Essentials of a Co-operative Business Plan and Concept 3

Upon completion of this module the reader will know and understand the following:

  • Elements of a business plan.


Materials for Download 

External Resources

How to do it

A business plan is a vital document for any successful co-op. A comprehensive, written document that expresses ideas and assigns specific responsibility to individuals and/or teams within your co-op provides the map for the whole organization to follow.  Without a written plan, people go in their own directions, their destinations always moving before they arrive.  A co-ordinated effort in a co-operative organization depends upon a written plan that everyone can follow and use as a basis of evaluation for their performance.

Executive Summary

The executive summary is a one page brief which provides the reader a quick overview of the most salient points in the business plan.

1. The Concept: Vision, Mission, Purpose and Values

The concept section of the business plan is the foundation of the business. The opening paragraph should summarize, in a few sentences, what the business is all about.

There are four interrelated pillars to the foundation of a co-operative business:

  1. Vision – The vision or dream those members and other stakeholders share for the future of the co-op.
  2. Mission – How the co-op will reach its shared vision.
  3. Purpose – The underlying purpose fulfilled by the co-op.
  4. Co-operative Principles – The Co-operative Principles and values held by all co-operative throughout the world.

2. Measurable Objectives

The measurable objectives provide the overall performance standards for the co-op as a whole. This area of the plan clearly delineates who is responsible for achieving specific results by a certain time. The phrase „who does what by when“ summarizes this section.

3. Situational Analysis

The situational analysis evaluates the external environment within which the co-op operates.  This analysis identifies the opportunities and the threats faced by your co-op and in combination with the organizational objectives above, determine the co-op’s marketing direction.

3.1. The Co-operative Environment

The co-operative environment includes all organizations and individuals who have a stake in the success of your co-op.  People who share your co-op’s vision, mission, purpose and values and who are willing to participate in making it happen are included within this category.

3.2. The Competitive Environment

The competitive environment includes other companies in your industry that are rivals for both resources and sales.  Opportunities include offering better value to members and customers, joint ventures, and acquiring competing firms.  The primary constraints are the marketing activities of competing firms and the demand constraints for your co-op’s products or services.

3.3. The Economic Environment

The effects of local, regional, national and international economies on your co-op including inflation, unemployment, trade agreements, technological change and import substitution are included here.  International trade offers opportunities for expanded markets but also opens domestic markets to competitors‘ products.

3.4. The Social Environment

Cultural and social traditions, norms and attitudes change slowly, but have major ramifications over time on how business is conducted.  Smart co-operatives are social leaders.

3.5. The Political Environment

This comprises the attitudes, beliefs, and values of the public, social and business critics and other “special-interest” organizations.  Product safety, quality, labour practices, conservation and ethical business practices are issues that may affect member and customer loyalty.

3.6. The Legal Environment

The international, federal, provincial and municipal laws directed at protecting the public interest and individual rights, provide a myriad of potential opportunities and threats.

3.7. The Natural Environment

Over the past three decades, the natural world has become a major consideration for our society.  There is a built-in link between the economy and the natural environment.     Businesses that are perceived as being irresponsible environmentally will increasingly pay the price of diminishing sales, increasing costs and decreasing profits.

4. Marketing Plan

Marketing activities must be aligned with organizational objectives.  Opportunities are often found by synthesizing information from the situational environments.  Once an opportunity is identified, an appropriate strategy must be created to take advantage of it by:

  1. Establishing marketing objectives,
  2. Selecting the target market(s), and
  3. Developing the marketing mix.

5. Production

5.1. Equipment and Facilities

Depending on the type of operation, you may require an extensive section on production equipment and facilities.

5.2. Quality Assurance

This area is crucial for any business, whether product or service oriented.  All successful co-ops depend on repeat orders from loyal members and customers.  The best way to assure repeat business is by providing value for money and consistently good quality.  A good quality assurance system will be based on employees‘ motivations to create high quality, internal checks and balances and feedback from members and customers.  This area has great potential to decrease waste, product returns and expenses.

6. Organization and People

6.1. Leadership

The Board of Directors and the management team must provide the leadership and inspiration to motivate the employees and members towards the measurable objectives of the organization.  The confidence exhibited by the Board and management team, their openness in listening to and flexibility in implementing employees‘ and members’ ideas will provide the organizational leadership required to make the business a success.

6.2. Staffing

Ideally, limit the number of employees to people who can consciously agree upon and contribute directly to that which your co-op enterprise is to accomplish, for whom, and by when.  Each person involved in the business needs to understand and agree with its vision, mission, purpose and values.

6.3. Job Descriptions

To be effective, people need to clearly understand their responsibilities and their contribution in achieving the goals of the organization.

7. Finances

7.1. Budget and Financial Control Systems

The financial plan is primarily concerned with the forecasts of profitability and financial liability.

The co-ops financial plan is the penultimate step before drawing up the final business plan. It sets out the financing mechanism of the business, and indicates it’s potential. It serves as an operating plan for financial management, providing a timetable of when the business will break even, and showing what its likely cash flow will be. What its anticipated profits for the next few years are, what its balance sheet will look like at the beginning and hopefully at the end of the first year of operation, and how funds are likely to be used.

8. Ownership

8.1. Capitalization

While the concept and the human motivations are the key ingredients of a successful business, ideas cannot be implemented without adequate capital.  The potential sources of capital include the members, preferred shareholders, suppliers, employees, retained earnings, bank loans, and government grants.  Besides the start-up capital required by a new business, all businesses need to set aside a capital pool for contingencies.

8.2. Organizational Structure

The legal structure of the co-operative will depend on the objectives of the members, the size of the business and the industry.  Co-ops can be incorporated as for-profit or not-for-profit organizations.  It is useful to show formal reporting relationships in an organizational chart.

8.3. Projected Return on Investment

Every co-operative, whether for profit or not-for-profit, requires some return on investment.  Clear targets should be set to ensure the business provides a reasonable return on the capital invested by members and other shareholders.

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