Have you thought of how you can start a cooperative or if a cooperative is right for your business? Look no further as this article may be the springboard you may need to solidify your decision. Starting a cooperative is almost hassle-free, provided the number of persons required by the law is met. This is because of the encouragement and support that cooperatives receive from the government.
But you must have a genuine reason, not just one of personal ambition, but that of a saviour mentality, one who is ready to bring people together, to help one another to achieve financial and economic freedom. So starting a cooperative society might be one of the best decisions you may want to take now or in the nearest future as the case may be.
This article deals exhaustively with what a cooperative is, and the step-by-step procedure on how to start a cooperative.
What is a cooperative?
A cooperative is a group of people who come together, bring funds and resources together, and engage in business activities for the mutual benefit of each member.
The cooperative seeks to promote and secure the financial, economic, and social welfare of its members, and it’s an excellent avenue for steady and predictable wealth accumulation, provided it’s run on honesty and trust.
Steps to forming and managing a cooperative
Every business or venture requires time, dedication, and faith in one’s ability to start. However, for a cooperative, the extant laws are more relaxed and favourable. So creating and managing a cooperative may be easier than you think.
Below are the steps that must take for you to start and manage a cooperative.
1. Develop the idea
The idea of the cooperative came from you, so you must develop that idea. The first concern should be what type of cooperative you intend to start, and also, the needs that the cooperative must fulfil in your community.
If you’re in a farm setting, then you may opt for a farmers’ cooperative. There is also the thrift and credit cooperative, and the most common is the multi-purpose cooperative. So look at your environment, look at the problem, and decide what will be of benefit to you and the larger good.
2. Seek for members and gather them
Speaking with those you believe will benefit from the idea the most comes after developing your idea with a clear plan. Motivate and convince people to follow you.
Find people who would be eager to join your cooperative and who are enthusiastic about your company’s idea. During a discussion with potential members, develop your mission statement and core values. Explain your business plan in detail and how it will make life better for cooperative members. During the meeting, choose the cooperative’s name and address as well.
3. Conduct a feasibility study
The sustainability of the cooperative will rest on a proper feasibility study. In carrying out feasibility studies, you must take into account the type of persons in your locality. Their background and education. Next is to look at the type of businesses that will be profitable and the market for the business. Also, you should take into consideration the amount needed to kick off the business.
4. Register the cooperative
Having done thorough feasibility studies and gotten the required membership for the cooperative, the next step is to register the business.
The following are the Information or document required for a successful registration of a cooperative, in Nigeria as a case study. Other countries may vary.
- The cooperative’s name: this is the name of the cooperative. The name may reflect the type of cooperative you intend to operate though it’s not a rule.
- The cooperative proposed location, Address, and Local Government Area: if beginning a cooperative, you may use your home address as the official address of the cooperative. And if the cooperative is among your colleagues at work, you may decide your workplace as the meeting place. And that’s what you state as the address
- The cooperative’s goals and objectives: the goals and objectives of the cooperative must be well communicated and crafted. This may be done by the required minimum number of members needed.
- The Membership bylaws and rules: these are the laws that govern the running of the cooperative.
- Four copies of the cooperative’s proposed bylaws
- Letter of Intent
- A feasibility study of the cooperative’s proposed business model
- Certified copy of the resolution adopted at the cooperative officer’s first meeting of the members.
- Cooperative official stamp duty (to be presented following name selection, availability, and approval)
Procedure for registering a cooperative
To be properly registered as a cooperatives society, you must apply to the Director of Cooperatives.
Depending on the type of cooperative, the application must have the minimum number of members required to sign it. If you’re applying for a cooperative organization with many purposes, for instance, 10 people must sign.
Then, with the view to conducting a name search to determine availability, a form will be sent to the members for them to complete and return.
After the forms have been filled out, they must be stamped with the cooperative’s name and logo and the additional documents mentioned above before being submitted for verification and approval.
If the Director of Cooperatives is pleased after the verification, he may then provide you with a letter of recognition. This letter grants the cooperative authorization and the right to function for three years as a cooperative organization.
After three years, a certificate of registration that includes a certified copy of the cooperative’s by-laws will be given out. (Note: Some states may allow certificates to be issued for fewer years.)
5. Source for capital
The cooperative’s board of directors will be in charge of raising the funding required for its beginning. Members, residents, and lenders could all help you raise money.
Government startup grants may also be available to you. Make sure to specify in your business plan how much financing you require and how you intend to acquire it.
6. Launch out
Having completed all modalities, it is time to launch the cooperative. Open the door to more people to come on board, advertise the cooperative, and always celebrate your progress and win.
Starting a cooperative is one thing and managing it for fully effective running becomes another thing. As a cooperative, the board of directors and all stakeholders are elected democratically. However, as one starting a cooperative, you must look well to the integrity and honesty of those who you seek to join the cooperative.
No matter the laws governing the cooperative, the foundation of a successful joint venture will always be determined by the nature of the people at the helm of making the decision.