Is a co-operative right for me?

This section asks two key questions to help you decide whether a co-operative model is best for your business or organisation.

1. Do you want members to own and control the business or organisation?

A co-operative is a member-owned business – the members may be staff, customers, suppliers or local residents, or a combination of these stakeholders. This shared ownership is central to a co-operative’s existence:

  • Members have an equal say in how the business is run
  • Members choose what to do with profits, whether distributing among members, reinvesting in the business or giving to the community

If you want to limit ownership to just a few people, even as the co-operative grows, then a co-operative may not be for you.

‘Members’ can have a number of different (and multiple) relationships with a co-operative, from consumer to tenant, worker to other co-operatives. Read a run down of just some of the possibilities below.

Click to understand different member types

Member type

Description

Consumers The members are individuals who purchase goods or services from the co-operative
Tenants The members are individuals who rent directly, or have shared ownership in a property or multiple properties
Workers The members are individuals who work for and share ownership of the co-operative
Employee trust The members are employees with at least a 75% stake in ownership via a trust or similar legal entity
Self-employed The members are individuals who use the co-operative to collectively support or conduct their business activities
Enterprises The members are legal entities (excluding self-employed individuals) that use the co-operative to collectively support or conduct their business activities
Co-operatives The members of the co-operative are themselves co-operatives

2. Have you got a viable business plan?

A co-op must be a viable business. As for any business, most co-operatives will aim to bring in enough income not just to cover costs but to make a profit, with members deciding on whether that surplus is reinvested in the business, distributed among members or given to the community. You need to be sure that your co-operative will generate an income from the goods or services provided.

In order to understand this, you need to have a firm idea of what you want your business to look like and will need to do some work on this in the testing your business idea section.

What kinds of businesses can be co-operatives?

There is no single, exclusive legal form that defines a co-operative business in the UK. Co-operatives can be any legal form – PLC, LLP, Society, Community Benefit Society, Unincorporated Association.

Co-operation is defined in the governing documents of an organisation, not its legal form. To be a co-operative, your governing documents should include reference to the International Co-operative Alliance’s definitions of co-operative identity, which include:

Co-operative values

Self-help, self responsibility, democracy, equality, equity and solidarity.

Ethical values

Honesty, openness, social responsibility and caring for others.

Co-operative principles

  • Voluntary and open membership
  • Democratic member control
  • Member economic participation
  • Autonomy and independence
  • Education, training and information
  • Co-operation among co-operatives
  • Concern for community

You can read more about governing documents elsewhere on The Hive, but you might not need to do this until you have written your business plan and are ready to set up your business or organisation as a co-operative enterprise.


In this section

Benefits of co-operatives • Testing your business idea

Updated: 26/03/2019