Continuous Support for New and Expanding Co-ops

Challenges to food co-op development have been exacerbated by a tough economy, yet food co-ops are still making plans to start, grow and expand. Those working to provide services and support to food co-ops have been busy continually seeking ways to build on this momentum.

Many projects have been supported by three organizations working toward promoting food co-op growth: Food Co-op Initiative (FCI), CDS Consulting Co-op (CDS CC), and the National Co-op Grocers Association Development Co-op (NCGA DC).

In addition to the trailblazing work of CDS over the last two decades, the FCI and the NCGA DC have formed in recent years to address specific issues facing food co-op development.


three-phasesOrganizing Startups

The Food Co-op Initiative was created in 2006 as the Food Co-op 500 program to provide resources and support for communities that want to start new food co-ops. They offer advice, coaching and access to training materials and other resources so that groups interested in starting new food co-ops have the tools to get started using best practices based upon experience and models for success. In addition to being the first organization most startup groups will interface with, FCI also plays another unique role in the sector, and that is they are completely open to anyone seeking information about organizing a food co-op effort. FCI doesn’t charge for the information and services in order to encourage development by being accessible to anyone. The FCI’s activities are funded largely by a grant from the Blooming Prairie Foundation.

“Our role is key in the initial organizing process. We give groups resources and an overview of what they’ll need from other professionals and organizations,” said Stuart Reid, food co-op development specialist. “We hope to give them a running start before they make huge investments in time and money.”

Feasibility and Planning

Since 1992, CDS Consulting Co-op members have been working to support the creation and development of food co-ops. In 2008, the food co-op consultants reorganized to respond to expo­nential growth and increase their capacity for meeting the needs of the food co-op sector. Services are offered on a fee-for-service basis to work with all food co-op groups along the continuums of co-op size and organizational development.

As part of their food co-op development work, CDS codified the stages of expansion and growth for startups through the Four Cornerstones in Three Stages model. The four cornerstones of vision, talent, capital and systems are within three stages of food co-op development: organizing, feasibility and planning, and implementation. The model is also applicable to existing food co-op expansions.

With three organizations now working to expand and support the food co-op sector, Bill Gessner, expansion planning and business development consultant, sees a specific role for each of them, and while there is cross-over in terms of resources, he places CDS CC squarely in the role of planning and feasibility. Gessner also sees how the CDS CC’s food co-op preparation and planning interfaces with the NCGA DC’s implementation. “When we are working with a food co-op in the early stages of expansion planning, and we are assessing organizational readiness and capacity, we would assess a higher level of readiness to a co-op working with the NCGA DC in the subsequent stages of the expansion project.” he said.

Expansion Implementation and Opening

The NCGA formed as a secondary cooperative in 1999 to provide support to its member retail food co-ops as a virtual chain. TheNCGA DC was incorporated in 2008 after their members asked theNCGA to find ways to assist them with expansion and new store development. Members can engage the NCGA DC fee-based services through a contract that returns a percentage of their sales to DC over the term of the agreement.

The DC assists expanding co-ops with financing, real estate negotiations, opening the new store and monitoring operating profitability up to two years after opening. According to CE Pugh, national development director of the NCGA DC, the DC usually works with stores after they have done some financial projections and a market study and site selection activities with CDS CC. “Having co-ops go through that process first is very helpful to everybody,” Pugh said. “When they’re ready, the DC can help them move forward. The work CDS CC does prior to the handoff engages people at a much higher level.”

Pugh said it’s also important to note that the DC’s development model cannot work for stores below $3–4 million in sales because what makes the DC’s activities sustainable is getting a pay back on volume. Robynn Shrader, CEO of NCGA said, “In the long run we see the DC as something funded through food co-op growth and development. Those who benefit today will contribute their resources for those who will benefit tomorrow. There’s lots of room for different ways of doing business, and there’s opportunity for leveraging all our resources in a coordinated fashion,” she said.

Food Co-ops Benefit

For Margo O’Brien, general manager of St. Peter Food Co-op in St. Peter, Minn., the sector’s increased capacity to meet the needs of food co-op growth is welcome support. “As a general manager you’re running the store, building a shared vision, and driving growth in a community. The skill level required to do any one of those things is high, and no one person has the skills to do everything well,” she said. Working with individual consultants and organizations gives her the confidence and tools she needs for a successful outcome.

The co-op’s expansion process began with CDS CC consultants doing strategic planning, market studies, board development, and financial proformas. Additionally, the co-op worked with CDS CC to change its equity requirement from $80 to $200, and raise $750,000 in investments for the project—a goal that was exceeded by $390,000.

Now the co-op is contracted with the NCGA DC to help carry out their expansion plans. “One reason I contracted with the DC was the followup. Once the store is open we will have someone to help guide us during the first year or two on an ongoing basis reviewing our financials and performance,” she said.

O’Brien believes that working with both organizations has greatly strengthened her co-op’s preparation and capacity. Through all of their combined efforts on behalf of startups and expansions, the food co-op sector stands to gain in strength, and everyone—management, staff, boards, members and customers—benefit from their enhanced and focused expertise.

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By |September 30th, 2010|Categories: Solutions|Tags: |

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