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Co-operative Entrepreneurs
Entrepreneurialism is not always about individuals. Giles Simon asks two female entrepreneurs why they started co-operatives that share the decisions and profits of their businesses.
Of over four hundred thousand businesses that start-up in the UK annually, many are owner-managed enterprises, owned and controlled by individual entrepreneurs. Every year, however, a significant number of individuals decide to start a co-operative enterprise in which ownership, responsibility and control of the business is shared.
Beyond employee engagement
Alison Holland started Brightkidz single-handedly in 2003. It has grown from a home-based, one-woman project to a worker co-operative employing eight staff and offering hundreds of products.
BrightKidz provides information about walk to school schemes and supplies fluorescent, reflective products and products to promote walking, cycling, road safety and sustainability. It works with thousands of children, teaching them how to be safe and seen and encouraging them to get involved in walk to school schemes. Clients include local authorities, schools, businesses and the public.
“Originally” Alison explains “BrightKidz was a local walk to school scheme and educational website. With my background in business though, I was aware that to make BrightKidz sustainable we needed to be trading.”
Alison wanted social purpose at BrightKidz’ core, and “a worker co-operative model seemed most suitable.”As a worker co-operative, the business is owned and controlled equally by all the employees, not just Alison. Although Alison started the business, she always envisaged it growing. As it grew, BrightKidz took on employees, giving them ownership and control.
After a probationary period, employees can choose to become members of the co-operative. Members are directors of the business and therefore constitute the Board which meets regularly to decide on the strategic direction of BrightKidz. Employees who choose not to become members have a say through various meetings and discussions.
Alison explains the co-operative functions like other small businesses – decisions made by the Board are delegated to managers to implement, so day-to-day decisions are made quickly. “As a small business we don’t get tangled up in protracted decision-making.”
It seems an unusual step – to start a business that, as it grows, will be owned by other people. But, Alison says, “I’d spent my career working in offices and other businesses – they taught me how not to run a business. I wanted staff to feel it was their business, not a ‘them and us’ feeling.”
Richard Reeves’ research confirms that members of worker co-operatives and employee-owned businesses are happier and feel stronger sense of commitment than employees of conventional businesses because their decisions directly affect the business and they receive a share of the profits. Think of John Lewis.
“A co-operative model also makes sense because BrightKidz started as a campaign, not a business” adds Alison. “We trade as a community enterprise, which feels better than a conventional private business.”
“The other thing about being a values-based co-operative is that not all decisions are based on money. Not only does BrightKidz source environmentally and ethically but “we try to get our manufacturing done in the UK. This sometimes costs more, but a sustainable business needs to pay extra for UK-made products.”
Business for the 21st century
Sam Roger was a director of worker co-operative Equal Exchange for 11 years but has now started a new co-operative. Ethics Girls is an online shop specialising in Fairtrade, ethically sourced goods – clothes, kitchenware, food, the lot.
The twist is that the business will be owned and controlled by a combination of employees, consumers and producers. Each member will have a share and one vote, and elect a Board that will include two members of staff, two producers and two consumers. Sam is committed to the co-operative way of doing business but sees a strong business case for this collaborative model.
Sam Roger, a founder member of Ethics Girls
Crucially, members of co-operatives are more than customers. “If you own a stake in the co-operative,” she says “you are committed to the business – this goes for customers and staff. Membership gets people involved, meaning people help out, support and develop the business.”
She points out that web 2.0 means that customers do this already for conventional businesses. “On Amazon, customers write the reviews that sell Amazon’s products.” The difference with the co-operative is that the members get something in return – control of the business and a share of the profits. “It’s more honest.”
She admits “this approach might seem strange to conventional business,” but it ensures Ethics Girls “will respond to customers’ demands and be forced by producer members to be trustworthy and honest.”
Another benefit is raising finance. Sam wants members of the co-operative – which might be hundreds, perhaps thousands of customers – to invest in the business. This has the potential to raise significant amounts of capital. Other co-operatives have raised significant sums through similar mechanisms – The Phone Co-op, for example, raised over £1.6 million from its 6,735 members, meaning the average investment per member is just £30.
Things are just beginning for Ethics Girls. Sam runs the business with one part-time member of the co-operative, but she has a big vision. “We are small start-up now but our business model is a co-operative with a small core staff, and a large membership of customers and producers.” In fact, for Sam, as technology develops, this is how business will look in the future.
In the current climate it’s hard not to agree with Alison and Sam. Businesses that engage employees, customers and producers by making them owners and members of the enterprise look very timely. There are over 4,700 such co-operatives in the UK already, the vast majority small and medium sized enterprises.
Perhaps in the future we will see even more individuals setting up their businesses as co-operatives to share the decisions, responsibility, costs – and profits.
Giles Simon is Communications and Development Officer at Co-operativesUK
For more information about co-operatives visit www.cooperatives-uk.coop or contact giles.simon@cooperatives-uk.coop or 0161 246 2941.