New Cooperative Development
An entrepreneurial group would facilitate the development of new worker cooperatives. Its functions would include conducting market research, doing feasibility studies, writing business plans, arranging financing, assembling teams to start cooperatives, and forming protected markets from the membership to aid new startups. The advantage of a dedicated entrepreneurial group would be the ability to actively search for markets where new cooperative could be started and to focus on areas where success was likely, the employment growth potential was high, and the startup capital to labor ratio was small given the limited available funding. Other functions would include providing education, training, and advice.
The startup tasks require specialized knowledge and expertise in administrative, technical, financial, and legal areas which are unique for worker cooperatives. These services are currently provided by existing cooperative consulting firms, usually on an ad hoc basis by request. In many cases the costs are prohibitive if they are borne by those wishing to start a cooperative. It is also inefficient for each group starting a cooperative to develop expertise in all these areas, some of which are mainly useful during startup.
A credit union or cooperative bank would be good way to broadly share routine startup costs by supporting an entrepreneurial group. One of the main functions of this credit union will be developing an internal entrepreneurial group. The advantages would include broad input from members of the credit union and a potentially larger and more diversified base of support.
I estimate that the credit union will require at least of order 100,000 members to support an entrepreneurial group. As this is many times more than the population of US worker cooperative community significant external membership will be required. Increasing the membership in a credit union is complicated by the field of membership requirement which would make require potential members to first join an association that was part of the common bond.
A worker cooperative bank which has no common bond requirement is a preferable structure. It is possible for an existing credit union can be converted into a bank with approval of the membership. Such a conversion would facilitate growth and allow for improved cooperative business lending.
Loan funds have relatively fewer investors who would disproportionately bear the cost of an entrepreneurial group. Their financial contributors also tend to be over represented by wealthy groups and individuals. The current loan fund operational budgets are also insufficient to bear the extra costs of supporting added entrepreneurial activities. In most cases their asset bases are also too small to bear significant additional overhead.
The Arizmendi Association in the San Francisco Bay Area operates as an entrepreneurial group that develops cooperative bakeries.
