Examining the Co-op Business Model

Part of what makes local communities special is the contribution of family businesses and local organizations that serve the economic and social needs of their neighbors.

Often these businesses are owned and operated by people who take pride in creating local jobs, remaining independent and giving back to their community. With deep entrepreneurial roots that can easily be several generations deep, these businesses are an intrinsic part of their community’s fabric, their customers know and trust them and the communities they serve depend on them.

Unfortunately, national chains – through acquisition and consolidation, purchasing power and other economies of scale – are threatening the vitality of regionally oriented and family operated businesses that simply cannot compete with their limited resources.

In the face of this David versus Goliath struggle, many organizations are leveling the playing field through the long-established co-op business model that allows them to remain independent while benefitting from the economies of scale that national chains enjoy.

But there is a tremendous byproduct to the co-op approach as well.  In addition to helping small businesses succeed, local communities are benefiting from keeping the wealth generated in the area and not sending it off to faraway corporate entities or investors. Additional benefits include lower unemployment, better childcare and even lower prices.

The co-operative model

Successfully used for decades in agriculture and across many sectors, a co-op is a business that is owned and operated by and for the benefit of its members.

In essence, a co-op is really a community unto itself made up of business members and organizations most commonly within a single market sector. In the co-op approach, members enjoy access to business resources and knowledge sharing that can help them operate more efficiently and market themselves more effectively. These resources span a wide variety of business services, employee training, sales, and marketing.

Few businesses operating on their own can be an expert in every facet of their operations. As a member of a co-op, however, a business does not have to be. Members learn from fellow members who are managing similar businesses, and best practices are shared between members. The co-op operates as a community of peers helping each other.

Members can also lower their purchasing cost for supplies and services by pooling their purchasing power with fellow members of a co-op for economies of scale. But unlike the franchise model, the business owner or organization still controls their own destiny, which means they can continue to contribute to their local community as they wish.

Social entrepreneurships

“You can think of a co-op as a form of social entrepreneurship that is fortifying our local communities across America,” said Howard Brodsky, co-founder, chairman and co-CEO of CCA Global. “A local business will give back between two and five times more than a national chain to their community. So, by sharing access to expert business resources that a family business would not normally have and by providing greater purchasing power, a co-op helps family businesses to survive and grow in their communities. The business wins and therefore the community wins.”

John Taylor, a third-generation owner of a family flooring business in Ft. Myers, Florida is one such example. Taylor joined a co-op run by CCA Global after 40 years as an independent operator to protect his business from the impact of big box retailers.

“Joining a co-op has given me the backbone to compete with the big brands using tools I never had access to before,” said Taylor.  “Things like best-in-class insurance policies, administrative resources, credit card processing rates, employee training methods and marketing.”

Knowledge sharing among members is another benefit for Taylor. “I learn so much from the other members. Looking back to the time before we joined the co-op, it felt like we had our heads in the sand. We are better with the co-op than without it every day of the week.”

While no two communities are exactly alike, one need not look too deeply to find the independent family businesses and organizations contributing to the vitality of the local and regional economy.

Employment, vital services, and education all enrich a community. The demonstrated success of the co-op model across these and other sectors is a story about communities helping communities. In the end, it is not just about fortifying every business operator, but strengthening the communities they love to serve.

“When regional and family owned business are able to thrive and prosper with the help of the larger co-operative, the communities they serve benefit tremendously,” said Brodsky. “It is ‘capitalism with a conscience’ because people work together for the greater good.”

Article provided by CCA Global Partners. For more information on the CCA Global Partners cooperative model, visit www.ccaglobalpartners.com.