TYPES OF BUSINESS OWNERSHIP (PART 4) COOPERATIVES A cooperative (coop) or co-operative (co-op) is an autonomous association of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit. It is a form of business which is owned by and operated for the benefit of its members. These members provide the capital and facilities for the business. The cooperative is similar in certain respects to the corporation. Both offer shares of ownership and are regulated by a board of directors. The major difference is that the profits (dividends) of the cooperative are distributed to the members according to the amount of products each has purchased from the cooperative during the year. This encourages the members to use the cooperative as often as possible. PRINCIPLES OF COOPERATIVE Cooperatives are typically based on the values of self-help, self-responsibility, democracy and equality, equity and solidarity and these seven cooperative principles: 1. Voluntary and open membership 2. Democratic member control 3. Economic participation by members 4. Autonomy and independence 5. Education, training and information 6. Cooperation among cooperatives 7. Concern for community TYPES OF COOPERATIVES Here are some types that are widely accepted: 1. Producer cooperatives 2. Worker cooperatives 3. Consumer cooperatives 4. Credit unions 5. Retail or Purchasing co-ops 6. Social Co-ops ADVANTAGES 1. A cooperative protects its members against exploitation. 2. The customer is at the same time the profit receiver. 3. Subsidized prices goods or services to members. 4. Members are able to sell their produce at reasonable prices. 5. Less Taxation. 6. Funding Opportunities. 7. Perpetual Existence. DISADVANTAGES 1. The management committees of cooperative usually consist of members who have no business acumen. 2. Most member do not understand the principles of cooperative movement, as such they are usually apathetic to the rights and duties of members. 3. In some organizations membership is so broad and disorganized that voting is virtually out of the question. 4. Leaders may be tempted to misappropriate funds. 5. Obtaining Capital through Investors is slow. 6. Lack of Membership and Participation can destroy it. FORMATION OF COOPERATIVES Forming a cooperative is different from forming any other business entity. To start up, a group of potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan. Not all cooperatives are incorporated, though many choose to do so. If you decide to incorporate your cooperative, you must complete the following steps: File Articles of Incorporation, Create Bylaws, Create a Membership Application, Obtain Licenses and Permits, Hiring Employees, Cooperative Taxes, Consult an attorney or business consultant for more information regarding your nations specific laws. Phone: 08063429970, 08156778776 BB Pin: 321DFD19 InfoQUEST CONSULTS Research|Training|Consulting
Posted on: Mon, 28 Oct 2013 12:49:40 +0000
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