Sequence of Events
The Keystone Development Center has a checklist that we follow when working with groups forming cooperatives. A checklist helps us and the group to make sure nothing important gets overlooked.
Each cooperative has a different development process – it is inherently organic in nature. These steps can happen concurrently or in a different order. The basic steps, however, do not change. This checklist is used only as a guideline.
The steps are categorized according to five stages of cooperative development: Explore, Assess, Structure, Implement, and Thrive.
Cooperative Development Checklist
Explore (Who and Why)
In the Explore phase, a group comes together to learn why and what kind of co-op might be a good fit for their needs and vision.
Step 1 – A group comes together to explore their needs and ideas and discuss KDC services.
The group expresses their needs and what they want to learn and do, and KDC staff gets to know how we can provide assistance.
Step 2 – The group establishes a plan of education and/or an incremental workplan.
With KDC input, the group decides what they are trying to learn or find out or what they hope to accomplish.
Step 3 – KDC introduces co-op structures and assists the group in applying these ideas to their co-op concept.
KDC educates the group about the cooperative business model and the rights and requirements of members. The group can then determine if a cooperative is what they need.
Step 4 – The group members formally agree to form a steering committee and take on responsibilities as members. If needed, an advisory committee is also recruited.
KDC shares information on the role and responsibilities of steering committee members and helps the group formulate and adopt its own agreements. If needed, an advisory team that may include experts, knowledgeable industry players, local members of the community, or other people who can help advise the group (SBDCs, Extension, Dept. of Ag., local economic development organizations, etc.) is also recruited and established.
Step 5 – The steering committee clearly identifies the economic, social, organizational, or capital needs to be addressed and the purpose of their co-op.
KDC assists the group to identify and define the economic or other needs that a co-op can fulfill.
Step 6 – The steering committee adopts a step-by-step business development process.
KDC educates the group about the business and co-op development process and the incremental phases (what’s on this page!).
By the end of the Explore phase, a steering committee is established, can articulate the needs that a co-op could address, and has a plan to continue the co-op development process.
Assess (What)
In the Assess phase, the steering committee acquires a clearer picture of the co-op, the viability of its potential market, how members and governance could function, and how it could be capitalized.
Step 7 – The steering committee agrees on its mission, vision, and values.
KDC assists the group to develop all three components of their Purpose statements.
Step 8 – The steering committee begins work on a business model canvas and proposed co-op structure.
KDC assists the steering committee to understand the components of a business model, how a proposed structure could work, and the capitalization needs to address the financial side. Tax implications of different options are researched.
Step 9 – The steering committee conducts market research and feasibility analysis.
KDC assists the steering committee to find out if sufficient demand exists for a cooperative among potential members, as well as a viable market for products and services.
Step 10 – The steering committee solidifies accountability, collaboration, and conflict management skills and practices.
KDC helps the steering committee to pinpoint areas of needed improvement in skills and practices that ensure accountability, transparency, coordination, and efficiency, and offers training and coaching. The steering committee formulates a conflict management plan.
By the end of the Assess phase, the steering committee has a clear purpose, a proposed structure, and a (pre-)feasibility assessment of the cooperative, and the group is working collaboratively together.
Structure (How)
In the Structure phase, the cooperative is formed as a legal entity, the business plan is written, and preparations are made for launch.
Step 11 – The steering committee develops a business plan.
KDC assists the steering committee in preparing a business plan that includes marketing and fundraising, management, roles and responsibilities, workflow, industry-specific best practices, and capitalization. If needed, KDC helps to identify other service providers/consultants who can develop the business plan.
Step 12 – The steering committee develops bylaws or operating agreements and articles of incorporation or other entity formation documents.
KDC assists the steering committee to develop the formation documents appropriate for their cooperative, and connects the group with appropriate legal and accounting support.
Step 13 – The steering committee legally establishes the business.
KDC assists the steering committee to file paperwork with the appropriate state agencies to legally establish their cooperative.
By the end of the Structure phase, a cooperative is legally established and ready to launch with a solid business plan.
Implement (Launch and First Year of Operations)
In the Implement phase, the cooperative puts its plans into action, raises the needed capital to launch, and refines its operational and governance systems.
Step 14 – The incorporators elect a board of directors and approve bylaws.
KDC assists the incorporators in planning and conducting an initial meeting at which directors are elected and bylaws are approved.
Step 15 – The board of directors establishes transparent accounting and record keeping systems.
KDC educates the board of directors on creating and refining accounting and record keeping systems, including patronage and member equity or loans, that maintain financial accuracy, transparency, and empowerment for members.
Step 16 – The board of directors establishes financial relationships, including opening a bank account and if necessary applying for loans.
KDC assists the board to establish a banking relationship and to open a checking account and other appropriate accounts. As needed, KDC helps to establish and maintain relationships with co-op and Community Development Financial Institution (CDFI) lenders.
Step 17 – The board of directors conducts a Member Equity Drive.
KDC assists the board to structure its outreach to and enrolment of members along with their buy-ins.
Step 18 – The board of directors establishes its tax status, obtains insurance, secures licenses and permits, and accesses real estate and equipment.
KDC assists the board to establish all the various operational and administrative set-ups that are required, or connects the board to other professionals who can assist.
Step 19 – The board of directors implements its business and marketing plan.
KDC assists the board to complete financing, set up systems for customer recruitment and retention, start production or service delivery, and find and hire a manager.
Step 20 – The cooperative celebrates its launch with a grand opening!
The board and manager plan and hold a grand opening that welcomes customers, vendors, members, and other supporters.
Step 21 – The board and management establish regular meetings, accountability, evaluation, and policy revision.
The board and manager establish a regular practice of reporting, check-ups, and review.
Step 22 – The cooperative engages in member appreciation, communication, and trust building.
A co-op is only as strong as its members make it be! Regular opportunities for members to stay in sync with the cooperative keep the co-op responsive and members engaged.
At the end of the Implement phase, the cooperative has launched its operations and internal systems.
Thrive (Fine Tuning for Longevity)
In the Thrive phase, the cooperative fine-tunes its business, operations, and culture practices to stay healthy and efficient.
Continuing Support
KDC can provide workshops and technical assistance on member training and engagement, financial systems and loan management, customer recruitment and retention, production and/or service planning, annual meeting planning, human resources, board training and evaluation, and ownership culture.
In addition, we encourage cooperatives to network with each other and to give back to the cooperative community.
If an existing cooperative is considering growth or renewal of some kind, the KDC team is ready to assist in the planning and implementation.