Cooperatives And Other Funding Options For Small Businesses

Wednesday, November 18th, 2015

Getting the money to start a small business is a struggle for many beginning entrepreneurs. These professionals want to own a small business, but they do not have the capital to get things started. It is important for entrepreneurs to understand the options for funding small businesses and what a cooperative is. It is also good to understand some examples of how cooperative businesses, or co-ops, work and how to become part of one.

What are the options for funding a small business?

The most obvious choice for funding a small business is a loan. However, business loans require having the collateral to cover the loan which is typically not an option for a small business start-up.

Another funding option is a business grant. Some federal programs and state agencies offer grants to help small businesses get started. There are strict requirements for getting a grant and there are usually strings attached on how business owners can use the money.

Investors are a third option for funding a small business. An investor wants to see that you have a solid plan and the experience to make your business successful. In many cases, an investor will want to have a say in how your business is managed, but will not take part in day to day management functions.

Partners are a fourth funding option for a small business. By taking on a partner, you agree to give a large portion of your business ownership to that partner. Partners differ from investors in the fact that they take an active role in running the small business and making day to day decisions.

What is a cooperative?

The concept of a cooperative has its roots in human history. When humans started gathering into communities, they started managing and sharing common resources for the good of the larger community. Today’s co-operative business model is based off these methods. A cooperative, in business terms, is a legal entity owned and controlled by its members. Each member of the cooperative has a say in how the cooperative runs. A co-op often shares the entity’s earnings among its members, based on their participation in the enterprise.

Examples of how cooperatives work

KaleidoScoops is a national ice cream cooperative, where each store owner is a member of the co-op. All of the store owners elect a board of directors to determine how the cooperative parts of the business are managed. The organization as a whole creates standards and manages the corporate identity.

A store owner within the KaleidoScoops cooperative has a great deal of freedom, especially compared to being part of a franchise. Co-op store owners have a national brand of premium ice cream to sell in a stand-alone store or as an addition to their existing small business. There are no franchise fees or royalties involved. Only a minimal annual membership fee is required from the owner to be part of the cooperative.

Each owner manages their own small business, without constant corporate intervention, but there are some regulations that must be followed. To be a part of the cooperative, owners must use the KaleidoScoops ice cream products and appropriate signage. Co-op owners cannot have dirty stores or tamper with the cooperative brand. However, there is no one constantly telling the cooperative owner to run certain specials or make their employees sell a certain amount of product. Each owner has input at the cooperative level about changing standards or adding new products.

A cooperative offers all the power of a national franchise without the high fees and corporate control that a franchisee has to handle. Members of the KaleidoScoops cooperative get the discounts and shared marketing of a larger business with the perks of owning a small business.

How start a cooperative business

If you want to open your own small business, but don’t want to deal with the inconveniences of other small business funding options, consider KaleidoScoops. With an established national brand and some of the best hand-dipped ice cream in the world, you can have the small business you want. By joining a co-op, you can accomplish your dreams without the need to take on investors or partners, or join a franchise.

If you would like more information about co-ops, Get The Scoop on becoming part of the KaleidoScoops cooperative. If you would like more information about KaleidoScoops premium ice cream products, call us today at (877) 426-8488. You can also connect via email by clicking on Contact Us.