Should Your Small Business Be a Co-Op?

Joshua Kurlantzick writes at  AllBusiness.com: As the economic rebound continues to lag, many entrepreneurs and small companies are looking for innovative strategies to survive and prosper in the...

Joshua Kurlantzick writes at  AllBusiness.com:

As the economic rebound continues to lag, many entrepreneurs and small companies are looking for innovative strategies to survive and prosper in the face of tough times and even tougher credit. Perhaps the most innovative approach is to rethink the very nature of what it means to be a company…   Co-ops have long been dismissed as touchy-feely experiments in business socialism, but with growing pressure on many traditional companies, the co-op model is getting increased attention — not just as a political statement of owner-worker solidarity, but as a fresh approach to business success….  Several new high-profile cooperatives have attracted a substantial amount of funding from local foundations and investors. In Cleveland, entrepreneurs backed by a grant from a local development fund opened Evergreen Cooperative Laundry, a worker-owned firm that delivers high-end laundry services to health care providers and currently employs 10 workers. Its success inspired a similar co-op, Ohio Cooperative Solar, which will provide solar panels for large companies. In New York, another new co-op, ReBuilders Source, will sell recycled building materials to construction companies.

Co-ops offer several advantages, the primary one being that because employees own the business and share in its success, motivation is seldom a problem. “You have at least two-thirds of the workers who take great pride in the fact that we are an employee-owned company, that their name is on the line in terms of quality,” explains Firmat. And because co-ops usually keep overhead low — the workers who own them naturally want to keep expenses down — they can often pass on lower prices to consumers. And, notes Firmat, Full Sail is able to use its employee ownership as a marketing tool to help foster an image of high quality and local production, which appeals to many beer buyers.  Co-ops’ low costs can give them a real advantage in the most expensive sectors of the economy. That’s good business, but also good for customers. “Health care and employee-benefits cooperatives can help rein in the skyrocketing costs of these services,” notes NCBA president Paul Hazen.

A few factual errors (Full Sail is not organized as a cooperative, Rebuilders Source has closed, the definition of cooperative is not quite on target) suggest the article was not thoroughly researched, but it remains good to see the cooperative story being broadcast to the business community. 

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