Guide: Start a co-operative

Plan your co-op

By now, you will have a core group of people who have worked up a business idea. Perhaps you have carried out a feasibility test and are ready to formulate your business plan. A vital stage in setting up a co-operative, and crucial to its survival and development, are five questions to help you develop that plan:

  1. What will your co-operative do? You need a simple answer to the question of what your co‑operative will do and how it will do it.

  2. Who will be involved and who is the co-operative for?  You cannot go it alone. A co‑operative is operated by and for the benefit of its members. Primarily, it is the collective needs of the members that should be listened to and it is important to keep members’ needs central to any co‑operative business plan.

  3. How does the money stack up? A successful co‑operative needs good financial planning. Build a financial model, including start-up costs, overheads, projected income streams and plans for the distribution of any profits. Co‑operatives can be financed in many ways including capital from members, loans, share issues and internal profits.

  4. What is your market, and who are your competitors? Who will purchase the co‑operative’s goods and/or services? Some co‑operatives only provide goods and services to members, while others allow non-members to participate - but usually on less favourable terms. You need to know who your customers are and what it is they want. Likewise, is there anybody else already providing the same or similar goods or services, or have you found a niche?

  5. What legal form is best for your co-op? Every co‑operative needs a legal form, whether it is a Company Limited by Guarantee, a Co‑operative Society or a Community Benefit Society. You could make this choice without professional help, but you do need to consider the variety of legal forms available in order to formalise your co‑operative and establish a ‘best fit’ with your business plan. Co‑operatives operate under a variety of legal forms, but it important to spend time choosing the correct one in order to prevent difficulties in the future. 

Where can I get help?

You do not need to develop your co‑operative business plan alone. You can get help from a business development worker who will be able to help shape your business idea, identify gaps and provide you with advice on the next steps.

How can Co‑operatives UK assist?

Once you have got your business plan in shape, the Co‑operatives UK advice team can help you create your co‑operative.