What are the barriers to growing co-operatives?

Visitors to Co-operatives United joined in a discussion workshop to identify some of the barriers facing co-operatives that are looking to grow. The workshop opened with FC United...

Visitors to Co-operatives United joined in a discussion workshop to identify some of the barriers facing co-operatives that are looking to grow. The workshop opened with FC United giving an insight into the major barrier they face in growing their club – namely that they don't currently own their own ground. However, they hope to address this issue very soon, after having gone to their members with a Community Share Issue that has raised £1.6m.

FC United recommended the Community Shares route to any football club looking to raise capital – the option is only available to IPS co-operatives, but it allows a club to raise funds from its supporters without having to compromise values or seek outside investment.
The workshop also heard from Unicorn Grocery, who talked about the various stages of their growth. When they first started out, they relied heavily on "sweat equity" – members putting in extra hours to keep the organisation going – but eventually that hard work led to a successful business that has moved into the next stage of its growth.

Unicorn were the first to raise a recurring theme – often, co-operatives don't actively seek growth, but end up having to undertake it as circumstances change around them. The land that Unicorn operate on was originally rented, but when the owner looked to sell they had to raise the finance to buy it themselves or face an uncertain future. They chose to raise loan stock to fund the purchase, allowing them to raise funds from investors without having to compromise their worker co-operative nature. Later on, Unicorn used loan stock again when they wanted to secure a local source of organic produce, and decided the best option was to start growing it themselves.

David Button, chair of Co-operatives UK, gave his perspective on the growth of the agricultural sector in the UK. He said that, again, this was prompted by outside forces: competition from Dutch farms provoked UK farmers to form co-operatives to make it easier to respond. David said that there was always a balancing act to perform, bringing investment into the business without diluting the member base. He also added a word of caution that sometimes if a business can't fund its growth from its trade, that can be a sign that it isn't ready to grow. Co-operatives, he reminded us, are businesses first.

The floor was opened up for questions, including some from Vivien Woodell of – amongst others – Co-operative Phone and Broadband. He gave some of the experience of that organisation in its journey as a new start co-operative, telling the workshop that the most difficult thing was knowing that there are different stages of running a growing business, and spotting when you had switched into the next one. The trick is knowing that you need to evolve, and then being willing to.

The workshop concluded that there is a delicate balancing act involved in growing a co-operative – increasing your size without losing your focus on your members can be difficult. We were asked to learn from the experience of Australian co-operatives, who – the report Who knew Australians were so co-operative? has found <http://www.tai.org.au/index.php?q=node%2F19&pubid=1052&act=display> – have found great success but are struggling to communicate what membership means to their members.

You can find more information about growing your co-operative on the Co-operatives UK website, at www.uk.coop/grow.

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