Business Co-ops for Independent Professionals
Cooperatives offer distinctive benefits to professionals who want to maintain individual clients and desire to maximize affordability by sharing a business name, offering their services in a shared on-line site or in a shared commercial space, and, if desired, sharing support staff. By working together with like professionals, they can gain marketing advantages, reduce overhead costs, reap quantity discounts on supplies through joint purchasing, and maintain control over their work/practice. The cooperative model can help professionals such as therapists, music teachers, attorneys, massage therapists, language translators or interpreters, hairdressers, tutors and others maintain thriving businesses without needing to be employed by someone else.
Business cooperatives, also referred to Shared Services or Marketing Cooperatives, are member-owned, democratic organizations that are governed on the basis of one member, one vote. Members either elect a board of directors or, especially in a smaller co-op, all members simultaneously serve as board members, who make major policy decisions and may hire a manager, receptionist, or other staff to coordinate day-to-day operations.
Most business cooperatives form to increase and enhance the profits of members while enabling them maximum control over their own work. By forming a cooperative, members are able to offer services through a cooperative corporation, jointly market their services, reduce overhead costs by sharing a commercial space and associated expenses, and, if desired, share the costs of support staff or services with other members. When appropriate members may also share the costs and use of expensive services, tools, or other equipment.
In a business cooperative, each member is an independent professional who maintains his/her separate clients and income, and offers services through the cooperative. Typically, transactions are processed through the cooperative and a pre-determined percentage is retained by the cooperative to cover costs. If individual members are occupying separate offices or rooms, an agreed-upon rate for each member’s space can either be paid on a regular basis or costs can be covered from the retained income. At the end of the year, remaining profits are distributed to members in proportion to their sales. Profit-sharing in a co-op is referred to as “Patronage” because members contribute to, and share the benefits of the co-op in proportion to their use of the co-op.
What is a Cooperative?
A cooperative is an organization that is owned and controlled by the people who use its products, supplies and/or services. Cooperatives can vary in their particular purpose but share in common the fact that they are formed to meet the specific objectives of members, and structured to adapt to member’s changing needs. Self-reliance and self-help are the hallmark of cooperatives.
While cooperation, that is, people working together for their mutual benefit, has been practiced throughout human history, the cooperative as a form of business organization began during the Industrial Revolution. Cooperatives were useful for promoting the interests of the less powerful members of society. Workers, consumers, farmers, artisans and others found that they could accomplish more collectively than they could individually.
Cooperatives can be used to address a multitude of shared needs: Producers like farmers, artisans or industrialists utilize the cooperative to market or process their goods jointly. Workers in areas as diverse as bicycle sales, baked goods production and catalog sales use cooperatives to create employment that offers many of the benefits of ownership — wages or income that directly corresponds to the economic results of the business and more control over their work. Consumers use cooperatives to gain better prices, acquire unique goods and services, or to meet social or cultural desires. Private business or public entities can use the cooperative to gain purchasing power through bulk buying, obtain products or services that are difficult to obtain individually, or share administration of certain projects to reduce overhead costs.
The International Cooperative Alliance (ICA), composed of cooperative leaders from around the world, has established seven fundamental principles that guide cooperatives:
1. Voluntary and open membership. Cooperatives are voluntary organizations and membership is non-discriminatory by gender, social, racial, political or religious beliefs.
2. Democratic member control. Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and decision making.
3. Member economic participation. Members contribute equitably to, and democratically control, the capital of their cooperative.
4. Autonomy and independence. Cooperatives are autonomous, self-help organizations controlled by their members.
5. Education, training and information. Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives.
6. Cooperation among cooperatives. Cooperatives serve their members most effectively and strengthen the cooperative movement by working together.
7. Concern for community. While focusing on the needs of members, cooperatives work for the sustainable development of their communities through democratically developed policies.