3. How does a CDA do it?
In terms of spreading the word, the most useful tool at the disposal of a CDA with admin support and IT is the mailshot. It is important to begin to get a local identity and to build an awareness of what the bearer of that local identity can deliver. Standard headed paper and a clear, recognisable logo (see templates provided in Appendices) are instrumental to this. Building lists are also important at this stage. Existing co-operative organisations in the area, educational establishments, trade union branches and Trades Councils, libraries, Local Authority officers, community groups and organisations, information and advice points should all be listed and mailshot on a regular basis. A simple, identifiable news sheet (see templates) may assist in this process.
Opportunities to speak at meetings should be sought and followed up with rigour.
Following on from this, any and all success stories new co-ops up and running, existing co-ops expanding, new programmes/projects embarked upon, new funding secured should be drummed up and put out to news services. This can be a thankless and frustrating task, but it must undertaken. It is important that local people are aware of the good work the CDA is doing.
Every CDA should produce a range of handout publications (see Appendices). These should be distributed regularly to points accessible to the general public, such as Job Centres, Careers Advice Centres, Libraries, Citizens Advice Bureaux, Enterprise Agencies, Business Links, TECs, Chambers of Commerce, Schools & Colleges, Youth/Community Centres, etc.
These can also be periodically mailshot to local politicians, Local Authority officers, other Third Sector organisations, other co-ops, Trade Unions, professional organisations, etc.
Each year a good CDA will produce an Annual Report (see templates) to summarise the years activities. This can and should be an important document in terms of proselytising.
Many CDAs now also have web sites. These are relatively simple and inexpensive to set up and have the added attraction of being instantly linkable to other CDA sites, to the CDA Anywhere site, and to any other co-operative sites and portals now popping up all over cyber space. Every CDA should give this option serious consideration.
3.2 Develop/encourage/support a co-operative culture
Co-operatives survive best in areas where other co-ops are also trading. Co-operation among co-ops (the 6th Co-operative Principle) is another feature of this unique business community. Co-operative companies constantly look for ways by which they might assist each other. Where there are already trading co-ops in the vicinity, it is important to get them on board and involved with the CDA at the earliest possible opportunity. Where new co-ops are developing, it is important to assure that they are aware of and in touch with any neighbouring co-ops.
Many localities also have individual co-operators who know and understand the basis of co-operativism. They may be members of the local Co-operative Party or the local Consumer Society. They may simply be thinking people with a commitment to economic egalitarianism. These people should be encouraged to attend major CDA events and to mix with trading co-operators as much as possible.
Make up of Membership of the CDA, as defined in its Memorandum & Articles of Association (see model M&A in Appendices), usually includes a mix of working co-operators, representatives of funding bodies, and individual or corporate "sympathisers". It is useful to try to assure that this mix is reflected on the CDAs Board of Management. It encourages diversity of thinking and the cross-fertilisation of ideas and increases the sense of beneficial, participative community.
Properly structured CDAs will require, at the very least, an AGM. This should be utilised as an opportunity to bring the various co-operators in the area together. It should be a sociable and informative event as well as a formal one.
3.3 Assist Business Start-ups
The CDA should have facilities to assist groups with feasibility studies, possibly including prototypes and trial-trading, market research, financial projections, and marketing. Ideally, the CDA should provide or facilitate the provision of adequate and appropriate training. The CDA should also be able to advise and assist on access to sources of capital.
A useful way of scheduling work with start-ups is to break the work down into three generally acknowledged time periods - pre-start, registration, and first 3 years.
Co-operative development will usually be centred on the creation of a business plan for a proposed enterprise. This provides a structure and a focus around which all the development activities can revolve. The business plan should demonstrate the viability of the business idea (or, in the case of a trading co-operative, of the expansion plan) and the capability and determination of the co-operative's members to make it work. This is as much for the benefit of the members as for others, such as financiers who may be approached for loans.
The length, complexity and content of the business plan will depend on the scale and nature of the business, but it will commonly include:
The people/the organisation - who is responsible for delivering the product/service- relevant experience, skills available, track record- special strengths, perceived weaknesses
The market - who is out there (e.g. demographic information)- evidence of demand (e.g. market research results, published data)
Premises and equipment - what is needed and what is already available, with costings- plans for meeting any shortfall in requirements
Marketing - how the customers are to be persuaded to buy from this source rather than some other- unique selling points: what is distinctive about this product/service
Personnel - staffing requirements and capacity, and plans for dealing with any under-capacity
Finance and management - who is responsible for what, the management structure, how the finances will be managed, reporting procedures
Legal/technical - the legal status of the organisation, relevant statutory requirements: e.g. audit regulations applying, other implications: e.g. VAT registration, FSA, health and safety, other legal obligations or restrictions
Financial projections - profit and loss
projections for 25 years
- cash flow projections for 13 years- commentary and justification for projections
- capital requirements
There are Business Plan and Finance Projection templates included in the Appendices and on the disc.
Companies can be registered either with Companies House or with the Registrar of Friendly Societies. Most CDAs tend to register through the ICOM Legal Department. ICOM provides a wide range of model constitutions (Memoranda & Articles of Association) which have been tried and tested over the years and have stood the test of time reasonably well. The models are constantly under review and new models are devised regularly as new situations emerge. Although this route can be slightly more expensive (many CDAs do their own registrations), it supports the work of ICOM in developing and refining the models. It is also a way in which larger, more established CDAs can, effectively, assist smaller, newer CDAs by sharing a legal resource.
It is fairly common practice, for smaller co-op start-ups with minimal borrowings, to commence life as a "co-operative partnership". This precludes the necessity for registration and the legal obligations that come with it, and allows for the co-op to cease trading more easily if things dont turn out as expected. The formal starting point in these situations comes when the partnership agreement is signed and a copy lodged with the CDA. If the enterprise progresses well, full incorporation can follow at a later stage.
Although filing systems and book keeping procedures should have been looked into in detail in the pre-registration phase, there is nothing quite like the real thing in terms of seeing if they work and practice and whether sticking to protocols is as easy as first envisaged. The early days, when business is most likely to be slow, are the ones best suited to testing these and adjusting them if necessary. As business picks up, it sometimes becomes difficult to assess or improve such systems without careful planning.
3.3.3 first 3 years
Problems will emerge, this is the only guarantee. It is better to be recognisably on hand when they do. For more detail, see "Provide Business Support" below.
3.3.4 Strategic market development
3.4 Provide Business Support
3.4.1 post first 3 years
- Finance: financial forecasting and planning, costing, book-keeping, credit control, management accounts, insurance.
- Marketing: market research, product design, negotiation, pricing, distribution, advertising, selling.
- Management: organisational structures, decision making, recruitment, disciplinary and grievance procedures, equal opportunities, policy reviewing, planning, training, customer relations.
- Legal: co-operative legal structures, employment legislation, insurance requirements, property law, commercial law, intellectual property.
- Operational systems: production planning, stock control, administration, office systems. information technology.
This can often be done in the context of regular business counselling sessions, but, where a clear demand becomes evident, consideration should be given to finding or establishing training courses of some description.
3.4.2 crisis management
The ultimate crisis is the one which leads to liquidation. CDAs should have a clear understanding of what this involves and how to achieve it with a minimum of pain.
- Introductory sessions, which may be incorporated into training programmes offered by other agencies, bringing trainees' attention to the co-operative option.
- Short courses, typically of between one and five days duration, covering practical topics such as market research, financial planning and control, employment law, administration etc. Some CDAs will make the completion of a series of such courses a requirement for further assistance from the CDA.
- Long courses, often financed with European funds, which may offer hundreds of hours of training leading to recognised enterprise awards. Long courses will often be supplemented with such "extras" as childcare facilities and travel expenses.
- Tailor-made courses, based on a thorough training needs assessment, and usually provided for trading co-operatives looking to improve their performance.
3.5 Initiate Conversions
This work tends to involve regular mailshots, orchestrated seminars, and follow-up visits to the non-co-op business sector. Agency credibility is vital in these instances. An air of competence and professionalism must prevail in these proceedings as co-operative concepts are introduced to directors, managers, and workers who may have very little exposure to such ideas.
Some CDAs are also involved in "Closure Response" programmes (see Appendices) whereby they work with other agencies to bring a package of solutions to major closure situations. This is sometimes the only way to gain access to a threatened workforce with suggestions of employee buy outs or spin off enterprises.
3.6 Engage in Community Economic Development
Effort must be made to ensure that development facilities are especially relevant to sections of the community who may be at a disadvantage in the job market: long-term unemployed, people with disabilities, members of minority communities, women returners etc, depending on the local situation. Certain aspects of this sort of co-operative development will often run alongside, include, or be a part of wider anti-poverty and community development strategies. In these cases the "enterprise" element may only appear towards the end of a process involving training and involvement in other community projects. Partnership working with other agencies is particularly important here.
3.6.1 Capacity building
In many instances, before commencing the development process, some capacity building will often be required to prepare a target community or group for the task of creating their own business. This will particularly be the case in areas with less of a tradition of self-employment and small enterprises as a significant source of work. Capacity building exercises may include seminars, short training sessions, guest speakers from co-operatives based elsewhere (or visits to such co-operatives), the development of enterprise planning groups within local community organisations, and taking groups to relevant conferences, events, and "networking" activities.
3.6.2 Group development
Having identified a core group of individuals who are interested in exploring the possibility of establishing a co-operative enterprise, the CDA will work to develop the group as an effective unit and equip it with the problem-solving skills necessary for collective self-management. By understanding their own strengths and weaknesses, and those of their colleagues, group members can identify how best to combine their talents and thus create a team synergy which is greater than the sum of its component parts.
Such a facilitative approach is commonly described as "bottom up". In some instances, a "top down" approach may be more appropriate, particularly when a market opportunity has arisen suddenly, and rapid action is required to take advantage of this opportunity. In a top down development, the CDA takes a more directive, managerial role, developing the co-operative group dynamic during and after the business start up period.
3.7 Manage Funds
Many CDAs manage their own grant or loan funds, either directly or through third parties such as ICOF. These are important tools in the work of developing the co-operative sector.
ICOF (Industrial Common Ownership Finance Ltd) can be a valuable partner in the establishment of any loan fund. Such loans can often be used to lever matching loans from other sources, especially High Street banks.
In some localities, CDAs manage small grant funds on behalf of their Local Authority. These can be used to assist in specific kinds of co-operative start up; usually ones which involve a significant community involvement. In some cases they are also used to fund feasibility studies into certain types of start-up or expansion.
3.7.3 non-controlling investments
Experiments with investments, usually ethical, which do not involve compromise of member ownership and control have been undertaken in a variety settings. Again ICOF, as well as specialist legal advisors like Malcolm Lynch Solicitors (Leeds), will have up to date information on the latest ramifications of these. Also, some institutions in other European countries (notably Italy) have schemes whereby investments are associated with participation at board level of client companies.
3.8 Access External Funds
In the UK there are an increasing number of bidding processes to be embarked upon in the search for funds for projects and initiatives. Single Regeneration Budget, New Deal, the Lottery, and European funds to name a few. When European funding first became available, ICOM quickly established a reputation as being fairly expert in comprehending and accessing the various complex regimes. Many CDAs developed there own in-house expertise. A modern CDA needs to be aware of all these sources and to be in a position to launch bids as and when required. Co-operation between CDAs in this area can be very productive, and DOs are especially encouraged to share ideas and successes in this area.
3.9 Manage Workspace
3.9.1 start up unit management
CDAs managing workspace units will need to establish realistic rental levels. Typically, these will commence at below market rate, to support the co-op in its early stages, rising towards market rate to prepare the co-op for departure from the shelter of the subsidised workshop unit. Some CDAs enforce a maximum period of rental to encourage more established enterprises to move off and leave space for newer arrivals.
3.10 Encourage Networking and Partnerships
Participating in and influencing local economic and political environment through networks and partnerships is vital to a CDAs success. "Partnership" is now very much in vogue in the non-co-operative sector and should be second nature to good co-operators. Examples of bodies which some CDAs have worked in partnership with are:
- other Business Support organisations
- other Third Sector organisations
- Local Authorities/Regional Development Agencies
- NHS Trusts/Social services
- housing organisations/departments
- other CDAs/ICOM/ICOF
The CDA should have a system for regularly reviewing its input into projects under development, to ensure continuing assistance which will further the CDAs own objectives.
3.11 Participate in the development of area Economic Development Strategies
All Local Authorities which engage in economic development are required to produce strategies which must be reviewed annually. The review process must include consultation with a wide variety of commercial and community bodies and institutions. Every CDA should get itself onto the consultation list of their Local Authority. And now, the new Regional Development Agencies are engaged in a similar process. All the CDAs within any region should work together to assure that the message of co-operation is getting through at the regional level too.
Where DOs are also Local Authority employees, they can often have direct input into their local ED strategy. Wherever possible, these opportunities should be taken up with gusto and all the arguments for co-operative economics carefully inserted. This can often provide the basis for launching innovative co-operative initiatives at some later stage.
3.13 Manage itself as an organisation
In addition, secondly, there is the management of the CDAs finances. This will normally include production of accounts for auditing at the AGM, but also production of management accounts and projections for Board meetings. Where external match-funds are being accessed, this can become fairly complex. It is usually advisable that at least one member of a CDAs staff has some sound knowledge of accounting and accounting principles.
Finally, there is the management of the day to day work of the CDA itself. Again, this will usually be done in accordance with systems agreed with the Board, but CDA staff themselves must be committed to clear, orderly, and transparent work practices. Filing systems can be very important in terms of easily picking up shared workloads (a suggested filing index is included in the Appendices). In general, it should be assumed that any member of a CDAs staff should be able to find any other members working documents should the need arise. Equally, Board members and member co-ops should be encouraged to take an interest in the work and should have a rudimentary understanding of the filing system.
Time management and the management of staff diaries also need clear procedures and practices.