How to start a worker co-op

In the age of unemployment, downsizing, and outsourcing, where can a poor soul find a job? Well, maybe it’s time we create our own. Self-employment is an option and can seem freeing, but it’s hard to do everything yourself and find time for a non-work life. The worker coop is an alternative to the isolation of self-employment and the exploitation of traditional jobs.

Worker coops can be more satisfying than working for the man. Worker-owners aren't forced into a hierarchy, and they have more say over what the business does than traditional employees. You still have to be responsible managing a coop, maybe more so, but your coworker-owners will likely be nicer and more understanding of personal needs and quirks than middle-management at any corporation. You will probably make more money by cutting out the investors and managers, unless you were one of them, in which case: welcome to egalitarianism! In typical low-paying industries, worker-owners can make several times what they were pulling in as employees. For example, in Petaluma, California, Alvarado Street Bakery worker-owners take home around sixty-thousand dollars a year – a Hell of a lot better than working for minimum wage. As a worker-owner, you are less likely to get laid off, both because coops prioritize steady employment over short-term profits, and because they are more sustainable than their conventional counterparts.

So what is a worker coop? It’s an enterprise owned and democratically controlled by its workers. There are endless variations on coops, which means there are many questions to consider before forming your own unique venture. Remember you are starting a real business, not a hippie commune! If you’ve never started a business before, you will need support – read up on how to start a firm, get advice from coop development organizations (listed below), and talk to coop-friendly lawyers and accountants. You will need a business plan, coop-specific legal incorporation documents, and capital to finance you in the beginning. Additionally, you will want an organization plan detailing how you will run your coop cooperatively.

Courtesy of Rainbow Grocery

One of the first barriers to starting a worker cooperative is finding others willing to be part of the initiating group. If you are working at a business that wants to be converted to a coop (whether the managers know it or not), you may already have your members. To find new folks, it may be helpful to send an announcement to any work-related listservs (like for groups interested in food justice, hackers, and even hippie communes) and post flyers at related businesses or job assistance centers in your area. Invite people to a meeting for your new enterprise or better yet, hold a general coop matchmaker start-up fair where people can meet, get to know each other and discuss first steps. Invite pre-existing coops to offer initial advice, then set up a listserv or wiki that helps people find each other by posting new coop opportunities on an ongoing basis. Some worker cooperative development organizations listed below can help with this.

Once you’ve gathered your initiating group, here are some questions to consider when forming a worker coop:

What is your common goal and purpose? Fair employment for people of color, access to healthy food, sustainability, independent media, selling locally produced goods? This will make decision-making easier and get you through the tough times.
Are you forming a new business or converting an old one? If it’s new, is there a market for your service or product, do you have a niche, what is your expertise? Being a coop gives you a leg up, but you still must provide a needed product or service that competes in the greater, cutthroat capitalist marketplace … until it collapses. If it’s a drowning business, is the owner willing to sell and how will you save it? You may need to make major changes to make it sustainable.
Who will be on your team? It helps to have people in your crew with experience in your product or service, skills in running the different parts of a business (management, accounting, marketing, etc.) or at least friendly consultants on hand to do these things, as well as people skills (communication, meeting facilitation, decision-making). Your team needs to really be into the coop model, even if they learn the details later. Remember you will be making a long-term commitment to spending 40+ hours weekly together, depending on each other for survival, making major decisions together, and caring for each other (that sounds like marriage!).
How will new worker-owners join? Trial periods are highly recommended – think dating, engagement, then marriage – no need to rush. Some coops have a buy-in requirement to become an official owner. This can be in an initial lump sum investment, periodic deductions from paychecks, or sweat equity contribution to demonstrate serious long-term commitment and give equal power. Training new worker-owners how to run the business as a cooperative is crucial – people are often trained in the business world to compete, control, and manipulate, not cooperate or communicate. On the other hand, people who are into cooperation often don’t have business skills or work-specific expertise. Your team really needs both.
How will you manage your coop? Collectively, with rotating representative managers, professional hired managers? Usually big coops have more hierarchy and job divisions. Small coops tend to collectively manage and pitch in to run the different parts of a business. There is no one way, but democracy rules. Disguised and non-consensual hierarchies though can be particularly damaging to morale.
How, when, and who will make decisions? Consensus, super-majority, majority? It helps to clarify the process in detail and delegate minor or certain types of decisions to individuals or committees so you don’t spend too much time in meetings. Believe me, long indecisive meetings have killed more coops than the financial crisis. On the other hand, transparency, inclusion and frequent communication maintain the cohesiveness and trust of the group. Consensus works in small groups that get along and have a lot in common. In bigger, more diverse groups, it can create enough inertia and conflict to stifle a business. I like using modified consensus (try to get everyone's enthusiastic agreement if possible) and super-majorities as a good middle path. The key here is not voting-rule dogma but developing a communication process that allows everyone to be heard and resolve disputes fairly.
How much money will you need and where will you get funding? From your new worker-owners, a loan from the former owner, a loan from a bank (try one that has loaned to coops successfully), or a grant for worker-coop start-ups? Be realistic about your budget – people may be leaving their lifeline paycheck and you need to make sure you have enough funds for everyone to make it until the business becomes profitable – or non-profitable if that's your bag. One failed coop can give them all a bad rap.

Whew! That sounds like a lot of work. But worker-owners I’ve talked to say in the long run it’s totally worth it. There are resources listed below to help you get started, including worker-coop development organizations. Starting a new coop can create jobs, not just for you, but also for people who may have never had the opportunity to own a business or earn a living wage. Worker coops are part of a larger movement to create an economy that is democratic, just, and takes care of everyone. And it can start with you and your coworkers.

Courtesy of Box Dog Bikes

Reading Resources:

Worker Coop Development Organizations: