Why A Cooperative or Co-op Is The Right Entrepreneurial Choice For You

Most people, even those not in the business world, are familiar with franchises and how they work.  It is the structure of some of the most successful and iconic businesses on the American landscape.  But in recent years more and more entrepreneurs are deciding this business model is not for them.  The recent economic climate in many areas of the country has made it more difficult for the small business owner, many of whom are still struggling to stay open.  This means paying out hefty franchise fees and ongoing royalty payments just isn’t an option for a growing number of business owners. In fact it is easy to see how this arrangement could make a person unmotivated and unhappy after a while. You work hard to make your business successful, and you are thanked with controlling directives from the corporate office and the loss of profit in the form of royalty fees. If you want to be an entrepreneur, running a franchise clearly isn’t always your best option.  So you might be wondering, “What else is out there?”  The answer to your question is…a cooperative corporation!

Cooperatives explained

The modern cooperative movement has been going on for around 200 years.  Cooperatives operate all over the world, and exist in most segments of the economy.  In recent years, this model is increasingly being applied to small businesses.  Many of these businesses have been very successful.   Yet many entrepreneurs still don’t know much about cooperatives. Those who are aware may have images of farmers, grocers, or credit unions and not realize that this business model can be applied successfully to other types of businesses as well.

One big advantage to being part of a cooperative corporation is that you have a say in the direction of the business.

 And more money doesn’t equal a louder voice, the way it does in a publicly traded company.  Each member votes to appoint a board of directors from the co-op’s membership.  The people in charge are members/owners themselves and ultimately responsible to the other members for their decisions.  There is much more of a personal responsibility to make sure the co-op engages in ethical business practices and that its members remain profitable.  The leadership stands to lose as much as anyone else in this situation.  So the sense of personal responsibility that comes with ownership works to everyone’s advantage.

Running a small business is extremely rewarding, but far from easy.  One of the attractive things about a franchise is that they are already part of a large successful company.  They have built the brand and in return for your franchise fee and a cut of your profits they will provide various degrees of help to set up your franchise, such as finding locations, providing signage, training management, and supporting your grand opening.   A cooperative corporation like KaleidoScoops provides you all those things as well.  The big difference is you pay your one time membership fee and your normal business expenses and that is it.  The membership fees in cooperatives are much, much less than franchise fees (which can sometimes be as high as $100,000!) and there are no ongoing royalty payments to the co-op to drain your profits.  Due to the nature of a cooperative business, you have the support you need to get your business running successfully.  You get the benefit of a proven business plan, a proven product and get the support of those doing business just like you.

The path to success

A cooperative actually sets you up to succeed!  Since membership fees are far less than franchise fees, the start-up costs are less than a franchise.  This makes it easier for your business to become profitable, faster.  The cooperative can help keep your ongoing costs of doing business down as well.  Small business owners are often put at a disadvantage because they don’t have the purchasing power or resource availability that larger companies do.  A cooperative uses the size of its membership to secure lower prices on the things your business uses every day, keeping your costs lower than they would be otherwise, and keeping your business competitive.  In general, you are assuming much less financial risk than you would with a franchise, both initially and ongoing.

A cooperative corporation has more respect for the small business owner.  You are allowed to run your business your way, within reason.  A co-op trusts that its members can use their unique skills, expertise, and knowledge of the local market to maximize the success of their store.  This freedom and respect makes your life as an entrepreneur easier and the experience of running your own business much more enjoyable.  And as everyone knows, when you are happy at your job, it is so much easier to be successful.

For additional information about starting your own KaleidoScoops business and be part of this prospering co-op, request a free starter kit.  You can also e-mail us with any questions or comments about our products.

Choosing Between A Franchise And A Cooperative or Co-Op

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