A co-operative social firm is a business which operates to fulfil social and commercial objectives simultaneously
The social objectives prioritise the provision of employment opportunity, work experience and training for people disadvantaged in the jobs market. These include:
Other social objectives may also be features of the way in which a social firm operates such as:
The commercial objectives are similar to that of any business
A successful co-operative social firm does not so much balance these objectives as pursue them as a package. The primary focus will be on providing an environment in which a mixture of disabled and non-disabled people can reach their full potential and to ensure that potential can be fully and profitably utilised by the business.
To obtain full benefit the participants will require:
Co-operatives are organisations which operate according to certain principles. These are explained in the Statement of Co-operative Identity. These principles are:
open entry to all who
qualify for membership
Co-operative Social Firms must decide upon what basis a person qualifies
for membership and then membership must be offered to those who meet that
criteria. Criteria may include length of service, attainment of realistic
objectives in work or qualifications, proof of co-operative behaviour or
of contribution to the wider objectives of the co-operative. Some social
firms limit potential membership to those who have contracts of employment
with the co-operative, others to any who carry out work on any basis (employed,
trainee, volunteer) and others have a wider definition which can include
carers and supporters.
democracy
All members have an equal vote. The general meeting of members is the ultimate
authority even if it delegates power to an elected management committee
or to an elected manager.
equitable distribution
of benefit
equitable need not mean equal but should mean fair and by agreement of the
members. The benefits involved include not only profits but also access
to personal development.
limited return on financial investment
Money does not have voting power within a co-operative. A member who invests
a million pounds has the same vote as a member who invests nothing. Some
co-operative constitutions allow for a limited number of investor members,
most do not. Investors can receive a reasonable return on their investment
but can not have an open ended reward from growth in the worth (equity)
of the business. Often investors in co-operative social firms desire little
or no return.
co-operation with other
co-operatives
Co-operative social firms find themselves part of a movement with hundreds
of millions of members in hundreds of thousands of co-operatives world-wide.
Through their national and international federations, sectoral organisations
and direct links co-operatives are creating new and fairer ways of conducting
international trade and influencing the development of economic and social
policy.
education
Co-operatives accept responsibility for educating members not only to be
able to carry out their work role but also to be able to participate effectively
in the control of the co-operative. Co-operatives also have a responsibility
to contribute to the education of the public about co-operative values.
community benefit
Co-operatives seek to be sustainable businesses in every sense of the word,
not only in financial terms but also with regard to the local ecological
and human environment. Many co-operatives have social audits carried out
each year to monitor their performance and many have a dimension of accountability
to their local community built into the way they manage themselves.
Joining a Co-operative Social Firm (CSF)
If you are interested in a job within an existing or new CSF contact your local Co-operative Development Agency or regional Social Firm Network (details available from Social Firms UK) for details of firms within your area.
Define the membership
criteria
What will people have to contribute to justify membership of the co-operative?
What will they have to do to prove this (probationary requirement)?
Define the product or
service
Look for opportunities to provide products and services to organisations
which are likely to be supportive of what the social firm is trying
to achieve.
Talk to them to find out what their needs are. They constitute an initial
"soft market". Be careful not to be trapped into supplying on
a small scale goods and services which are only economic to produce on a
large scale. If you have a product idea for a local, regional or national
market, be sure to carry out adequate market research to assure you that
the market exists. This might have to be a major part of a pre-start feasibility
assessment.
Cost resources required
Everything you need to acquire facilities, equipment, opening stock, training,
set up. If there is a staged set-up process follow the trail through to
the point where the operation is viable, even if that takes several years.
Then add to it the amount of working capital that is required. Working capital
consists of the money which is tied up financing customer's credit, stock
ready for sale, goods in production and the trading losses which always
occur in the first couple of years while a business is getting established.
This is your profile of investment required. Do not start without confidence
that the whole requirement can be raised. You may get stuck half way to
viability. Most businesses do.
Create a business plan
See below
Get support
Take the business plan to the various interest groups from whom support
is required and get their commitment (in writing!).
Get the finance
It is best to get a mix of grant aid and commercial borrowing for both capital
investment and revenue support.
Get trained
Develop a training plan to get everyone equipped to do what they need
to do within the business as workers, managers, company directors etc.
Broadly the following subject areas will have to be covered:
1. Introduction or Synopsis
( some would say Executive Summary ).
It tells the reader what the rest of the document will explain.
2. The Product or Service.
What it is, why it is so wonderful.
3. The Market
Who will buy it. What they are like. Where they are. How many of them there
are. Why the product will be of benefit to them. Why it is better than any
alternative they might buy.
4. The Marketing Plan.
How the benefits of the product will be explained to, and made irresistible
to 3
5. The Organisation of
Production . Delivery of Service.
What needs to be done to create 2 and get it to 3, reliably and at minimum
internal cost. What inputs are required, where they will come from, how
supply continuity and quality will be assured. What processing is required,
what equipment will be needed.
6. People
Who we have on the team. Why they are the perfect people to carry out 5
and 4. Could include sub contractors.
7. Business Structure.
Who owns, who controls, who employs, by what mechanism, and why.
8. Premises
What it takes to house 6 and what they need for 5 as close as possible to
3 and contributing to 4. Why the chosen article fits.
9. Financial Projections
Costs of setting up. Fixed capital and working capital requirements.
Cash flow projections for at least three years.
Notes explaining the assumptions upon which these figures are based.
Profit and loss projections for at least three years.
Projected balance sheets to correspond.
1. To provide a structure within which to establish what needs to be looked into. To provide the questions which drives that research.
2. To establish in your own mind(s) whether the investment of your own time and energy is appropriate. Construct the business plan. Read the business plan. Do you believe it?
3. To be a blue print to follow in the setting up process. Very few businesses can possibly be into full production and sales immediately. The more that can be worked out up front, the faster things come up to speed. Many, many businesses fail before they truly get going, often having done enough to prove that it would have done well if it had got up to speed faster.
4. To be a benchmark. A business plan should not be a document which is written and then thrown into the back of a filing cabinet. It is the yardstick by which actual performance can be measured. Are sales up to projection? Are the costs on target? What is going right and what is going wrong ?
5. To establish Common purpose. To make sure that everybody involved in the enterprise knows what it is all about and what they are committing themselves to. Those who are going to take the responsibility for it, workers, associates, key suppliers, marketing people, possibly key customers, family, carers, statutory agencies and the people who put up the money.
For more information see the CAN Services sheet "Social Firm Development"
Updated May 2002