This is the first step in my series on how to create a cooperative. I’ll link to each post here as it’s written. In my last post, I combined information from many guides to create 10 steps. We’ll use these to launch our cooperative. Here’s the table of contents:
Introduction to cooperatives
Building a cooperative: step by step guide
- Collect information, clarify needs, and assemble your founding members
- Discuss needs and vision. Coordinate organizing and business research
- Consolidate a clear vision and plan
- Conduct a feasibility study
- Design your decision-making process
- Create a business plan
- Define roles
- Convene your first cooperative owners meeting
- Convene your first board meeting
- Begin operations!
Cooperatives have danced around my mind ever since I first heard about them. I recently started my own consulting business but of course I have an eye towards the future. I’m thinking through what it might be like to launch a worker’s consultant cooperative. Like every entry in start the future, I’ll begin with a caveat. I’m doing the research, but I’m not a lawyer. I attended six seasons of the Annalise Keating school of law and those kids barely got away with murder. Let’s go!
Collect information, clarify needs, and assemble your founding members
The first question people might have about a worker’s consultant cooperative is, “why?” One reason I became a consultant was to escape the power imbalances of most offices. There are lots of advantages to creating a cooperative of consultant worker-owners.
Cooperatives can offer reduced overhead, shared resources, and other perks. Workers can join a cooperative insurance pool to reduce the rate any one of us could get on the open market. A cooperative could give its members access to more clients and a broader range of industries. Workers cover for each other when someone is out sick or on vacation.
Another draw to worker cooperatives is democratic control: “one member, one vote.” This doesn’t happen by default in some cooperatives. A cooperative like REI is a consumer cooperative. They have a CEO and top-down leadership that are notorious for being anti-union.
Worker cooperatives boast shared ownership among its members. Cooperatives that have good years share their profits proportionally across members. Workers can also be responsible for losses in a way you don’t see in a typical business. This will come up again in my case study below.
how we get started
Step 1 of starting a workers cooperative is about exploration. This is the time for bold reimagining of what we’d want to get out of a business like this. Once you have some ideas, start looking for people who could join you. You might start with your work friends or like-minded professional colleagues.
I would start by reaching out to other consultants I know. I’d ask talk to other work friends who I could interest in learning more about the co-op lifestyle. Here it’s important to find people who are genuinely interested in starting a co-op. The cooperative structure is unfamiliar to most people. Be ready for realistic talk about the benefits and downsides.
Begin to draft a mission and core values as you discuss ideas together. I know that not all my own values will work for everyone. Worker cooperatives must find ways to make decisions and work through conflict. If your group can’t come up with common ground, it might not be the right group to start a cooperative.
Continue to narrow your focus on the goals, structure, and vision for your new org. What needs do you perceive in the world of consulting? What services would you provide? How would you find new clients? How would you decide which clients to take on, and which to decline? How would individual consultants work together on a project?
Take an inventory of the skills and interests your group would bring to the new cooperative. Whose perspectives could you be absent from the room? What skills are you missing? For instance, who has a finance background? Who can write a business plan? Not everyone needs to be good at everything. Derute Consulting describes their system of five leadership-learning nodes. Individual contributors lead parts of the organization based on the expertise they bring. Anyone can join any node but working in at least one is mandatory for all workers. In my first post I described three consultant cooperatives I found in my research. Derute Consulting, Radiate Consulting, and Nina Collective all operate successful worker cooperative models.
case study: Burley Design Cooperative
I wrote earlier about how some cooperatives distribute their profits to all worker-owners. Cooperatives that don’t make a profit one year also have to decide how to distribute their losses, too. Joel Schoening wrote about the Burley Design Cooperative for the Oregon Historical Society. The Burley company launched as a regular company in 1969 and moved to Cottage Grove, Oregon. In 1978 the owners and their employees moved to form a cooperative.
Burley Design Cooperative (BDC) operated for decades in Oregon. They more or less launched the bicycle trailers and accessories market. During its heyday, BDC had 100 worker-owners and sales of more than $10M per year. Some years this translated to dividend bonuses of $30,000 per worker. But over time, fewer employees felt connected to the original ethos of a cooperative.
Employees used to the fat year-end dividend checks were in for a shock when the company started losing money. Workers were on the hook for writing checks to their company to make up the losses. Decisions made over three decades chipped away at support for the cooperative model. It eroded into the 2000s when they hired a new General Manager who did not have a background in cooperatives. In 2006, enough worker-owners voted to sell their cooperative to a private owner. He soon outsourced jobs and shipped production overseas.
I include this case study as a bit of a reality check. Lots of people feel disenchanted by traditional top-down hierarchies. A worker cooperative offers its worker-owners freedom and a high level of autonomy. It’s easy to fall back on old practices. It’s easy to lose sight of the original purpose of a cooperative. Like starting any business, we have to go into it clear-headed and honest with each other. That’s what sets us apart from companies with opaque decisions and top-down authority.
Cooperatives have been around in different forms since the 1700s. Cooperatives and mutual aid organizations also have a lengthy history among Black americans. Freed and enslaved Black people pooled resources to buy burial plots and share food and land. Lisa Barclay describes Jessica Gordon Nemhard’s scholarship in an article about this history. For instance, the Colored Farmers’ National Alliance and Co-operative Union began when the Southern Farmers’ Alliance refused entry to Black farmers.
What I appreciate about cooperatives is the leveling of power dynamics. But even hierarchy-free organizations can perpetuate whiteness and white supremacy. Cooperatives can adopt unfair or unequal practices if enough members vote for it. I also worry about how we start cooperatives. Most guides recommend that we start with who we know. A lot of white folks mostly know other white folks. We have to be intentional so as not to perpetuate this segregation into a cooperative.
Most worker cooperatives reject top-down hierarchy while they operate in a world that values it. They help tether power and resources to the workers, not the ruling class. We have to be methodical and deliberate as we create alternatives to our present system. We’ve decided to take the time to create something that’s revolutionary. Why should we use that to repeat the mistakes of the past?
Note: I’m taking two weeks off to celebrate my birthday, deal with moving, and (somewhat fitting, for this post) Labor Day. See you in three weeks!
my name is josh martinez. i have always loved trying to understand systems, and the systems that built those systems. i spend a lot of time thinking about how to get there from here.
i own and operate a consulting practice, Future Emergent.
say hello: josh[at]bethefuture.space