This article originally appeared at American Express Open ForumLong stigmatised as organic markets frequented by hippies, cooperative businesses suffer from the spread of misinformation. In reality, such a business model — true, frequently applied to health food stores and bike shops — is more mainstream than that.
In fact, there are about 30,000 co-ops in the U.S., which account for more than $3 trillion in assets, more than $500 billion total revenue, and more than 2 million jobs, according to figures from the National Cooperative Business Association.
Credit unions are co-ops, and so are Fortune 500 businesses like Land O’ Lakes and Sunkist, the 118-year-old business whose revenues topped $1 billion in 2010.
In most ways, co-ops are like any other business—they exist to generate revenue and serve consumers. But in a few important ways, co-ops are different. No one person can own the majority of the business; instead, workers or customers who buy in (also known in the co-op world as “members”) have equal shares, and receive equal shares of surplus revenues in profitable terms.
Most importantly, co-ops exist entirely to benefit their member-owners. Instead of working for profit or solely for the business’ benefit, they work with an eye on what would best serve member-owners. Even if your business operates under a for-profit model, it could apply a few lessons from the co-op school of thought.
Here are six things you can learn from co-ops:
1. Keep consumers involved
Co-ops place heavy emphasis on keeping their target market and consumers involved in and aware of in-house operations. After all, they’re owners, too. While a for-profit company doesn’t need that level of transparency with the day-to-day minutiae, keeping consumers of your products and services engaged in your company is key to securing their loyalty and keeping your brand fresh in their minds. Whether through targeted marketing efforts, like e-mail blasts, or better interaction through social media channels or in real life, make you customer feel a connection to your company and reap the benefits.
2. Spend wisely
A co-op business is accountable to its member-owners for everything, including spending. Bearing in mind that costly projects will be under scrutiny and have expected results keeps co-ops spending smartly. True, as a business owner, it’s necessary to take gambles and make certain investments with no guaranteed return. But keeping a co-op mentality by weighing costs versus benefits of such risky moves can help keep you in the black. Don’t rule out upgrades that will propel your company forward, but instead be strategic about the best, most cost-effective way to execute them.
3. Be forthcoming with information
Again, as an independent, for-profit operation, you aren’t under any severe obligation to keep your stakeholders fully in the loop. But sharing information, being honest and clear about developments and setbacks as well as how you plan to improve (particularly to your investors) can breed trust. If stakeholders know your are committed to truth-telling and bettering your business, they are more likely to invest in you. If they are clued into the ways you plan to achieve success, they will help you get there.
4. Stay true to your “mission”
For-profits don’t necessarily have the same cut-and-dry mission statements that completely dictate co-ops and nonprofits, but they should have a clear vision. It’s crucial to be acutely aware of where you’re going and where you’ve been, as a company and as a leader there. That’s the only way to make sure your vision and your actions square up, and that you’re moving your company in the direction you need to go. It’s not always easy to find the path to your desired endpoint, but paying close attention to your actions with that goal in mind definitely helps.
Last but not least, and certainly the most obvious, co-ops can teach a lot about cooperation. After all, it’s the principle that’s woven through virtually every aspect of that business model—and it can be hugely effective. While it’s not necessarily a fundamental consideration for for-profit businesses, integrating it can create a boon for your company. For example, fostering an intra-office culture where cooperation is prioritised will streamline processes and probably boost morale, too. Cooperating with other businesses will create lasting partnerships that are mutually beneficial. Cooperate with your community, by being active in it, and you’ll come away with a gleaming reputation. And if you cooperate with clients and customers, the boost in business will speak for itself.
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