SUPPORTING NEW FOOD CO-OPS CORNERSTONES

ACCOMPLISHMENTS & PROGRESS SINCE 2005  CHALLENGES & BARRIERS LESSONS LEARNED

WHAT HAVE WE ACCOMPLISHED? 64 new retail food co-ops since 2004 Hundreds of inquiries Over 50 Seed Grants and Sprout Loans 100 Active and engaged startup efforts

BUILDING THE SYSTEMS Documentation & Data Resources Training Networks Experience and Feedback

P6: COOPERATION AMONG COOPERATIVES NCGA and the Development Co-op Regional Associations Commitment from co-op boards and managers Co-op loan funds Cooperative Development Centers

COMMUNITY SUPPORT RISES ,000 – 2,000 founding members Million dollar loan and share campaigns USDA support through development centers & other programs Community economic development grants & loans

WHAT WORKS Co-ops larger than 3,000 sq. ft. retail Co-ops with natural food/local food emphasis Co-ops that organize their community and do excellent business plans Professional support

CHALLENGES The Natural Foods industry matures Outliers Intriguing Ideas Conflicting advice Changing legal and financial regulation

DO YOU MISS THE 80’s? Competition New regulations/increased enforcement Expectations Sophistication Product differentiation Food Co-op perceptions and recognition

STILL WORKING ON… How to serve low-income communities? How to organize where co-ops are not understood? When is “volunteer” member labor acceptable? Can/should we invest limited resources in risky and unproven efforts? How do we define “retail food co-op?”

DETERMINING SALES POTENTIAL MARKET STUDIES

AN ESSENTIAL PLANNING TOOL Analyze local market Demand Competition Geography Analyze (or help identify) potential sites Desirable characteristics Location Potential weaknesses Project sales volume At opening Through maturity

PROVIDES Assurance to owners & lenders Realistic baseline for financial projections Guidance for planning location and size Overview of competition Recommendations for products and services

HOW TO GET A GOOD MARKET STUDY Not a do-it-yourself project Use a professional who understands co-ops Provide clear assumptions Follow through with your plans

FOLLOW UP Ask questions! Update study when: Major competitive changes occur Site options change Business plan changes After 2-3 years

WHAT TO LOOK FOR (AND WHEN) SITE SELECTION

WHY GOOD MAY NOT BE GOOD ENOUGH The right location Access Cars Mass transit Pedestrian Parking Visibility Appropriate neighbors Size and flexibility The building itself

STEPS, TIMELINE, TOOLS & BENCHMARKS STAGE 3 IMPLEMENTATION

OVERVIEW OF STAGE 3 Stage 3A - Preconstruction can last 3-6 months or longer, and require a budget of $80,000 - $100,000. Stage 3A ends when the contingencies of the lease (or purchase) are removed, the sources & uses budget is fully financed, and the final decision point is reached and crossed over (no turning back).

OVERVIEW OF STAGE 3 Stage 3B is the construction stage and typically lasts as long as the preconstruction stage (3-6 months). The budget for Stage 3B represents ½ to 2/3 of the total Sources & Uses budget. Stage 3C (one month) is Preparing for Opening and Stage 3D (forever) is Sustaining. The budget for these stages includes the remaining funds in the Sources & Uses budget.

TOOLS & RESOURCES Sources & Uses Budget Professional Support Attorney for capital instruments Architect Store planner Inspectors Consultants for GM hiring, board training, operations Distributors, Brokers and Suppliers Co-op Community

SAND TRAPS Is the board ready to manage a GM? Have you promoted the co-op store to the market? Do you have your working capital?

WHAT TO EXPECT & HOW TO BE READY OPENING & BEYOND

TRANSITIONS The board delegates operations to the manager. Celebrate and keep the momentum! Monitor vigilantly Expect setbacks, staff turnover, equipment breakdowns … What will you do if the cash runs out? Be prepared, and willing, to get help Invest in your future- capital, education, community