Developing and operating a successful business is never an easy task, but operating successful cooperatives can be even more challenging due to their unique business structure and the group dynamics involved. Here are seven ways that a cooperative can improve its odds of success:

1. Unified Vision and Goals: Cooperatives are formed to address a common need among their members.  Members must identify a unified vision and goals for the cooperative.  When a common need or vision does not exist, it is difficult to retain commitment from the members for the co-op.   

2. Member Commitment and Leadership: Support and leadership for the cooperative must come from its members.  While it is good to have support from outside organizations and advisors, members have to be involved and must be the ones who are making the decisions.

3. Sufficient Financing:  The start-up period for a business can be rough, and the first years are often not profitable.  To weather these challenges, the cooperative must have adequate financing.

4. Competent Management: To increase the chances for success, the board of directors for the co-op must hire qualified and experienced management to lead the co-op.  Co-op members are generally too busy to manage the day-to-day activities of the co-op.

5. Comprehensive Business Plan: Detailed plans for how the co-op is going to achieve defined goals and operate the business are important.  The planning process should include the development of financial projections, and if the business venture does not have a plan to become profitable then the development of the new organization or enterprise should stop.

6. Investment in Member Education:  Members need to be educated on the cooperative business structure, industry trends and changes in the marketplace that affect their cooperative, and the business operations and financial performance of their cooperative.  Member education is important for members to be involved in the cooperative and to make informed decisions about the co-op’s operations.

7. Use of Experienced Advisors: Most members of cooperatives are not experienced in cooperative business development and lack experience in managing a business in the industry.  The use of advisors in facilitating the development of a cooperative can improve the efficiency of the process and speed up the timeline.  Advisors can also play an important role in providing decision-making support to new or mature co-ops. 

The Kentucky Center for Agriculture and Rural Development (KCARD) is a cooperative development center, and KCARD has assisted approximately 50 cooperatives in their development.  If you would like more information about cooperatives or are interested in starting a cooperative business, please contact us at 859-550-3972 or email us at kcard@kard.info.