provides a step by step guide on how to start a co-operative. There’s a lot to do, and a lot to learn — but we have tons of supports, resources, and tools are available. This article provides a map to many of them.

A short note before we get started

Starting a business is exciting and rewarding, but it can also be frustrating.

At Co-operatives First, our job is to de-mystify the process of starting a co-operative business . That’s why we built this site. The Co-op Creator provides a variety of guides, tips, templates, and links. We’ve also developed an online course full of helpful videos to help you learn about this process — you can take that for free here . 

For the DIYers out there, this is ideal. But sometimes folks need more hands-on support. If that’s you, our knowledgeable staff is a phone call or email away .

Okay, let’s get started.

Step 1: Decide if a co-op is the right choice for your business

What do you want to do.

Agree on the purpose of the business. Maybe your community doesn’t have enough daycare options. Maybe you’re a professional with your own firm who wants to share the cost of office space and administration. Perhaps you’re a producer who needs help packaging, marketing, and distributing your vegetables. Whatever the case, everyone needs to agree to and buy into the purpose of the co-op. A good place to start is by asking the question: what problem are you trying to solve and how does working as a group help solve that problem? This resource can help you focus ideas and engage potential members and markets in the process .

Who will do it?

A co-op is a business run by a group of people who share its benefits. You might already have a group that wants to work together. That’s great! You might also have an idea and need to get more people on board. To get the word out, you could organize a meeting to discuss how a co-op could work and see who wants to get involved. 

Is a co-op the best fit?

If you’re thinking about starting a co-op, consider these two questions: What is the purpose of the business and who should benefit from it? If the answer is ‘provide a service for those who benefit from it,’ then a co-op is probably a good choice. The model works best when member interests are aligned and working as a group brings value beyond what can be achieved alone.

To learn more, here’s how co-ops compare to other business models . Or try our questionnaire .

Step 2: Get organized

Decided a co-op is the way to go? Time to organize your co-op’s structure, plan of action, and finances. 

Create a steering committee

Co-ops need people to start and support them. So, if you haven’t already, find like-minded people to join you. But make sure these people have a personal interest in starting the co-op.

Also, keep in mind BC, Alberta, and Manitoba require three people to incorporate a co-op — in Saskatchewan you need six.

Develop an action plan

Sit down with your committee. Come up with a plan for starting your co-op. Decide what needs to get done, and who is going to do each task. Write it down and hold people accountable.

Do a PESTLE analysis

To assess the external factors that could impact your new business, try completing a PESTLE analysis . Also consider doing a business model canvas to better understand how the business will work.

Create a preliminary budget

How much money do you need to start the co-op? Where will it come from? Get a clear financial picture of your start-up before getting too far into it.

Create a governance structure

Who will make the decisions in your co-op? Figure out who’s in charge, and how the decision-making process will work in your business. 

Step 3: Incorporate your co-op

Now you’re ready to incorporate your co-op, which means you’ll file documents with the government that legally create your business. You probably do this with your provincial government — but if your co-op will operate in more than one province, you can incorporate with the federal government.

We’ve created work plans that you can follow to incorporate your co-op in:

• Saskatchewan
• Canada (federal incorporation)

Incorporating your business will include the following tasks: 

Select and reserve a name 

The next step in starting your co-op is to pick a name — here are some tips on choosing a name for your co-op . You can find more specific information about registering a name in your province’s work plan (above). Or try our guide to naming your co-op .

Complete and submit the Articles of Incorporation

Your Articles of Incorporation (also known as “Memorandum of Association” if you’re in BC) are the documents you submit to the government to start your co-op. Once you’ve filed these and they’ve been accepted, your co-op will be a legal entity . This means it has rights, and can do things like open a bank account, take out loans, etc.

You’ll find more detailed info about incorporation both in the above work plans, and here:

We know you’re busy. We can incorporate your co-op for you. Curious why you should incorporate? Check out this video .

Write your bylaws

Bylaws (known as “Rules of Association” if you’re in BC) are the rules you write for your co-op. The government requires that you include certain things in bylaws, while other rules are up to you.  Requirements change depending on whether you’re in BC , Alberta , Saskatchewan , Manitoba , or are incorporating federally .

Step 4: Build your membership

Attract and admit new members.

Once you’ve started a co-op, it needs members! You’ll need to identify who your members should be , get the word out to them about joining your co-op, and create a process for them to join . 

Keep track of your members

To better manage members’ data, co-operatives keep membership registries . These registries are just places where you store information. For co-ops with more complex interactions with members, you might want an accounting software to track member accounts, issue dividends, and generate reports. For smaller and/or newer co-ops, you could just use an Excel spreadsheet.

Hold an Annual General Meeting

Every year, your co-op will have to hold an AGM . At this first one, you’ll elect your first board of directors . Often, the steering committee that’s been working to start the co-op becomes the first board, but you may also need to recruit members . 

Step 5: Formalize and expand your plans

Write a business plan.

A business plan is a great tool not only to guide you as you build the business, but to attract investors, show lenders that your business idea is sound enough to deserve a loan, or get new members to join. You should do this as a group.

We’ve created this handy Business Plan Creator to lead you through the process. You can also apply to Co-operatives First to have a professional consultant create a plan for you. 

Finance your business

Figure out how you’re going to get the money to start the co-op: from loans? Members? Selling shares? Fundraising? Usually it’s a combination of these. Write a financial plan , a budget , and think about how to finance the business going forward .  

Step 6: Govern your co-op

Train your board.

It’s important for all board members to understand their role and what’s expected of them. Co-operatives First can provide training to get your board started on the right foot. 

Develop policy

New boards have a lot to do to guide the co-op. Here are some just a few things a new board will do in the first year:

• Create a strategic plan
• Write a Human Resources policy
• Write a Conflict of Interest policy  
• Recruit members
• Evaluate itself

 If starting a co-op is your goal, Co-operatives First can be there every step of the way. Contact us to get started.

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How to Adopt a Cooperative Business Model

• | September 9, 2020

Cooperative businesses can contribute to a more just, resilient economy. Here’s how companies are adopting cooperative business models.

Capitalism built around investor-owned companies is struggling to meet society’s needs. Nathan Schneider (University of Colorado Boulder) argues that cooperatives could do better.

Starting or running a business? A cooperative model might help you do it better.

While our economy keeps getting more efficient and generating more value, most people are getting a smaller and smaller portion of it. The investor-owned companies that dominate our economy are geared to maximizing shareholder value, more than pleasing customers, creating jobs, or benefitting society.

Cooperatives are a different way of doing business. They have been around since the 19th century, but many people aren’t familiar with them. They’re likely all around you, blending in with for-profit enterprises but serving a very different purpose.

In this article, I’ll describe what makes a cooperative and how you can build the principles into your enterprise. I’ll describe advantages and disadvantages and how cooperatives are being retooled for the modern era. These ideas are adapted from my 2018 book, Everything for Everyone: The Radical Tradition that Is Shaping the Next Economy .

What makes an enterprise cooperative

Cooperatives are based on the idea that those who use an enterprise — the members — should also own and govern it. Cooperative members decide to produce, how to do it, and what to do with the profits. The goal is to make businesses truly accountable to those they claim to serve.

A co-op’s members might be individuals, or businesses, or other co-ops. Cooperatives of any substantial size hire staff to manage the day-to-day, but for big decisions or board elections, the rule is one member, one vote.

As co-owners, members receive dividends from the enterprise’s profits, proportional to how much they have spent. Members can also choose to reinvest dividends to develop the cooperative.

The International Cooperative Alliance, an international non-profit, identifies seven principles of cooperatives. In addition to member control, these principles also stress voluntary and open membership – no discrimination – and concern for community. Cooperatives must aid not only their members but the broader society.

7 Principles of a Cooperative Enterprise, from the International Cooperative Alliance (design by Abby Litchfield)

Cooperatives aren’t all or nothing.

Businesses can also take partial inspiration from the co-op model. For example, Employee Stock Ownership Plans (ESOPs) give employees an ownership stake in the company. Trusts are another strategy; they can hold some or all of a company’s stock on behalf of certain beneficiaries, such as its workers, or in service of a social purpose. 

Many emerging business models draw on the co-op idea; while they aren’t formal co-ops per se, they can still gain some of the benefits. In my recent work on the idea of an “ Exit to Community ” for startups, we’ve been exploring a wide range of models for shared ownership.

Cooperatives in practice

Globally, commonwealths are a major market force. The largest cooperatives generate about $2.2 trillion in turnover and employ about 10 percent of the world’s employed population. For example:

In Canada, the vast credit-union federation Desjardins is a cooperative bank.

New Zealand has the world’s largest cooperative economy as a percentage of GDP, thanks mostly to hulking dairy co-ops .

Smart—originally, Société Mutuelle pour Artistes —organizes 80,000 workers in 9 European countries to provide employment support services.

When Argentina’s economy collapsed in 2001, workers took over factories that owners tried to close and started running them for themselves.

The case for a cooperative business model

Cooperatives have advantages over investor-owned or purely for-profit companies. For example:

Cooperatives are innovative, often identifying a missing market . They’re a ground-up approach; traditionally, they have evolved when people have to figure out how to do what no one will do for them.

Cooperatives can have lower costs. Volunteerism and sweat equity reduce start-up costs , and co-ownership can mean lower transaction and contracting costs. When people trust each other as co-owners, they can cut fair deals more easily.

Cooperatives have greater trust and loyalty from customers. Customers see cooperatives as providing higher quality products and more worker and community benefits.

Cooperatives are more resilient. They have a lower chance of failure , especially after the startup phase, and greater resilience in downturns (likely due to shared sacrifice and greater risk aversion). 

Today, as digital firms dominate the economy, the democracy of cooperatives has even more appeal. It can provide safeguards around data privacy and labour conditions , both under threat.

Limitations of cooperatives

Cooperatives have disadvantages as well. Raising capital is a challenge in an economy designed for investor ownership. Lenders and investors expect businesses to be owned by a small group of founders, not a community of members; we need policies that can change that.

Cooperatives can become stuck in their ways. Investor-owned businesses attract investor-owners by promising to exceed expectations; co-ops tend to attract members by meeting known, day-to-day needs. We need to ensure that the co-ops have built-in incentives not just to meet member needs but to help prepare members for uncertain futures.

A new generation revives cooperatives

Over the years, many large, established cooperatives – like credit unions and mutual insurance giants — have lost the kind of member involvement that they had at their founding. They have low member turnout in board elections, for example. They’ve also often become conservative and hesitant to adopt new ideas. Some organizations, like We Own It , are organizing co-op members to re-activate their democracy.

Newer cooperatives often have different goals than their predecessors. They want go beyond serving their members to do good in the broader world. They can adopt complex, multi-stakeholder ownership structures to address complex challenges; many new co-ops, for instance, have separate member classes for workers, users, founders, or outside investors. Co-ops increasingly view themselves as social entrepreneurs and secure B Corp certifications, based on metrics of social impact.

Modern cooperatives

Two cases show the more modern cooperative approach.

Brianna Wettlaufer, an executive at image provider iStock, was frustrated that the imperatives coming from the company’s investor-owners required her to keep payments to independent artists. She left iStock and founded Stocksy United . It’s an artist-owned cooperative, where 50%-75% of all licenses go directly into contributors’ pockets. Stocksy presents its value proposition: “The sense of community and ownership felt by our members drives a greater level of passion into their work, resulting in inspired imagery of the highest quality.”

Namaste Solar is a worker co-op solar utility company based in Colorado. By combining and connecting different co-op models, the founders of Namaste have achieved both a successful local business and national-scale impact on their market. Namaste organizers created Amicus Solar, a purchasing co-op that allows other small solar utilities across North America to buy equipment together, dramatically lowering costs. Namaste has also spun off the Clean Energy Federal Credit Union to assist with financing.

Be part of cooperative change

Cooperatives provide an imaginative, exciting, possible future. In my Media Enterprise Design Lab at the University of Colorado, we explore some of the ways that cooperatives are evolving. Check out our work – and share your ideas for an economy that better addresses society’s needs.

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Steps to Startup

Starting a cooperative presents a unique opportunity for a group of people to meet a shared economic or social need. As democratically governed businesses, cooperatives can be a great way to structure a business that is guided by member values.

As with any new venture, starting a cooperative requires good ideas, expertise, time, energy, and money. It can take six months to two years, sometimes longer, for a new cooperative to go from an initial concept to launch.

The following are basic guidelines for getting started, but each new cooperative is unique. The manner in which the momentum, people, and money come together will vary. However, each of the steps described below is a logical point at which organizers can evaluate a cooperative’s progress and decide whether or not the effort should move forward.

Here are a few questions to ask yourself before getting started.

• What is the need that is not being met? What problem are you solving?
• Who are the members? What would motivate people to join the cooperative?
• Who are the competitors? Who else is already doing this?
• Who are your first customers?
• Who are strategic partners you can align yourselves with?

Made it through the basics? Good for you! Now it’s time to figure out if a new cooperative business is the right choice for you. You’ll find more details on how to get started in the steps below.

For even more info, please visit our Startup Resources Page .

Stage 1: Explore

This is an accordion element with a series of buttons that open and close related content panels.

Identify the problem and gauge interest

A core group of individuals explores an opportunity or common need for a particular product or service. They identify the benefits that a cooperative approach might offer and reach out to a broader group or community to gauge interest in the idea. This group organizes informational meetings for potential members to further define a common need. It also recruits others who have the skills and expertise required to lead the cooperative development process.

Form a steering committee

If there is enough initial interest in the cooperative idea, it is time to establish a steering committee. The steering committee should be made up of trustworthy individuals who have good business sense, will champion the project, and are capable of putting the interests of the group before their own. Many potential cooperative members will base their support of the cooperative on the credibility of the steering committee members. The steering committee:

• Gathers more information on the cooperative option and potential member support;
• Refines the business idea and its initial mission, purpose, and goals;
• Manages financial matters in a responsible and trustworthy manner;
• Leads decision-making during the cooperative development process.

Stage 2: Assess

Conduct a feasibility study.

The steering committee coordinates a feasibility study to assess the viability of the proposed cooperative venture. This study examines whether there is a market for the new cooperative’s products or services, and whether the co-op can generate enough revenue to cover the risks and costs of operating the business. It should be completed by someone who is knowledgeable about the particular business sector and does not have a vested interest in the study’s outcome. This study is a key step in the development of the cooperative. The group may need to pay for the study by conducting the first phase of a membership drive, or by applying for funding from federal, state, or non-profit agencies.

A feasibility study includes:

• Market analysis;
• Management, equipment, and facility needs;
• Revenue projections;
• Sources of financing;
• Potential membership.

Cooperative Development Grant . Wisconsin Economic Development Corp.

Cooperative Feasibility Study Guide . USDA Service Report 58, 2016.

Feasibility Study Outline . Iowa State University Extension, 2010.

Evaluate feasibility study results

The results of the feasibility study help the steering committee decide whether to continue the cooperative development process. This is a critical decision point during the development process.

Stage 3: Incorporate

File articles and adopt bylaws.

If the feasibility study indicates the concept is viable and the steering committee decides to move forward, the group may decide to legally incorporate as a cooperative. In Wisconsin, the group can choose to incorporate under Chapter 185 or Chapter 193 of the state statutes by filing Articles of Incorporation with the Wisconsin Department of Financial Institutions. The Articles provide the basic organizational information required by state statutes.

The steering committee often acts as the interim board of directors. It may draft the Articles and the initial set of bylaws, which describe how the cooperative is governed. Articles and bylaws should be reviewed by a lawyer familiar with cooperatives. Bylaws must be adopted or amended by the cooperative’s members at the first membership meeting.

Sample Articles of Incorporation . USDA Cooperative Information Report 7, How to Start a Cooperative, 2015.

Guidelines for Cooperative Bylaws.  University of Wisconsin Center for Cooperatives, 2019.

For more, see our Legal & Taxation Resources page.

Open a bank account

Once the cooperative is established, the interim board of directors should open a bank account for cooperative financial transactions. In many cases, a group will incorporate earlier in the process so that the cooperative can receive funds and pay initial expenses.

Stage 4: Plan

Prepare a business plan.

A business plan is an in-depth analysis of and plan for the cooperative business. It is also an important communication tool for answering questions that potential members will have about the proposed cooperative. Banks and other funding sources will want to assess the business plan as part of their financing decisions. The business plan includes:

• Description of the goods or services offered; • Market analysis; • Marketing plan; • Operational plan; • Description of the management and ownership structures; • Sources and uses of start-up funds; • Projected financial data for the first five years of operations.

Elect a board of directors

A membership meeting is held within six months of incorporation to elect the first board of directors and to present and approve the bylaws. The board of directors begins coordinating the business plan implementation and works to secure start-up capital.

The Circle of Responsibilities for Co-op Boards . USDA Cooperative Information Report 61, 2014.

Benefiting from the Board: A Case Study . UW Center for Cooperatives, 2008.

For more resources see our Governance Resources page.

Stage 5: Capitalize

Begin membership drive.

The membership drive will indicate whether there is sufficient member support for the new cooperative. Materials for prospective members should clearly explain the cooperative’s mission, the financial requirements for membership, and the risks and benefits of membership. Some groups launch the membership drive earlier in the development process.

Cooperative Equity and Ownership: An Introduction . UW Center for Cooperatives, 2013.

Secure start-up capital

A cooperative may use both debt and equity to meet its initial capital needs. Cooperatives may also use member loans or preferred stock to raise start-up capital. Lending institutions will evaluate the risks associated with making a loan to the start-up cooperative business by analyzing the financial projections in the business plan and ensuring the co-op has capable staff lined up. Lenders will also look at the amount of member equity invested in the cooperative, since this indicates the level of risk and commitment that members are willing to assume. Members will typically be expected to supply 30-50% of the start-up equity capital. The cooperative will need to borrow the balance from a financial institution. Banks, credit unions, and loan funds that are specifically oriented to cooperatives and understand their unique structure can be important resources.

Stage 6: Launch

The board hires a general manager, who plays a key role in securing the operations site, developing vendor networks, and hiring additional staff. Some groups hire staff earlier to assist with the development process.

Address licensing, regulatory, and insurance requirements

There are often specific licensing or regulatory requirements that must be met before the business can begin operations. Legal, insurance, and risk management issues must also be addressed before launching.

Commit to ongoing training and education

Ongoing member education and board training are vital to establishing a sustainable foundation for successful cooperative operations. Education topics might include the cooperative model, cooperative finance and governance, industry trends, and working together effectively.

Other Startup Resources

You don’t have to do it alone! There are lots of great resources available, as well as co-op development centers all over the country that can help you get started.

Steps for Starting a Cooperative . USDA Powerpoint, 2016.

Cooperative Development Centers by State

How to Form a Farmer's Cooperative Business Plan

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How to write a farm business plan, how to become a cigar distributor.

• The Structure of a Cooperative Organization
• Grants for Beginning Female Farmers

Increased bargaining power and the opportunity to reach more markets makes a cooperative a lucrative idea for small farms. When it comes to preparing the business plan, co-op plans differ from those of other organizations in that the focus is about providing for the needs of the members rather than making a profit as a whole. The plan should include several key components that show your group has studied the market and is in agreement on the types of services the cooperative will provide.

Executive Summary

The executive summary appears at the beginning of your plan where it briefly explains the background and experience of each farmer involved in the co-op. Describe the legal nature of your cooperative and explain how decisions are made, such as requiring a vote by all of the members for major decisions. List the goals of the group in forming the organization, including reaching out to retail markets or accessing corporations that buy large quantities of farm goods.

Explain the services your cooperative plans to offer, such as providing training to help farmers better understand potential markets. Some co-ops provide immediate payment for delivery of products so the members can put the money right back into their farms. Or you may provide transportation to get products to market or high-quality storage spaces that members would not have access to otherwise. Since your co-op likely consists of farms that grow or raise similar types of products, explain how you need the selling power of the group as a whole to find better-paying markets that want larger quantities than individual farmers could produce.

Describe the branding your cooperative plans to use to develop a name and reputation in the marketplace. Explain the types of companies you plan to approach. For instance, a co-op made up of hay farmers may want to approach overseas markets that need large volumes of hay for their livestock. Explain how the co-op plans to differ from individual farms, such as by accessing wholesalers and restaurants that would be difficult to reach by single farmers. Provide details on the marketing, promotions and advertising activities needed to make your buyers aware of the products you provide as a cooperative.

Typically, the founding members lead a cooperative with legal, technical and financial consultants brought in when necessary. Explain who will monitor the business and marketing plan the cooperative creates to make sure all of the farmers are on target and participating in the manner originally planned.

The financial section explains how much cash each member will contribute to fund the cooperative. Outline the types of stock or certificates to be given to each farmer who becomes a member. Explain how the money invested will pay for facilities and marketing efforts as part of the co-op’s mission to provide services to the members that help them increase their profits.

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Nancy Wagner is a marketing strategist and speaker who started writing in 1998. She writes business plans for startups and established companies and teaches marketing and promotional tactics at local workshops. Wagner's business and marketing articles have appeared in "Home Business Journal," "Nation’s Business," "Emerging Business" and "The Mortgage Press," among others. She holds a B.S. from Eastern Illinois University.

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Cooperative Business Planning

This resource includes several templates for cooperative business plans from actual housing cooperatives in North America. Other references provided are a blueprint for the development process, of which the business plan is a part, and a cooperative business plan presentation given at the 2009 NASCO Institute.

• Business Templates
• Sample Plans

FREE 10+ Co-operative Business Plan Samples [ Ecological, Food, Arts ]

Cooperatives need a working business plan in order to maintain their operation and to bring in more profitable client progress . A cooperative business plan is a systematic approach to a favorable profit and loss turnout that sets the goals and objectives of the institution as well as the practical steps to realize them. Below are free Co-operative Business Plan Samples that you can download to get you started with your own cooperative business plan. Keep reading.

Co Operative Business

10+ co-operative business plan samples, 1. co-operative business plan sample, 2. co-operative food business plan, 3. ecological and co-operative business plan, 4. co-operative business plan format, 5. community co-operative business plan, 6. rural electric co-operative business plan, 7. editable co-operative business plan, 8. co-operative arts business plan, 9. standard co-operative business plan, 10. professional co-operative business plan, 11. new co-operative business plan, parts of a co-operative business plan, 1. executive summary, 2. methods of operation, 3. external environment analysis ,  4. marketing plan, 5. production, what is a patron of a cooperative, what does a dividend mean, what is a preferred stock.

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Without a reliable and concrete plan, the cooperative will not progress and will not meet its goals as a simple small business investment that serves average-income workers of a particular community. The business plan should serve as a guide to the undertakings of the cooperative and will redirect the business administration according to what’s stated in the plan. Hence, the cooperative should be written in a clear and informative manner. Below are the salient parts of a cooperative business plan.

The executive summary includes everything that a reader or a prospective client should know about the business. It comprises an overview of the coop’s humble beginnings and goals. This part also contains, most importantly, the mission, vision, purpose, and values that the cooperative wants to uphold. 

The operational plan that keeps the manpower of the coop moving follows certain standards and methods of evaluation to be followed properly. This section provides the identification of materials and human resources to carry out the tasks of specific designations. 

This section of the plan analyzes the existence of the coop’s natural environment external to its organization. External factors such as the weather of the locality at which it operates and the kind of residences living nearby are key factors of its failure and success because it is from this environment that potential customers and clients are made. Other external factors that affect the operation of the coop are the legal, political, and social environment. 

This part discusses how to reach out to prospective customers and how to promote the product and services of the cooperative. Whether the coop’s nature of business is anchored more on retail business or wholesale , promotional works can be implemented to increase profit. 

The production plan and structure of the cooperative depends on what kind of profit-making institution it is. If it is anchored on manufacturing and fabrication, several factors should be considered such as the location and limitation of land area to conduct operations. A considerable amount of budget for capital will be allocated to the equipment required to mobilize operations of this kind of cooperative. 

An individual or organization who buys the products and avails the services of the cooperative for a sum of money. They are either members or nonmembers of the cooperative and members usually have privileges to discounts.

These are monetary returns of the cooperative’s investors and the amount of return depends on the invested items or products or preferred stocks. In the US, dividends from many state-owned cooperatives are limited to an annual rate of 8%.

Capital stocks that have a specific dividend rate. It is preferred over other stock dividends and refunds to members of the cooperative. It is a type of equity capital that is different from other dividends paid by the board members and other stakeholders. These stocks are also the kind that other members can buy from stockholders at a defined amount of money by the regulations and by-laws of the cooperative.

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How a Cooperative Business Works in the 21st Century

Learn about types of co-ops, advantages, problems, and taxation

• What is a Cooperative Business?

Types of Cooperative Businesses

Pros and cons of co-ops, how to start a cooperative business, cooperative businesses and taxes, for more information in your state.

 Mike Harrington/Getty Images

When you think of the word “co-operative,” you might think of a local food co-op, but there are many more types of cooperative businesses operating in the U.S. today. As some business owners and consumers look beyond traditional, capitalist ways of doing business, co-ops may provide one alternative. 

What is a Cooperative Business? 

A cooperative (co-op) is a business or organization owned by and operated for the benefit of its members. Profits or earnings are distributed among its members.The co-op can be a for-profit business or a non-profit organization.The co-op runs similarly to a corporation, because members purchase shares and elect a board of directors and officers. It differs from a corporation because typically each member gets one vote.   Members of a co-op can be individuals, families, businesses, farmers/ranchers, or manufacturers.   

The International Co-operative Alliance and National Cooperative Business Association  define a cooperative as a group of people with a specific need who work together to create a company to meet that need.

The cooperative movement dates back to the mid-19th century, but the concept goes back even further, to craft guilds, farmer organizations, and mutual insurance companies. The 21st-century cooperative movement has taken off with the growing emphasis on equality and concern about people and planet, in addition to profits (these three are sometimes called “the triple bottom line”).  

These are some of the many types of co-ops, formal and informal, in operation today: 

• Mutual insurance companies (most with the word “mutual” in their names) are owned by policyholders, rather than stockholders. 
• Credit unions are not-for-profit organizations that serve their members. 
• Rural electric power co-ops are private, not-for-profit organizations incorporated in 48 states to provide at-cost electric service to customers. 
• Consumer-goods co-ops , like REI Co-op (yes, that’s part of its name). The company, an outdoor outfitter, says that “more than 70 percent of our annual profits are invested back into the outdoor community.” 
• Producer co-ops , like Sunkist, owned by and operated for their member-growers. 
• Cooperative buying clubs, in which a group of households gets together to buy foodstuffs in bulk and divide the orders among the members. 
• Retail co-ops like Ace Hardware, which was formed in 1924. The company is still owned “solely and exclusively by the local Ace retail entrepreneurs.” 
• Community-owned businesses , such as the Nebraska Cooperative Development Center, which has helped communities in small rural towns start cooperative grocery stores. 
• Housing cooperatives are formed when people join to own or control housing and/or related community facilities. These co-ops are different from condo associations, in which each unit is privately owned and there is a common area owned jointly. 
• Youth co-ops are businesses incorporated and run by young people to give them experience with one type of real-life work model. They can be set up in a school or community center or another organization that supports youth. 
• Worker cooperatives are formed and owned by employee groups that generate profits for the company and its workers.

As demonstrated by the descriptions of several types of cooperative businesses above, organizing a group with a common business purpose in this way can pay off. Positives and negatives can include:

Lower costs by buying in bulk

Common protection from loss (mutual insurance companies)

More price power for sellers when joining together (like Sunkist)

Equal say in the business for members

Shared values. Many co-ops (like REI) value more than just making a profit

Tax advantages for co-ops organized as non-profit businesses

Less opportunity for outside investors because they can’t gain control

Lack of interest by members over time

A co-op can be as simple or complex as you want. You can decide to start a co-op like a food buying club just by getting together with other families to order and distribute food. As you grow beyond this small group, you should form a cooperative business in your state.   

Business Type. You’ll need to decide on a business type (corporation, partnership, or LLC) and register your business with a state .  

Some states have regulations specifically for cooperatives ( New Mexico,  for example.) In some states, you must be formed under co-op status to use the word “cooperative” in your name. 

You’ll need to do all the other tasks involved in forming a corporation , partnership,  or LLC, including electing a board of directors to oversee the operations. 

If you want to be non-profit (exempt from income tax), you first form the business, then apply for tax-exempt status. See IRS Publication 557,  “Tax-Exempt Status for Your Organization,” for details. 

The overall philosophy of cooperatives is that they are intended to operate at cost, so there’s no “profit,” and the patrons (those doing business with the co-op) receive net earnings on an equitable basis.   

The IRS allows several different federal income tax options for cooperative businesses. One variation is exempt from tax and another is subject to tax. 

The federal tax agency considers cooperatives exempt from federal income taxes if they meet certain qualifications. To qualify for and maintain exemption (Internal Revenue Code 501(c)(12)), the cooperative must:  

• Be organized and operated as a cooperative
• Conduct business as set by the tax code and IRS regulations

It must receive 85% or more of its income each year from its members and use the income solely to meet the cooperatives’ losses and expenses. 

Taxes for cooperative businesses are complicated and getting non-profit status from the IRS is not for amateurs. Get help from a tax attorney if you want to form a cooperative business. 

A Subchapter T cooperative is subject to tax. This co-op type may conduct any kind of business. Members or patrons (those doing business with the co-op) can be individuals or organizations. The co-op returns margins (net earnings) each year to users as patronage refunds, based on the amount of business each user does with the co-op. The tax is paid by the cooperative on a temporary basis; it receives a deduction when the money is passed on to the patrons.  

The National Agricultural Law Center has a state-by-state list of Business Organization Forms and Filing Instructions that could be helpful. Also, the National Cooperative Business Association has a spreadsheet (Excel download) showing the cooperative business regulations in each state.  

Small Business Administration. " Choose a Business Structure ." Accessed March 24, 2020.

Cornell Legal Information Institute. " Cooperative ." Accessed March 24, 2020.

Cooperative Directory Service. " Coop Directory Service ." Accessed March 24, 2020.

U.S. Department of Agriculture. " Income Tax Treatment of Cooperatives ." Page 2. Accessed March 24, 2020.

IRS. " General Survey of IRS 501(c)(12 Cooperatives and Examination of Current Issues ." Page 177. Accessed March 24, 2020.

Phillippines Finance

Cooperative Business Examples in the Philippines Inspiring Case Studies

Cooperative businesses are an integral part of the economic landscape in the Philippines. These enterprises, owned and operated by their members, contribute to poverty reduction, job creation, and sustainable development in the country. The cooperative model offers a unique alternative to traditional business structures, emphasizing cooperation, solidarity, and mutual support.

There are numerous successful cooperatives in the Philippines that serve as inspiring case studies for aspiring entrepreneurs and advocates of social and economic development. These cooperatives span various industries, including agriculture, finance, retail, and services. By highlighting their achievements and innovations, these case studies demonstrate the potential of cooperative businesses to drive positive change in society.

One notable example is the Philippine Federation of Credit Cooperatives (PFCCO), which has made significant strides in the field of financial services. PFCCO is a network of credit cooperatives that provide access to affordable credit and other financial products for their members. Through sound management and effective member engagement, PFCCO has empowered individuals and communities to achieve financial stability and improve their quality of life.

Another inspiring case study is the First Community Cooperative (FICCO), a successful agricultural cooperative. FICCO has implemented innovative farming practices and introduced technology to increase productivity and enhance the competitiveness of its members. By working collectively, FICCO has not only improved the livelihoods of its members but also contributed to the growth of the agricultural sector in the Philippines.

These examples demonstrate the transformative power of cooperative businesses in the Philippines. By fostering inclusivity, promoting sustainable practices, and empowering individuals and communities, cooperatives are driving positive social and economic change in the country. Their success stories inspire others to embrace the cooperative model and contribute to a more equitable and prosperous society.

Table of Contents

Why cooperative businesses are important in the Philippines

In the Philippines, cooperative businesses play a crucial role in the economic and social development of the country. With a long history and strong presence, cooperative businesses contribute to poverty reduction, job creation, and sustainable development.

Poverty reduction:

Cooperative businesses provide opportunities for individuals and communities to lift themselves out of poverty. By pooling resources and working together, members of cooperatives can access credit, markets, and training, which are often difficult to attain individually. Through cooperative businesses, people have a platform to improve their economic conditions and achieve self-sufficiency.

Job creation:

Cooperative businesses are labor-intensive and have a strong emphasis on job creation. They provide employment opportunities, especially in rural areas where formal job opportunities may be limited. By establishing cooperative enterprises, individuals can engage in income-generating activities and become economically productive members of society.

Sustainable development:

Cooperatives promote sustainable development by encouraging members to adopt environmentally friendly practices. Many cooperative businesses in the Philippines are involved in agriculture and organic farming, promoting sustainable agriculture and reducing the dependence on chemical inputs. Cooperatives also prioritize social responsibility and community development, supporting initiatives such as education programs, healthcare services, and infrastructure development in underserved areas.

Empowering marginalized groups:

Cooperative businesses are instrumental in empowering marginalized groups, such as farmers, fisherfolk, and indigenous communities. By forming cooperatives, these marginalized groups gain collective bargaining power, allowing them to negotiate better prices for their products, access markets, and improve their livelihoods. Cooperatives create a space for these groups to have a voice, participate in decision-making processes, and have equal representation.

Financial inclusion:

Cooperative businesses provide financial services to individuals who are often excluded from the formal banking system. Through cooperative banks and credit unions, individuals can access affordable credit, savings accounts, and insurance products. This helps promote financial inclusion and empowers individuals to build assets, start entrepreneurial ventures, and secure their future.

Overall, cooperative businesses are vital in the Philippines as they contribute to poverty reduction, job creation, sustainable development, empowerment of marginalized groups, and financial inclusion. They embody the principles of solidarity, self-help, and mutual support, fostering inclusive growth and social progress in the country.

The benefits of cooperative businesses

Cooperative businesses, also known as co-ops, offer several advantages to their members and the communities they serve. These benefits include:

• Equal ownership and control: In a cooperative, each member has an equal say in the decision-making process. This ensures that all members have a voice in shaping the direction of the business and ensures a democratic control structure.
• Shared resources and risk: By pooling resources and sharing risks, cooperative businesses provide their members with the opportunity to access services and products that would otherwise be unaffordable or unavailable to them as individuals.
• Profit sharing: Unlike traditional businesses, co-ops distribute profits among their members based on their level of participation in the cooperative. This allows for a more equitable distribution of wealth and helps to reduce income inequality.
• Lower costs: Co-ops often benefit from economies of scale, which can result in lower costs for members. By purchasing goods or services in bulk, co-ops can negotiate better prices and pass those savings onto their members.
• Member services and support: Cooperative businesses are often focused on meeting the needs of their members and the community. They provide tailored services, such as access to credit, training, and education, specific to the needs of their members. This support helps to improve the livelihoods of members and promotes economic development.

In addition, cooperative businesses tend to have a positive impact on their communities. They contribute to local economic development by creating employment opportunities and supporting local suppliers. Co-ops also tend to have a long-term perspective, prioritizing environmental sustainability and social responsibility.

Overview of the cooperative business sector in the Philippines

The cooperative business sector in the Philippines plays a significant role in the country’s economy, providing opportunities for inclusive growth and development, particularly in rural areas. Cooperatives are member-owned and member-controlled business enterprises that operate based on cooperative principles and values.

The cooperative movement in the Philippines began in the early 1900s, and it has since grown to become a thriving sector with various types of cooperatives operating in different industries. These cooperatives range from agricultural cooperatives that focus on farming and livestock production to credit cooperatives that provide financial services to their members.

Cooperatives in the Philippines are regulated by the Cooperative Development Authority (CDA), which is responsible for promoting and monitoring the development of cooperatives in the country. The CDA ensures that cooperatives comply with the cooperative principles and guidelines, and it provides support and assistance to cooperatives through capacity building programs and access to financing.

One of the key strengths of the cooperative business sector in the Philippines is its ability to address the needs and aspirations of its members, particularly those belonging to marginalized and disadvantaged sectors. Cooperatives provide opportunities for livelihood and income generation, access to credit and financial services, and social and community development initiatives.

Moreover, cooperatives in the Philippines promote economic democracy and empowerment by giving their members a voice in decision-making processes and allowing them to participate in the distribution of profits. This participatory and inclusive approach has contributed to the sustainable growth and resilience of the cooperative sector in the country.

Currently, there are over 29,000 registered cooperatives in the Philippines, with millions of members across the country. These cooperatives operate in various sectors, including agriculture, finance, consumer, housing, and transportation. They contribute to job creation, poverty reduction, and the overall socio-economic development of the Philippines.

Overall, the cooperative business sector in the Philippines is an important pillar of the economy, providing opportunities for economic empowerment, social development, and inclusive growth. Its impact extends beyond the financial realm, as cooperatives also promote values such as solidarity, cooperation, and community building.

Successful Cooperative Business Examples

Cooperative businesses have been flourishing in the Philippines, making a significant impact on the economy and the local communities they serve. Here are some inspiring examples:

Banana Growers and Exporters Cooperative (BGEC)

The BGEC is a cooperative that focuses on banana production and export. They have established a strong partnership with local farmers, providing them with the necessary training and resources to improve their crop yield. By working together, the cooperative has successfully penetrated international markets and has become one of the leading exporters of bananas in the Philippines.

Green Energy Cooperative (GEC)

The GEC is a cooperative that focuses on renewable energy production. They have developed and implemented various projects that harness solar and wind energy. The cooperative not only provides clean and sustainable energy to its members but also contributes to reducing the carbon footprint of the Philippines. Their success has inspired other cooperatives to invest in renewable energy projects.

Women’s Handicraft Cooperative (WHC)

The WHC is a cooperative that empowers women by providing them with livelihood opportunities through handicraft production. They train women in various traditional handicraft techniques and help them market their products locally and internationally. The cooperative has successfully created a sustainable income source for its members and has become a symbol of women empowerment in the local community.

Food Processing Cooperative (FPC)

The FPC is a cooperative that specializes in food processing. They work with local farmers and food producers to create value-added products like jams, sauces, and dried fruits. The cooperative provides technical assistance, modern equipment, and a market platform for its members. Through collective effort, the FPC has expanded its product range and distribution network, boosting the income of its members and supporting the growth of the local food industry.

Fishermen’s Cooperative (FC)

The FC is a cooperative that represents the interests of small-scale fishermen. By pooling their resources and working together, the cooperative members have improved their bargaining power with buyers and suppliers. They also engage in collective marketing and purchasing to reduce costs and increase profitability. The cooperative has been successful in securing fair prices for its members’ catch and in accessing credit and government support for the fishing sector.

These examples demonstrate the power of cooperation and collaboration in building successful businesses that bring positive change to local communities in the Philippines. Through shared resources, knowledge, and a commitment to mutual success, cooperatives continue to thrive and contribute to the economic development of the country.

Agricultural Cooperative: Farmers Helping Farmers

One of the most common types of cooperative businesses in the Philippines is the agricultural cooperative. These cooperatives are formed by farmers who come together to pool their resources and collectively engage in agricultural activities.

Objectives and Benefits:

• Improving agricultural productivity
• Providing better access to markets
• Reducing production costs
• Enhancing bargaining power
• Promoting sustainable farming practices

Organizational Structure:

The agricultural cooperative is typically governed by a board of directors elected by its members. The board is responsible for making decisions on behalf of the cooperative and ensuring that the cooperative operates in accordance with its bylaws.

Activities and Services:

The agricultural cooperative carries out a range of activities and provides services to its members, including:

• Collective purchasing of agricultural inputs such as seeds, fertilizers, and equipment
• Sharing of agricultural machinery and equipment
• Providing technical assistance and training to improve farming practices
• Collective marketing and selling of agricultural products
• Access to credit and financial services

Success Story: Aguinaldo Rice Growers Cooperative

An example of a successful agricultural cooperative in the Philippines is the Aguinaldo Rice Growers Cooperative. This cooperative was formed by rice farmers in the municipality of Aguinaldo in Ifugao province.

The Aguinaldo Rice Growers Cooperative has been instrumental in improving the agricultural productivity of its members through various initiatives. The cooperative provides its members with access to high-quality seeds, fertilizers, and agricultural equipment at lower prices through collective purchasing.

In addition, the cooperative has established a rice mill, which enables its members to process their rice harvest and sell it at better prices. This has significantly increased their income and improved their livelihoods.

The cooperative also provides its members with technical assistance and training on modern and sustainable farming practices. This has not only improved the quality of their agricultural produce but also reduced their production costs.

Through collective marketing, the cooperative has been able to negotiate better prices for its members’ rice and increase their access to markets. This has helped the farmers in Aguinaldo to overcome the challenges of market fragmentation and reach a wider customer base.

The success of the Aguinaldo Rice Growers Cooperative has inspired many other agricultural communities in the Philippines to form their own cooperatives. These cooperatives have become a powerful tool for farmers to support each other, improve their livelihoods, and contribute to the sustainable development of their communities.

Conclusion:

Agricultural cooperatives in the Philippines play a crucial role in empowering farmers and ensuring their economic sustainability. By coming together and working collectively, farmers are able to overcome the challenges they face as individuals and achieve better outcomes for themselves and their communities.

Consumer Cooperative: Empowering Local Communities

A consumer cooperative is a type of cooperative organization that is owned and managed by its customers or members. Its primary focus is on meeting the needs and aspirations of its members rather than maximizing profit. Consumer cooperatives are built on the principle of democratic control, where each member has an equal say in decision-making processes.

In the Philippines, consumer cooperatives have been instrumental in empowering local communities and promoting economic development. These cooperatives often operate in rural areas, where access to goods and services is limited.

Consumer cooperatives provide a wide range of benefits to their members and the communities they serve. Here are some key ways in which consumer cooperatives empower local communities:

• Accessibility: Consumer cooperatives bring essential goods and services closer to rural communities. They establish stores or outlets that offer various products at affordable prices, making them accessible to local residents.
• Quality Control: Consumer cooperatives prioritize the quality of the products they offer. They work directly with local producers and farmers, ensuring that their products meet high standards. This promotes local entrepreneurship and helps uplift the economic status of small-scale producers.
• Community Development: Consumer cooperatives contribute to community development by reinvesting their profits back into the community. They support local initiatives, such as education programs, infrastructure projects, and livelihood development activities.
• Financial Inclusion: Consumer cooperatives provide financial services to their members, especially those who are underserved by traditional banking institutions. They offer savings and credit facilities, helping members build financial resilience and improve their livelihoods.
• Social Empowerment: Consumer cooperatives promote social empowerment by involving the community in decision-making processes. They organize regular general assemblies where members can voice their concerns and ideas. This fosters a sense of ownership and belonging among the members, leading to greater social cohesion.

Consumer cooperatives in the Philippines have proven to be effective in uplifting local communities and addressing social and economic challenges. By prioritizing the needs of their members and fostering a sense of community, these cooperatives have become agents of positive change. They serve as inspiring examples of how cooperative models can empower local communities and contribute to sustainable development.

Financial Cooperative: Promoting Financial Inclusion

A financial cooperative is a type of cooperative that is dedicated to providing financial services to its members. It operates based on the principles of cooperative ownership, democratic control, and member participation. Financial cooperatives are known for their focus on inclusivity and serving the needs of their members, especially those who are underserved or excluded from traditional banking services.

Promoting Financial Inclusion

Financial cooperatives in the Philippines play a crucial role in promoting financial inclusion, particularly among low-income individuals and those living in rural areas. Through their community-based approach, financial cooperatives provide access to financial services and products that are tailored to the specific needs and preferences of their members.

Financial cooperatives offer a wide range of services, including savings accounts, loans, insurance, and investment options. These services help individuals and families build financial stability, grow their savings, and access credit for livelihood or entrepreneurial activities.

One of the key features of financial cooperatives is the emphasis on mutual assistance and solidarity. Members pool their resources together, which allows the cooperative to provide loans and other financial services at affordable interest rates. This reduces the dependency on exploitative lenders and payday loans, which often trap borrowers in a cycle of debt.

Case Study: Philippine Federation of Credit Cooperatives

An excellent example of a financial cooperative in the Philippines is the Philippine Federation of Credit Cooperatives (PFCCO). Established in 1979, PFCCO is the largest credit cooperative federation in the country, with over 1,500 member-cooperatives.

PFCCO aims to uplift the socio-economic conditions of its members by providing access to affordable credit and financial services. It operates on the principles of self-help, mutual help, and economic participation. Through its extensive network of member-cooperatives, PFCCO serves individuals and communities in both urban and rural areas.

The cooperative offers various financial products and services, including savings and time deposits, salary loans, agricultural loans, and microfinance services. PFCCO also provides capacity-building programs to enhance the financial literacy and entrepreneurial skills of its members.

To ensure the sustainability and growth of its member-cooperatives, PFCCO provides technical assistance, training, and access to information and resources. It also advocates for policies and programs that support the development of the cooperative sector and promote financial inclusion in the Philippines.

Financial cooperatives in the Philippines are vital institutions in promoting financial inclusion and improving the socio-economic well-being of underserved individuals and communities. Through their inclusive approach, these cooperatives provide access to financial services that empower individuals to become financially independent and productive members of society.

By fostering a sense of ownership and collective responsibility, financial cooperatives ensure that the benefits of financial services are shared among their members, fostering economic resilience and sustainable growth. The success of financial cooperatives like PFCCO demonstrates the transformative power of cooperative principles in creating positive change in society.

Impact and Success Stories

Cooperative businesses in the Philippines have had a significant impact on the local economy and the lives of their members. These businesses have demonstrated their success through various initiatives and achievements.

One example of a successful cooperative business in the Philippines is the 1st Valley Bank Cooperative (1VBC). This cooperative was established in 2013 and has since grown to become one of the largest cooperative banks in the country. 1VBC provides financial services to its members, which include farmers, fisherfolk, and small business owners. By offering affordable loans and other financial products, 1VBC has empowered its members to expand their businesses and improve their living conditions.

Another inspiring success story is that of the Agdao Multi-Purpose Cooperative (AMPC). This cooperative, which was founded in 1976, focuses on supporting marginalized sectors of society, such as farmers and women. AMPC has been instrumental in providing access to credit, training, and marketing opportunities for its members. Through its efforts, AMPC has helped improve the livelihoods of its members and their families.

Furthermore, the success of the Banahaw Heals Herbal Corporation (BHHC) demonstrates the potential of cooperative businesses in the health and wellness sector. BHHC is a cooperative of medicinal and aromatic plant gatherers, processors, and traders. The cooperative has successfully cultivated and processed various plants, such as lagundi, sambong, and yerba buena, into herbal products. BHHC’s products have gained recognition both locally and internationally, contributing to the sustainable development of the community and the conservation of local biodiversity.

These success stories highlight the positive impact that cooperative businesses have on the Philippine economy and society. By promoting inclusivity, empowering marginalized sectors, and fostering sustainable practices, cooperative businesses play a vital role in improving the lives of their members and the communities they serve.

Improved Livelihoods and Economic Development

Cooperative businesses in the Philippines have played a vital role in improving the livelihoods of their members and contributing to economic development in the country. Here are some inspiring case studies that highlight the impact of cooperative businesses:

Cooperative Bank of Agusan del Sur

The Cooperative Bank of Agusan del Sur is a cooperative bank that provides financial services to its members and helps improve access to capital for small farmers and other marginalized sectors. By providing loans and other financial services at lower interest rates compared to traditional banks, the cooperative has helped its members start or expand their businesses, increase agricultural productivity, and ultimately improve their livelihoods.

Villar SIPAG (Social Institute for Poverty Alleviation and Governance)

Villar SIPAG is a cooperative organization founded by Senator Cynthia Villar. It aims to uplift the lives of Filipino families through various initiatives focused on sustainable livelihood and economic development. The cooperative provides training and opportunities for members to engage in entrepreneurship, agriculture, and other income-generating activities. By equipping community members with skills and resources, Villar SIPAG empowers them to improve their livelihoods and contribute to local economic growth.

Cavite Coffee Farmers Cooperative (CCFC)

CCFC is a cooperative of coffee farmers in Cavite province. Through collective action and cooperation, the cooperative has been able to improve the quality of coffee production in the region and access better markets. CCFC provides its members with training on coffee cultivation techniques, access to fair trade markets, and assistance in processing and marketing their products. By strengthening the coffee industry and improving the income of its members, CCFC contributes to the economic development of the local community.

Federation of People’s Sustainable Development Cooperative (FPSDC)

FPSDC is a cooperative that focuses on sustainable development initiatives, including renewable energy projects and eco-tourism. Through its various ventures, such as the FPSDC Solar Power Plants and the FPSDC EcoVillage, the cooperative has created employment opportunities, generated income, and contributed to the overall economic development of the areas where they operate. FPSDC demonstrates the potential of cooperative businesses to not only improve livelihoods but also contribute to green and sustainable economic growth.

These case studies demonstrate the transformative power of cooperative businesses in the Philippines. By fostering cooperation, providing access to resources, and promoting entrepreneurship, cooperative businesses have the potential to uplift communities, improve livelihoods, and contribute to sustainable economic development.

Empowerment of Marginalized Communities

Cooperative businesses in the Philippines have played a significant role in empowering marginalized communities. These cooperatives have provided opportunities for individuals from low-income backgrounds, indigenous peoples, and other minority groups to improve their socio-economic conditions through collective action and shared resources.

One inspiring example is the Kasagana-Ka Development Center, Inc. (KDCI), a cooperative that focuses on empowering rural women. KDCI provides microfinance services, entrepreneurial training, and livelihood programs to its members, who are mostly women from impoverished communities. Through these initiatives, KDCI has enabled its members to start their own businesses, increase their income, and gain financial independence.

Another notable cooperative is the Davao United Durian Growers Cooperative (DUDGC), which supports farmers in Davao who cultivate durian, a popular fruit in the Philippines. DUDGC provides technical assistance, access to markets, and collective bargaining power to its members. By working together, durian farmers have been able to increase their income, improve the quality of their products, and establish a strong presence in the national and international markets.

The Philippine Rural Reconstruction Movement (PRRM) is another cooperative that has prioritized the empowerment of marginalized communities. PRRM focuses on community development and sustainable livelihood programs in rural areas, particularly among indigenous communities. The cooperative works closely with these communities to address their needs and concerns, providing support for education, health, agriculture, and environmental conservation.

Overall, these examples demonstrate how cooperative businesses have successfully empowered marginalized communities in the Philippines. By fostering collaboration, providing resources and support, and advocating for their rights and welfare, cooperatives have played a crucial role in uplifting these communities and promoting inclusive economic development.

What are some examples of successful cooperative businesses in the Philippines?

Some examples of successful cooperative businesses in the Philippines include the First Community Cooperative (FICCO), which provides financial services to its members; the Cooperative Bank of Cotabato, which offers banking services to small-scale entrepreneurs; and the Bukidnon Cooperative Marketing Association, which promotes the products of local farmers.

How do cooperative businesses in the Philippines contribute to the local economy?

Cooperative businesses in the Philippines contribute to the local economy by providing employment opportunities, supporting local farmers and artisans, and promoting sustainable practices. They also help build stronger communities by empowering members and promoting shared ownership and decision-making.

What challenges do cooperative businesses in the Philippines face?

Cooperative businesses in the Philippines face challenges such as limited access to capital, lack of marketing support, and regulatory barriers. They also struggle with governance issues, ensuring member participation and commitment, and adapting to a changing business environment.

How are cooperative businesses different from traditional businesses?

Cooperative businesses are different from traditional businesses in that they are owned and governed by their members who actively participate in decision-making. They prioritize the well-being of their members rather than maximizing profits and often operate with a focus on social and community development.

Can anyone join a cooperative business in the Philippines?

Yes, anyone can join a cooperative business in the Philippines as long as they meet the membership requirements set by the cooperative. These requirements may include residency in a particular area, payment of membership fees, and adherence to the cooperative’s values and principles.

What is a Cooperative? (Ano ang Kooperatiba)

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Agricultural Business Plan Template

Written by Dave Lavinsky

Agricultural Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their agricultural companies.

If you’re unfamiliar with creating an agricultural business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an agricultural business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your agricultural business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start an agricultural business or grow your existing agricultural company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your agricultural business to improve your chances of success. Your agricultural business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Agricultural Businesses

With regards to funding, the main sources of funding for an agricultural business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for agricultural companies.

    Finish Your Business Plan Today!

How to write a business plan for a agricultural business.

If you want to start an agricultural business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your agricultural business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of agricultural business you are running and the status. For example, are you a startup, do you have an agricultural business that you would like to grow, or are you operating an established agricultural business you would like to sell?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the agricultural industry.
• Discuss the type of agricultural business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of agricultural business you are operating.

For example, you might specialize in one of the following types of agricultural businesses:

• Animal feed manufacturing: the production and sale of food formulas for farm animals.
• Agrichemical and seed manufacturing: the production and sale of agrichemicals (e.g., fertilizers, pesticides, and fungicides) and seeds to farmers that support the growth of their crops.
• Agricultural engineering: development, testing, and implementation of new agriculture tools and machinery to improve the process for farmers.
• Biofuel manufacturing: the production of energy from biomass.
• Crop production: the process of growing and harvesting a variety of crops such as fruits, vegetables, and grains.

In addition to explaining the type of agricultural business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include reaching X number of harvests per year, the number of customers served, or reaching $X amount in revenue.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the agricultural industry. While this may seem unnecessary, it serves multiple purposes.

First, researching the agricultural industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your agricultural business plan:

• How big is the agricultural industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your agricultural business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your agricultural business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of agricultural business you operate. Clearly, schools would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other agricultural businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of farmers, wholesalers, and distributors.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of agricultural business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for your customers to engage with you?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a agricultural business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of agricultural company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you produce fruit, soy, or vegetable products?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your agricultural company. Document where your company is situated and mention how the site will impact your success. For example, is your agricultural business located on a small or large farm near your customer base?  And, will you operate one or multiple locations? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your agricultural marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your agricultural business, including scheduling employees, tracking inventory, accepting orders and payments, and meeting with customers.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to reach your Xth harvest, or when you hope to generate $X in revenue. It could also be when you expect to expand your agricultural business to a new region.  

Management Team

To demonstrate your agricultural business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing agricultural businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an agricultural business, or owning their own farm.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, how many pounds of each crop do you plan to yield each season? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your agricultural business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a agricultural business:

• Cost of farm equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your farm’s location lease or a list of agricultural equipment and machinery used on your farm.  

Writing a business plan for your agricultural business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the agricultural industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful agricultural business.  

Agricultural Business Plan Template FAQs

What is the easiest way to complete my agricultural business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your agricultural business plan.

How Do You Start an Agricultural Business?

Starting an agricultural business is easy with these 14 steps:

• Choose the Name for Your Agricultural Business
• Create Your Agricultural Business Plan
• Choose the Legal Structure for Your Agricultural Business
• Secure Startup Funding for Your Agricultural Business (If Needed)
• Secure a Location for Your Business
• Register Your Agricultural Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Agricultural Business
• Buy or Lease the Right Agricultural Business Equipment
• Develop Your Agricultural Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Agricultural Business
• Open for Business

Don’t you wish there was a faster, easier way to finish your Agricultural business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s business plan professional services can help you create a winning business.  

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