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Co-operative Business Planning Guide

If you’re starting a new business, it’s important to clearly define and articulate your plans: what will we do and how will we do it? Every business, even co-operatives, should develop a business plan that can be used to engage new members, raise capital, attract investors, and provide guidance to those involved.

A co-operative is a business and requires the same level of skill, energy, and commitment as any other business. Starting and building a business can be complicated, confusing, and frustrating — but with a well-crafted business plan in place your co-operative will be off to a good start. Co-operative businesses might be structured differently than other business models, but all businesses are built on the same foundational practices. The co-op’s structure can be built into the business, but shaping and operating the business should make economic feasibility a priority.

When writing a business plan, consider who the audience might be. If your business plan will be used to attract funders, think of ways to set your business apart from others by making a clear case for why your business should receive their support. Be honest and thorough. Fabricating a business plan with unrealistic ideals and projections won’t help you promote your business and will lead to challenges down the road. The best way to ensure you create a superior business plan is to work with experts in business and co-operative development that can review your plan and provide the advice and expertise you need.

Once you’re ready to write a business plan, our Biz Plan Generator will help make the process easier.

Disclaimer: This business planning guide does provide examples where appropriate. Please note that much of the information presented in this example is fictitious and only intended to exemplify the type of information that should be included in each field.

Section 1: Business Overview

Provide the basic information about your company. When naming your organization, it’s important to remember that the business’s legal name does not have to be what’s used in your marketing materials. For example, the co-op store in Flin Flon is legally named the North of 53 Consumers Co-op, but is casually referred to as the Co-op.

Legal Name:

Trading Name:

Business Address:

Phone:

Fax:

E-mail:

Website:

Description of Business

Provide a brief overview of what your business does, where it does it, and why it’s doing that. It’s important to let your reader know that the co-op is filling a gap or capitalizing on an opportunity.

Section 2: The Marketplace

Running a successful business requires knowledge of your industry, marketplace, and the people that are purchasing your goods and services as well as your competitors. To properly plan how your business will fit into this marketplace, do some research and find out who will be buying your products, who else is operating in this market, and what changes might be coming down the road that could change this pattern. Using data is a great way to back up this analysis and will help paint a picture for the reader. Consider working with one of the provincial business development organizations to help you obtain this information.

Major demographic, economic, social and cultural factors: What factors will determine the demand for your product? How do contextual factors or trends shape your distribution?

Major Players: Identify the other major businesses operating in your industry; of particular note should be those that compete for the same markets.

Nature of the Industry: Where does your business, and even that industry fit into a larger economy; are there trends within that industry that should be highlighted?

Trends in the Industry: What are the notable trends in your industry; how might the industry be impacted directly by changes elsewhere in an economy?

Government Regulation: List any government regulations that impact your business; this may include environmental, industry-specific, legislative, or financial-related regulation.

The Market

A successful business owner understands their product and the market they are a part of. Your business plan should include specific details about your product’s place in the market, what you specialize in, and how you might respond to shifts. Operating a business requires entrepreneurs to pay attention to what’s happening in the market and how they can shape their business to adapt or improve their position. Continuously innovating and looking for ways to get ahead of trends is a key way to remain competitive and satisfy customers.

Market Segment: Briefly describe the size and scale of the industry and where products are bound; Identify what share of the market segment you’re servicing.

Products and Services: Give a brief description of the products or services that your business provides and who the intended consumers are.

Pricing and Distribution: Give an overview of your businesses pricing; this could include specific prices, but could also be relative to other operators in the industry.

Market Trends: Provide a snapshot of your market, give some specific figures that demonstrate where your products and services are going, and any growth/decline that might be occurring.

Implications or Risk Factors: Give an overview of the market considerations that might impact your business or contribute to the risk in an industry; this usually includes risks associated with access to market.

Planned Response: In the event of a change in market trends, what will you do to respond to ensure your business maintains its position and prospects of growth.

Competition

In many industries and geographies, co-operative businesses will face competition from other firms. These businesses competing for the same consumers need to connect with their market and get ahead of trends before their competitors to maintain their relevance. For co-ops operating in smaller markets that lack physically present competitors, it’s important to avoid complacency. Technological improvements make it increasingly easier for consumers to purchase products remotely. Sure, buying local is something many consumers consider, but competitive pricing and product offerings highly influence purchasing patterns.

Competitors and type of Competition: Broadly, who are your competitors, how are you competing with them, and what gives your business an edge?

Competitors’ Strengths and Weaknesses: Give a description of your competitors’ strengths and weaknesses; be specific and highlight how your business is different.

Competitive Advantage: Describe your competitive advantage; what are the factors that set your business apart from your competitors?

Section 3: Sales and Marketing

A key component of your business plan will be to articulate your supply chain. Providing a list of consumers and suppliers will give the reader a clear picture of how your business interacts with other firms. This is also very important information to track as there may be opportunities to save by constantly monitoring your supply costs. Potential funders will also want to see who your consumers are and where you’re distributing so they can assess the feasibility of the business and likelihood of a return on their investment.

Customers: If applicable, provide a list, including name and address, of your distributors. If your business services a single market of customers directly, provide a brief overview of that market.

Suppliers: If applicable, provide a list, including name and address, of your suppliers with some indication of the product or service they provide.

Public Engagement

A key component of a sales and market plan includes how your co-operative interacts with the public, especially customers. How your co-op advertises and promotes its business is important for letting readers know what outward image you’ll project about your organization. The costs and distribution network attached to your goods should reflect your market and production capabilities. Customer service is a critical part of your business’s success as under-serviced or unsatisfied consumers are much more likely to take their business elsewhere.

Advertising and Promotion: List any strategies that are relevant for raising awareness of your co-operative business. This may include signage, web content, social media, flyers, trade shows, and other forms of member engagement.

Pricing and Distribution: You don’t necessarily have to give specific numbers here, what’s important is knowing where your pricing stands compared to your competitors and others in the industry. Offer some insight into your distribution network including sales outlets and purchase patterns. While this might be basic information, it is important to continually re-visit to make sure you’re not undervaluing your product and are remaining competitive.

Customer Service Policy: All businesses need a feedback forum for customers to interact with the business. This might include a 1-800 number, responsive social media and e-mails, surveys, or engaged customer service staff. In some cases, co-operative businesses have an advantage as they can engage with their member-owners regularly and get feedback at members’ meetings.

Section 4: Human Resources

Those reading your business plan will want to understand how it works and who makes up the business. Provide an overview of the employees in your organization, their roles, and qualifications. For co-operatives, it is also good practice to describe some of the governance characteristics including the board and committees. This will paint a much clearer picture for the reader on the levels of decision-making within the business.

Additionally, include any anticipated human resource changes.

Policies and Procedures

A human resources policy is a useful tool that ensures new employees are aware of the expectations and benefits of their new position. For your business plan, a discussion of policies and procedures should give a reader a snapshot of your staff and the characteristics of their positions. It is important to track this information as you have employee turnover; some of your policies or procedures may be unappealing to potential employees.

Hours of operation: Describe your hours of operation.

Number of employees: Describe your team including members, board, staff, and committees, if applicable.

Vacation Program: What is your vacation policy?

Performance Assessment: Do you provide a review of your operations, staff, and structure?

Training and Development: Does your organization engage in practices that will improve your ability to produce? Are there things you are doing that help develop skills?

Remuneration and Benefits: Discuss your organization’s wage rate and comparison within your industry.

Section 5: Operations

Without getting too technical, give the reader some idea of how your business operates. What items are present that allow your business to function the way that it does, and what things you are considering improving in your operations? This helps provide some idea of the capital costs and value of your organization and where this might be trending moving forward. You may want to consider additional information in this section that is more industry or geography specific that would be important for a reader to see and critical to your operations.

Location: Provide the physical location of your business, but also some details on that space, its costs, and advantages.

Equipment, Furniture & Fixtures: Give the reader some indication of the capital currently owned by your business.

Future Expenditures/Technology Requirements: Readers, especially funders, will want to know what expenditures are coming down the road.

Research and Development: Give the reader some indication that you’re looking forward and trying to find ways to improve your business; this doesn’t have to be some quantum shift, but you should be aware of the best practices in your industry.

Environmental Compliance: Outline the environmental regulations that your business is complying with; does your organization enforce any policies related to environmental well-being.

Additional Information: This space could be used to expand upon other operations relevant to the business including storage, regulation, transportation, or safety.

Timeline

Business plans should be forward-thinking documents that are updated frequently. For this reason, there should always be a relevant timeline in your business’s plans. This is especially important for a start-up as it will outline the steps towards getting your business off the ground. However, for existing businesses, creating specific plans related to expansion, big projects, or longer-term operations is a good practice that keeps you checking in on your business.

If you’re planning on introducing a big project, or developing the business, work with a professional business developer that can help you properly identify an adequate timeline based on your resources and capacity. Setting realistic goals for your co-op will manage the expectations of members and outline steps that can be celebrated as the community moves forward.

Section 6: Financial Plan

One of the most intense elements in a business plan is the financial plan. This document should be a catch-all for all finance-related matters in your business. These documents are usually prepared with the assistance of an accountant or financial planner and should be include financial reports from past years, projections for the next 2-4 years, statements on the business’s financial position, sales activities, income statements, cash flow, expected requirements, and performance indicators. Since co-operatives have a limited liability structure, directors or members are not required to provide details about their personal financial status.

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