Survey potential members and conduct market research. Prepare a feasibility study.
GOAL: To assess whether the proposed co-op is likely to be successful and beneficial to its members.
WHAT TO DO: This is accomplished through initial research on the following areas: the need for the co-op, potential membership and volume of business, facilities needed, operating costs, capitalization and sources, and other issues.
- Survey potential members. This survey is the basis for all of your work from here on; be as thorough as possible and take the time needed to do a good job. Identify the common needs and the co-op’s potential for sales. Survey potential members by phone or face-to-face. If possible, consider hiring professionals to assist with survey design and compilation. A poorly designed survey or misleading presentation of data can be ruinous for a new co-op group.
- Collect and compile information. This steps involves a lot of work. If the group is doing the work itself, consider dividing the tasks and assigning them to individuals or to subcommittees. Tasks might include:
- Meet with other co-ops in the area or similar types of co-ops in other areas.
- Learning about similar businesses and how they operate.
- Identify possible sources of funding, such as grants and loans.
- Getting help from outside experts and consultants with experience in starting new businesses and new co-ops.
- Researching potential sources for assistance: local suppliers, local universities or business programs, economic development agencies, chamber of commerce, related groups.
- Assess feasibility. A feasibility study should address four areas:
- the feasibility and capacity of the market area
- the internal readiness of the group to carry out the project
- basic financial needs and potential
- the feasibility of the proposed design and project specifics
- Preparing the feasibility report: The committee will need to compile the information it has collected. (For a list of the areas to address in your feasibility study, see the outline that follows.) Outside experts and consultants will be invaluable in helping prepare this information. Depending on the conclusions of your feasibility study, you may wish to hold another community meeting to report on the results of the study and to make a group decision about how to proceed.
KEEP IN MIND:
You may want or need to gather some financial support from potential members at this stage. You might ask potential members to invest $100 to show their commitment, with the promise that the co-op will return $80to $90 if the feasibility study shows that the co-op will not be successful or if the organizing drive falls short. Be sure to keep good records and return the money as promised.
Asking members to commit to buying a certain amount per month from the co-op can be a valuable indicator —much more useful than industry standards in projecting potential sales. You’ll know your members will actually use the co-op if and when it opens.
KEY DECISIONS: _Is there sufficient interest in and market for a co-op?
Does the feasibility study indicate that a co-op could succeed? Do the initial financial projections make sense and justify starting a new co-op?