Co-ops looking to grow face a number of challenges: not least, raising funds, finding the right skills and responding to changing circumstances. In the UK, one of the places they can look to is the Hive, a support programme delivered by Co-operatives UK with funds from the Co-op Bank.
Petra Morris, co-op development manager at Co-operatives UK, says that although the Hive is open to any co-op or business wishing to convert to a co-op, it tends to be smaller business who find it most useful: “I think generally because they’re either new or they haven’t got that access to their own resources, they tend to come to us as a first port of call.”
The Hive offers up to 10 days of bespoke support, training and mentoring for groups who want to set-up a co-op, existing co‑operatives in need of support or businesses looking to convert to co-op or community ownership.
“We try to be quite tailored and specific, and quite flexible, according to the needs of each co-operative,” says Ms Morris. “But it’s often around finance and strategy and continuing to be sustainable good businesses going forward.”
For start-ups, the focus is often around registering, getting set up and developing a business plan. But existing co-ops can also get support, including help with strategy, marketing or member engagement, or anything else that might help them be more sustainable.
In 2020, Northern Irish brewery co-op Lacada sought help to reinvigorate their business after five years’ trading and received advice around governance and membership engagement. “Now our margins are better, our meetings are much shorter and our board members are much happier,” they reported.
Many co-ops who seek help from the Hive are pursuing some form of growth. But that can mean a number of things. “It doesn’t necessarily mean it has to be about greater profits or higher turnover or more employees,” says Ms Morris, “because growth for co-ops often is different from traditional businesses. So we emphasise that growth can be about changing the business model, going into new markets, developing new products, it can be about more members, it can be about better engagement.
“Co-operatives are there to serve their members and they have a purpose. And some are very geographical and community based… so growth for them is more about the quality of the service they are providing.”
Co-operatives UK also delivers the Community Shares Booster Programme, which supports groups in England looking at community share offers with development grants and matched funding. Community shares is a form of equity only available to co-operative and community benefit societies. It enables the co-op to raise flexible finance and gives members a stake in the business, on the basis of one member, one vote, regardless of how much they put in.
“Community shares is very patient, flexible finance,” says Isla McCulloch, community shares standards manager at Co-operatives UK. “You’ve got access to capital that’s not on strict repayment terms and you can spend it how you like, within the parameters of your business. Access to that kind of money is really difficult to find in the third sector and the social sector. You’ve either got grants with lots of conditions or you’ve got loans which are often quite expensive. So the nature of the money is appealing.”
But it also requires community buy-in, says Ms McCulloch: “The asset, whether it’s a skate park or a pub, needs to be something that people feel strongly about enough as a community that they want to be maintained for generations.”
In 2017, Sutton Community Farm launched a community share offer with the support of the Booster Programme, raising almost £100,000, with nearly £50,000 coming from the Booster match. The funds enabled it to build a barn and increase its membership from 141 to 408.
While many community co-ops have small staff and less than a £1m turnover, they are larger when it comes to membership. “It’s all about lots of people putting in a little bit of money and getting this big total that enables them to buy the pub or community hub or whatever it is. You’re talking about small co-ops that have hundreds, potentially thousands, of members.”
Many of these groups are also volunteer-led, meaning that the economic transaction of the co-op is less than that of a traditional business. “It’s driven by passion, it’s driven by this real care for community,” says Ms McCulloch. “But it has certain challenges associated with that.”
Where societies have board members with the required skills, knowledge and time to run a business, things progress much faster. But this can mean that some members of the community, such as parents or young people juggling work commitments, may find it harder to get involved, she warns. “And that’s the point in the fund and the grant, to try to augment that capacity, bring in external expertise so they don’t have to have it all in house, and really help move groups along and help take them to the next level.”
While launching a community shares offer can be a boost, it is easier in certain sectors.
“[When it comes to shops and pubs] co-ops can better exist in that ecosystem, because there’s a precedent for other small, ethical or independent businesses to operate. But there are sectors of our life where that’s very hard,” says Ms McCulloch, citing energy and care as two of these particularly challenging sectors.
“With a lot of the community shops and pubs, there’s market failure, so communities and co-ops are stepping into address market failure, and the co-operative model has a competitive advantage, either through things like volunteer time or community buy-in, that then enables the business to succeed and provide the service that’s required. Whereas in [other sectors] there is competition with private finance backing.”
One opportunity for growth that is seen across the co-operative movement, is replicability – one of the reasons that the “community shop and pub model has just boomed” says Ms McCulloch. There is evidence it works, and guides on what to do and how to do it.
The word replicate “is the key to co-operatives”, says Ms Morris. She explains that this is where the Hive’s peer mentoring work comes in, embodying the sixth co-operative principle of co-operation among co-ops. “I think this distinguishes co-ops from traditional businesses … co-operatives are always keen to see more co-ops in their sector and are keen to support them and share their knowledge and experience.”
Ms McCulloch adds, “It’s the most satisfying thing to help others set up, and then they make it their own,” adding “I think running any kind of co-op business is hard work so you don’t really want to keep growing and keep growing.”
“What I’m excited to see is new sectors coming through like housing, and other community hubs. And you see it in parts like West Yorkshire, or even Manchester, and the South West as well, there’s a lot of community activity and there’s a snowball effect. Where there’s been successful ones, people are like, ‘yes, we can do the same’. And then they work with each other to make it happen.”