Frequently asked questions about being a workers co-op
Q. How does a workers’ co-op differ from a business partnership?
A partnership is determined by financial investment in the business; the members of a co-op do not need to put any money up to join – they just need to work there.
Q. If co-op membership does not require financial investment, where does the start-up money come from?
Loans, usually. In our case, we took over the shop as a workers’ buy-out when the owner wished to retire. This required tens of thousands of pounds to pay the “good will” (going concern purchase), buy the existing stock, pay the lease deposit and first instalment and prime the bank account enough to get the business rolling. We raised some of the money through an online kickstarter campaign (kind donations) and a number of long-term loans from friendly individuals and other co-ops, which the shop will pay back over time.
Q. If you are a not-for-profit, does that make you a kind of charity?
No, the business is a limited company and runs like any other independent shop – including paying the same taxes! A workers’ co-operative provides paid work for its members, but we have set a constitution that does not allow us to take home end-of-year profits or sell the business and pocket the proceeds.
Q. As a not-for-profit, why are your prices not closer to wholesale?
It costs a lot to run a shop, and while we don’t seek to pile up cash in the bank, we have to raise enough to pay the rent, utility bills, taxes, insurance, payroll (currently minimum wage), repay our start-up loans, repair& refurbish the shop , replace & maintain equipment…. And so on. To remain viable, we need to add a certain mark-up, which we keep under review with changing costs and circumstances.
Q. Are the co-op supermarkets a workers’ co-op?
No, they are a different kind of co-operative, in which membership can be bought for the nominal fee of £1 by anyone who wishes to join, and dividends are distributed to those members annually.
Q. Can any shared venture call themselves a workers’ co-operative?
A. Not officially, unless they set the company up with a particular legal template enshrining the co-operative principles into company rules and safeguarding that structure. We have done this for the Natural Foodstore. You can, of course, run a company along co-operative lines and refer to this as a positive thing.
Q. How does a co-operative business fit alongside more conventional local shops?
A. Perfectly well! We are extremely lucky to be part of a friendly communtity of shops in the Heritage Triangle area of Diss. We talk to each other, work together on local events and initiatives and make an effort to support each other rather than compete. It is the small independents that make a town unique and vibrant, so an attitude of solidarity will serve us well!
Q. How can we set up a workers’ co-op?
A. Like with any business venture, you will need a motivated group who work well together and a viable business plan! Then, I’m pleased to say there will be lots of people ready to assist you. Your first stop should be Co-ops UK whose raison d’etre is to promote and support co-operative business. If you are interested in the political dimension of co-operation vs captialism, Radical Routes might be for you - their main focus is housing co-ops, but they have produced an excellent guide called “How to set up a workers co-op” which is essential reading. Drop in and have a chat with us if you’re local, or another workers’ co-op in your area: it is part of being a co-op to support other co-ops and we would be happy to help.