3. How does a CDA do it?

3.1 Proselytise

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 year’s 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 CDA’s 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.

3.3.1 pre-start

  • The Business Plan

    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 2–5 years
    - cash flow projections for 1–3 years- commentary and justification for projections
    - capital requirements

    There are Business Plan and Finance Projection templates included in the Appendices and on the disc.

  • 3.3.2 registration

  • Registration of a new company is usually the point at which it is formally acknowledged as a growth statistic for the co-op movement and an output for the local CDA. It is an important event.

    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 don’t 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

  • As stated above, the first 3 years are the critical ones in terms of trading life. It is important and useful to instigate regular meetings with new co-ops throughout this period. The frequency can be tailored to each situation, but it is important not to lose touch.

    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

  • In addition to responding to requests for assistance from groups of individuals wishing to establish their own businesses, CDAs may engage in identifying and developing potential client group markets to amplify. Potential co-operatives can then commence their business planning knowing that there is a market available for their goods or services. An added benefit arising from this type of strategic development is that staff within the agency will acquire specialist knowledge in the areas of commercial activity studied, and thus will be able to offer better quality advice to clients.
  • 3.4 Provide Business Support

    3.4.1 post first 3 years

  • Work for the CDA doesn’t stop after the start up phase. As suggested above, the general rule of thumb is that if an enterprise can last for three years, it is likely to become strong and established over a lengthy trading history. A good CDA will therefore be geared up to providing support throughout this critical period. In particular, a CDA will need to transmit skills in a number of technical areas, including:
  • 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

  • A further guarantee is that, throughout the life of any enterprise, a smattering of crises will occur. CDAs must be prepared to assist with these in whatever ways possible.

    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.

  • 3.4.3 Training

  • Training forms an important part of co-operative development activity. Typical programmes will include:

    3.5 Initiate Conversions

  • Industry level co-operative development is concerned with conversions, often arising from problematic succession situations, rescues, "phoenix" co-operatives, the democratic transfer of former public services, joint ventures, and similar operations. The skills required for this sort of development work are very different from those required when working within local communities. A development worker in this field will need to be adept at negotiating with trades unions, business owners, finance providers, and local authority officers, and able to make rapid and authoritative evaluations of business prospects and risks.

    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

  • Community level co-operative development involves proactive outreach work with members of local communities, encouraging people to identify economic opportunities and providing them with the advice, support and training necessary for them to take advantage of those opportunities. Most community level co-operative development is concerned with new-start enterprises.

    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.

    3.7.1 loans

    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.

    3.7.2 grants

    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 CDA’s 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
    • colleges/universities
    • NHS Trusts/Social services
    • housing organisations/departments
    • fundholders
    • 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 CDA’s 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.

    3.12 Monitor/Evaluate

  • Increasingly, especially where external match funds are being accessed, monitoring and evaluation are becoming more and more important. In fact, even where such funds are not being accessed, a good CDA should have regard for these and look to set up systems. Examples of good practice can be sought from established CDAs who have had recent experience of European funding and from ICOM itself.
  • 3.13 Manage itself as an organisation

  • The management of a CDA operates on several levels. In the first instance, an incorporated CDA will have a Board – usually part elected and part appointed by directly funding bodies. Meetings of this Board should take place at least quarterly, with perhaps a smaller executive meeting more frequently. Agendas must be drawn up and circulated, and Minutes kept and filed meticulously. Registers of Directors and affiliated Members must be kept and annual returns filed with Companies House. It is common for one of the CDA staff to be Company Secretary and to hold legal responsibility, on behalf of the Board, for the above.

    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 CDA’s 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 CDA’s staff should be able to find any other member’s 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.