All entrepreneurs face an important question at the start of their journey – what business structure is the best fit? Usually, you’d choose between a sole proprietorship, partnership, or corporation. But in BC, the Co-operative model (or co-ops) is growing in popularity.

Co-ops are a constant presence in BC. Our province is home to some of Canada’s largest, most well-known, and innovative co-ops, such as Vancity Credit Union and Stocksy. In this article, learn more about co-ops and whether it’s the right business model for you.

What is a Co-operative?

A co-operative is a jointly-owned business that’s democratically controlled by its members. Through shared ownership and collective decision-making, members collaborate to meet common economic, social, and cultural needs and aspirations. All members are shareholders in the co-op and have an equal vote in key decisions. This includes electing a board of directors, which governs the enterprise. 

Co-ops are an ethical and sustainable approach to business, as they consider both the economic impacts of their activities, as well as their social, cultural, and environmental effects. In Canada, all co-ops are founded on the International Cooperative Alliance Statement, which guides their structure, governance, and work.

There are several types of co-op structures to choose from based on what best suits your business’ structure and membership’s needs. These include; workers, producers, consumers, multi-stakeholders, and more.

The Co-operative Advantage

• Co-ops put people and values first – The decisions made by co-ops balance the need for profitability with the needs of their members and the wider community.
• Co-ops are resilient – Often, co-operatives are more stable over time and more resilient in economic downturns. When other businesses may shut down or lay off workers, co-op members collaborate to find solutions.
• Co-ops support their communities – Because co-operatives are democratically owned by community members, they keep money and jobs in the communities. They also enable communities to have a degree of autonomy from outside forces. Community-based ownership helps protect co-ops from takeovers and closures by outside decision-makers.
• Co-ops are adaptable – The various co-operative structures cater to businesses and enterprises across all sectors and industries. They can also evolve their structure over time, to scale and adapt to the changing needs of their membership.
• Co-ops distribute risk and reward – Co-operatives are a more accessible way to form businesses since the legal and financial risks are shared amongst multiple individuals. They also tend to make fewer risky decisions, due to the number of people invested in and accountable for the longevity of the business.

What Makes a Co-op Different?

Here are a few ways that co-operatives differ from conventional business models:

Democratic Member Control

A co-op is a union of people and is controlled by a democracy. Each member has one share and one vote, regardless of their patronage level. This business model pools the resources, knowledge, skills, and capital of its members, giving everyone a say in the direction it takes.

Allocation of Profit

Typically, income generated by a co-op remains in the community. This means that profits not reinvested in the co-op are repaid to members in proportion to their patronage. 

A common misconception is that co-ops are exclusively not-for-profit enterprises, but this isn’t the case. They effectively straddle the line between a for-profit and a not-for-profit model.

Concern for Community

Each co-operative works for the sustainable development of its community through policies approved by its members. This can take the form of education, training, and information opportunities for members, or socially-conscious programs such as Vancity’s values-based banking, or MEC’s Take Me Outside initiative.

Types of Co-ops

According to the BC Co-operative Association, the total membership of BC co-operatives exceeds two million people. Collectively, these members control over $48 billion in assets through ownership of their co-ops.

Here are the three different types of co-ops and the differences between the models:

1. Consumer Co-op

A consumer co-operative exists to provide products and services to its members. It was the very first type of co-op ever created, dating back to the Industrial Revolution and the creation of The Rochdale Pioneers. These businesses can work in sectors as diverse as housing, health care, child care, and traditional retail. Modo is an example of a BC-based consumer co-op.

2. Worker Co-op

In a worker co-op, employees’ creativity, productivity, and commitment directly affect their final take-home pay. Employees are the members and owners of the enterprise, with a direct stake in how the company is managed. Victory Gardens is an example of a BC-based worker co-op.

3. Producer Co-op

A producer co-op will process and market the goods and services produced by its members. They also supply the products and services needed for their members to conduct professional activities. Examples of BC-based producer co-ops include Home Hardware, Pharmasave, and Circle Craft.

Opportunities in the Field

There are many opportunities currently available in the co-op realm and lots of support to help you get started. The BC Co-operative Society’s Cultivating Co-ops Guide is a great first step. This comprehensive guide walks you through various evaluations, checklists, and templates to help you decide if a co-op business model is for you. 

Here are three examples of popular co-op models that exist in BC:

Worker Co-op Succession

Family-owned businesses make up about 63 percent of all private sector businesses in Canada. Estimates suggest that only one-third of these businesses will make a successful transition to the next generation of the family.

Worker co-ops provide a clear solution to this issue, especially if business owners are concerned about maintaining employment and benefits in their community. Keep in mind that if you decide to pursue an opportunity in this area, you’ll need the collective skills, cohesion, and capital to purchase the business.

Agricultural Producer Co-ops

Generally, it’s difficult for agricultural producers to get a fair price for their goods. Forming a co-op with other producers will collectively raise the price level for products marketed while lowering the cost of supplies purchased. This increased economy of scale allows farmers and agricultural producers to operate more efficiently at lower costs per unit than they could individually.

Small Business Producer Co-ops

Small businesses that sell goods often face challenges with economies of scale. Collaborating with other like-minded businesses creates efficiencies, increases the knowledge pool, and strengthens the resilience of each business. 

East Vancouver’s brewery district, or Yeast Van, is a local example of this type of co-op. They have even come together on co-operative marketing initiatives, like brewery tours and product collaborations.

Resources

For more information on the co-operative model, take a look at the following resources:

• BC Co-operative Association
• Vancity Co-operative Program
• Cooperatives First
• Canadian Worker Co-op Federation

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