Starting a co-op? This article provides a step by step guide on how to start a co-operative. For sure, there’s a lot to do, and a lot to learn. But tons of supports, resources, and tools are available and this article provides a map to many of them.
Starting a business is exciting and rewarding. But it can also be frustrating — especially for those forming a co-op.
At Co-operatives First, our job is to de-mystify the process of starting a co-operative business. That’s why we built this site. The Co-op Creator provides a variety of guides, tips, templates, and links.
For the DIYers out there, this is ideal. But sometimes folks need more hands-on support. If that’s you, our knowledgeable staff is a phone call or email away.
Okay, let’s get started.
Agree on the purpose of the business. Maybe your community doesn’t have enough daycare options. Maybe you’re a professional with your own firm who wants to share the cost of office space and administration. Perhaps you’re a producer who needs help packaging, marketing, and distributing your vegetables. Whatever the case, everyone needs to agree to and buy into the purpose of the co-op. A good place to start is by asking the question: what problem are you trying to solve and how does working as a group help solve that problem? This resource can help you focus ideas and engage potential members and markets in the process.
A co-op is a business run by a group of people who share its benefits. You might already have a group that wants to work together. That’s great! You might also have an idea and need to get more people on board. To get the word out, you could organize a meeting to discuss how a co-op could work and see who wants to get involved.
If you’re thinking about starting a co-op, consider these two questions: What is the purpose of the business and who should benefit from it? If the answer is ‘provide a service for those who benefit from it,’ then a co-op is probably a good choice. The model works best when member interests are aligned and working as a group brings value beyond what can be achieved alone.
Decided a co-op is the way to go? Time to organize your co-op’s structure, plan of action, and finances.
Co-ops need people to start and support them. So, if you haven’t already, find like-minded people to join you. But make sure these people have a personal interest in starting the co-op.
Also, keep in mind BC, Alberta, and Manitoba require three people to incorporate a co-op — in Saskatchewan you need six.
Sit down with your committee. Come up with a plan for starting your co-op. Decide what needs to get done, and who is going to do each task. Write it down and hold people accountable.
To assess the external factors that could impact your new business, try completing a PESTLE analysis. Also consider doing a business model canvas to better understand how the business will work.
How much money do you need to start the co-op? Where will it come from? Get a clear financial picture of your start-up before getting too far into it.
Who will make the decisions in your co-op? Figure out who’s in charge, and how the decision-making process will work in your business.
Now you’re ready to incorporate your co-op, which means you’ll file documents with the government that legally create your business. You probably do this with your provincial government — but if your co-op will operate in more than one province, you can incorporate with the federal government.
We’ve created work plans that you can follow to incorporate your co-op in:
Incorporating your business will include the following tasks:
The next step in starting your co-op is to pick a name — here are some tips on choosing a name for your co-op. You can find more specific information about registering a name in your province’s work plan (above). Or try our guide to naming your co-op.
Your Articles of Incorporation (also known as “Memorandum of Association” if you’re in BC) are the documents you submit to the government to start your co-op. Once you’ve filed these and they’ve been accepted, your co-op will be a legal entity. This means it has rights, and can do things like open a bank account, take out loans, etc.
You’ll find more detailed info about incorporation both in the above work plans, and here:
Bylaws (known as “Rules of Association” if you’re in BC) are the rules you write for your co-op. The government requires that you include certain things in bylaws, while other rules are up to you. Requirements change depending on whether you’re in BC, Alberta, Saskatchewan, Manitoba, or are incorporating federally.
To better manage members’ data, co-operatives keep membership registries. These registries are just places where you store information. For co-ops with more complex interactions with members, you might want an accounting software to track member accounts, issue dividends, and generate reports. For smaller and/or newer co-ops, you could just use an Excel spreadsheet.
Every year, your co-op will have to hold an AGM. At this first one, you’ll elect your first board of directors. Often, the steering committee that’s been working to start the co-op becomes the first board, but you may also need to recruit members.
A business plan is a great tool not only to guide you as you build the business, but to attract investors, show lenders that your business idea is sound enough to deserve a loan, or get new members to join. You should do this as a group.
We’ve created this handy Business Plan Creator to lead you through the process. You can also apply to Co-operatives First to have a professional consultant create a plan for you.
Figure out how you’re going to get the money to start the co-op: from loans? Members? Selling shares? Fundraising? Usually it’s a combination of these. Write a financial plan, a budget, and think about how to finance the business going forward.
New boards have a lot to do to guide the co-op. Here are some just a few things a new board will do in the first year:
If starting a co-op is your goal, Co-operatives First can be there every step of the way. Contact us to get started.
Need a business plan? Start here. The Biz Plan Creator is an easy-to-use and helpful tool. Designed to guide you through the process, the Biz Plan Creator offers a user-friendly platform and clear advice at every stage. Plus, it includes a secure account and customized branding of your plan. So, you can leave and come back to your plan as needed. And when you’re done, a branded PDF business plan ready for investors and financiers is your reward.