Starting a Co-op Business
by Veronica Stone on November 13th, 2007
A cooperative business is one which is owned and controlled by either it’s members, or it’s customers. It is a democratic situation, where each change and decision would typically be voted on by the members. Of course, usually the majority wins. There are benefits and drawbacks to this kind of business, as with any other kind. Here are the most common benefits and drawbacks of a co-op business.
Benefits
A cooperative business may be much easier to start than a typical single-owner business. This is because resources from each member can be pooled, and start up funding and other needs may be met more easily and quickly. When you are the only owner of a business, you are the only one who has the responsibility of finding the necessary funds, supplies, and anything else you will need to start and run the business. There is no doubt that in this area, a co-op can be very beneficial.
When you are the only owner of a business, you become jack-of-all-trades – you are the owner, manager, marketing director, customer service representative and every other position within the company. This can be very stressful, especially if your company gets extremely busy. While you can hire employees, ultimately each decision will be made by you. Having a co-op can be great for this too. You will have others who can handle different things along with helping to make decisions that are important. This is definitely less stressful and not as lonely. You can get some serious support with the different decisions that you have to make, and the positions that you have to fill.
Drawbacks
The most important drawback with a co-op is that you don’t get to make the final decision. No matter how strongly you feel about something, the ultimate decision lies with the majority. Of course, when you are the sole owner of a business, if you really want something done a certain way, you can easily make that decision. In a co-op, it’s not that easy. You can be left feeling very frustrated when you know one certain thing would really work, but the majority feels a different way.
Another major drawback of cooperatively owned businesses is the pay. Each member must be paid for their work within the company. If you are the owner of a business, you make your salary, and you can obviously pay yourself whatever you deem reasonable. In a co-op there are many more people to pay, and this can lead to a smaller payday for you.
With any business, there are advantages and disadvantages – it is exactly the same with a co-op. If you are trying to decide whether or not to start a co-op business, weighing the advantages and the drawbacks is important depending on what kind of business you intend to start. It simply comes down to your personal opinion and what you feel is more important.
