Best Industries for Worker Cooperatives

buiness-startup1-440x264Let us be clear. There is no limitation on the kind of industry cooperatives can engage in just because they are cooperatives. The term cooperative only applies to the way they choose to organize themselves, not what they do. Cooperatives do have some challenges that are unique to democratically run organizations, but that does not limit what they can do. In most other aspects, they face precisely the same challenges conventional businesses have to deal with, financing and skills being two of the greatest.

The challenge, then, as for any other entrepreneur, becomes to identify industries where the barriers to entry are as low as possible. For most fledgling businesses, cooperative or not, that means labor or skill intensive, low capital requirement and easy to learn.

One barrier is government compliance. There are two main kinds. First, there are the rules that have to do with employment and taxes. Then, there are the many regulations you have to follow depending on your industry. Regulations for the most part are there to protect the public as well as workers. Together, they make a formidable challenge to the average entrepreneur. Reality is that entrepreneurs may have great skills in their particular field, but fall seriously short when it comes to running a business.

Another obstacle startups have to face is competition. Competition is not necessarily always bad. If there is competition, it means somebody is making money in that field. Retail is not one of them as even many well-established names have to cope with increasing online sales. Start-up retailers are forced to try to find gaps online or big-box retailers cannot fill. Construction is an industry with low competition, but with lots of government regulation.

Start-up costs make another challenge to get a new enterprise off the ground. Some startups require little more than a computer and a kitchen table while other require massive investments in real estate and equipment. While professionals like doctors and lawyers need to make major investments in skills and credentials, starting a home based law practice or consulting practice is quite easy. Of course, you do not need to be a doctor or lawyer to be a professional. Lots of maintenance workers like home and office cleaners, landscapers, handymen and technicians work as professionals. It is no surprise that professionals take the lead in terms of number of startups. Many professionals simply avoid employment related compliance costs by remaining sole proprietors.

So, what kind of business should you choose for your new worker cooperative? The answer is, “It depends.” It depends where you are at with respect to the three areas examined above. First of all, what kind of skills do you already have? What other skills do you need? How can you acquire them. What kind of capital do you have available? What kind of market will you be entering? Who will pay for your product or service? You would have to come up with answers to all of these questions and many more just like any other business startup would.

New worker cooperatives should not have to reinvent the wheel. Enough experience has been accumulated worldwide that this is unnecessary. What is still lacking is the framework within which to do it. Let us look at a few of the initiatives to address some of the hurdles you will have to face.

First, a promising concept for financing is The Working World. The best part of the Working World concept is that it is non-extractive. Borrowers do not pay interest on loans and repay according to their earnings. This channels the funds to those who need it the most and eliminates the burden of interest. Another important aspect is that loans come with consulting expertise to make sure the fledgling enterprise succeeds. Funding comes from voluntary contributions from successful operations or individuals. Essentially, funds are placed into the commons for everyone to use as needed and returned when no longer needed.

I am unaware that anyone has done this yet, but it would make sense to me to establish secondary cooperatives in a similar manner to deal with government compliance as well as other business management related tasks such as marketing or technical assistance. Again, doing it in a cooperative manner, the weaker cooperatives will be assured the most help while the stronger will contribute more.

Finally, although a fair amount of administrative tasks can be handed over to secondary cooperatives, there is still a need for leadership and conflict resolution within the individual cooperatives. Setting aside, in a cooperative manner, resources for education is one task that can not be emphasized enough. Education is the best defense we have for democracy and against exploitation and abuse. Cooperatives need to fill those educational gaps left open by society as a whole.
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When you start with “why,” the who, the what, where, when and how will follow naturally. When you know where you’re going, the rest becomes a simple matter of mapping out the steps to get there.

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