Co-Op Store

There are three major components to this enterprise that bring it all together:
    The Farm, where we grow and raise food
    The Kitchen, where we process, handle, and do magic with the food
    The Store, where we offer our products to the world

The best part of the supermarket is on the outer walls: fresh produce, a deli, meats, dairy products.  It is no coincidence that these are the items in which we specialize.  If you want an awesome dinner, using the freshest ingredients possible is the only way to go.  From the farm we can grow a substantial volume on just a few acres.  My estimates suggest vegetable yields will be anywhere from 100 to 200 pounds per acre each day.  Some of this won't be ideal for fresh produce sales.  Modern supermarkets would never have a bifurcated carrot in view of the good people.  Such horrid problems can be dealt with in the kitchen with a soup kettle.  

Setting up a store is mostly a matter of shelving and display units.  Our own woodshop can reduce the cost of these to building materials.  Cold food naturally needs cold display units.  While these are not what I would call cheap, they are a one time investment.  The real expense is keeping the things running all the time.  An energy efficiency unit will cost more up front, but reduces operating costs in the long run.  If we are operating a deli or sandwich shop along one side of the store, we'll be needing a cold display case and a beverage cooler.  Oversized units would allow us to stock cold items in small quantities, and putting off the cost of large unit until sales volume dictates the need.  I've got a pretty good hunch we'll need the big coolers sooner rather than later, so including that cost in the startup spreadsheet would be prudent.

The size of the store is a question mark.  We won't have much inventory at the start.  It will be a couple of months before farm production begins.  If we have surplus space at the beginning we can put it to use with a dining area for the deli.  Too much surplus space is an investment that is not paying off.  Too small a store, we can fill it quickly and limit our potential.  

With limited cropland, our production is limited.  In the beginning, it will be a couple of months before we have product ready to offer.  We're not the only farm in the county.  There are other local farmers out there who jump at the chance to market their goods through our store.  In the nearby town of Lake City, Florida is a produce store which carries local products.  Produce, honey, cane syrup, jams and jellies, hot sauce, even local milk from pastured cows with no growth hormones.  Give them a call, they'll bring more product tomorrow.  Even with our own farm growing from sun up to sundown, we may encounter a situation where our production does not meet demand.  We'll want to make friends with those local growers.

In the beginning, we've got little or no budget to purchase an inventory.   Our level of organization will give us an advantage.  The Buyers Group will know what goods we can get, we'll know the price, and can sell the goods in advance.  Order today, we'll have it here in 3 days.  The Buyers Group will operate on a pay-when-you-order basis.  This lets us operate with NO inventory.  There may be some small volume of surplus available from that project which would be stored on the shelves, price tag attached.  We'll have the ingredients for the deli.  Rather than store them out back, store them with a price tag.  If push comes to shove, we can change the menu to reflect what we have to work with.  I see a bakery operation being a lucrative component of the kitchen.  Stocking baked goods, particularly breads, bagels, mufffins, should be no problem at all.  The whole idea behind the store is to offer products we already purchase, which includes those baked goods.  A small inventory would be turned over quickly.  

The math shows the potential from sales within the group only.  200 families, 3 people per family, $50/week/person = $30,000/week.  We're not a big box store, so getting the savings on individual sized packages will be a challenge.  We would see greater savings from items we can by in bulk and repack.  If we can save money on items for ourselves, we can offer that savings to the general public, further increasing our volume but more importantly, bringing people to the store.  If we can direct a portion of their spending to our co-op rather than the big box supermarkets, every day will be like Christmas.  Our potential sales becomes a means to make a difference in the lives of the people involved.

There will be some items we can make a profit on, but the price would be the same as the big box stores.  Milk is a prime example.  Price controls will keep the price the same, but instead of giving the profit to the corporation to send out of town, we keep it.  Our biggest profit potential is found in goods we grow ourselves.  A pound of fresh spinach sells around here for $4.  This is all ours.  A can of spinach is 69¢, we might earn a nickel.  It may not be worth our time and space to stock those prepackaged, boxed and canned commercial goods.

Getting a store stocked with fresh items at the start with very little cash for inventory is a challenge for which we must find a solution.  If we could come up with $50,000 our problems would be solved.  Our suppliers are not likely to extend credit to a new store, and we don't want to take on debt anyway unless it's for real estate.  Those local farmers want to get paid, but they can be much more flexible.  Net 30 is one way to proceed: "Put it on my tab".  That will get a few items.  

Using the money we have available, cashflow from the deli, profits and surplus from the buyers group and what sales we draw from the store we will eventually build a respectable product line.  Getting the farm production on line quickly will give us a tremendous boost.  Still, those first couple of months will be mighty thin.  We'll need to be creative.  We won't be backwoods broke.  We'll have a small budget to work with.  

Prioritizing those items with high turnover gives us cashflow to reinvest.  That milk comes into play again.  200 families will go through 400 gallons in a week.  Replace the milk sold, pick up another item.  Meats are money in the bank.  A couple pounds per person per week, 200 families/600 people, we're talking 1000 pounds per week at a couple bucks net per pound and we still save our customers money.  How about doing us a favor and stocking your freezer as soon as you can.  We'll get a much needed boost, but if you don't buy your meat regularly,  be sure to tell everyone you know so we can keep the product rotated.

One ace in the hole is that kitchen.  We can put it to use to stock the shelves.  We still have the same inventory problem in the beginning, and we'll have to get through it, but we would be able to pick up a few things and make our own inventory for the cost of ingredients and supplies.  Eventually kitchen production would be a regular thing.  We can turn our 2nd rate tomatoes into tomato sauce and get twice the price as the 1st rate fresh tomatoes.  We don't have the money to buy tomatoes and canning jars just yet.  For the first few items out of the kitchen, we'll need to look at low cost foods: grains and legumes.

If you've been to a well appointed health food, organic food or wholesome food store you may have encountered the bulk bins.  Big hoppers full of whole grains, beans, peas, lentils and the like.  The storage equipment would be part of the initial set up for the store.  The stuff on the bins gets a good price when we take it in 50 pound sacks.  We won't need to use all of this product all on one day, a little at a time will keep us going.  The whole grains we can mill into flour.  We can bake it into our breads and baked goods.  Now we can offer whole wheat, whole wheat flour, whole wheat breads and baked goods.  Another easy use in to make our own pasta.  If you've never had fresh pasta, you're missing out.  I can't find rye flour in the stores anymore, but I see the rye and pumpernickel breads over in the bakery.  Rye berries, rye flour, rye bread is now part of our repertoire.  Beans are highly versatile.  The deli can make use of some of these.  Can't make a good chili without them.  Baked beans make an excellent side dish with a lunch entree.  Chick peas are a fine addition to soups and salads, and add hummus to the display cooler.  So easy to make, a caveman can make it.  So long as we have some cavemen helping out, we should be good.  Rice is nice.  Goes in the soups, gets served with lunch and dinner, sits in the bulk bin until it's sold or used.  

We know the first couple of months will be rough.  Back in '95 I started a candy company with a twenty dollar bill.  An idea popped into my head and I went with it.  I made some lollipops, took them in to work, sold the for 50¢ each or 2 for a buck.  I'd sell every last one I made.  As long as I didn't spend all that money in the bar, I could get more ingredients and supplies, do it again.  A couple of months later I had a license to work out of my kitchen and I could sell the lollipops to stores.  I was still buying supplies every day or two, but I was getting them in the cheaper, larger sizes.  We can bootsrap our way to the inventory we need.  We've got an army of customers built into the co-op.  We can make it happen.

I want to get back to the kitchen and discuss it's relationship with the store.  Products come in from the farm, the kitchen is in place to wash and sort the  product.  Marketable product goes out to the store, unmarketable goes into the walk in cooler to be used in some manner that we need to think up in a hurry.  If the produce does not move in the store, it comes back to the kitchen, again to be used in some way.  With the deli in place, soups, salads, sandwiches, and a vegetable selection with a meal will make good use of some, perhaps all of this product.  From time to time we'll encounter items that can not be used in any way.  Wilted lettuce ain't gonna sell, can't be used as an ingredient.  Send it back to the farm to feed the chickens.  If we have no chickens, feed the worms.  If we have no worms, we can always compost it.  One way or another, we will get a use from all the product.  Our waste is a resource.

Staffing the store is pretty easy.  At the start we've already got a cashier in place for the deli.  If we have limited inventory, stocking the shelves is not an issue.  We'll need someone to clean up the place each day.  As the store grows, we add staff accordingly.

In the kitchen we've got the equipment and staff.  Add the ingredients, we have the ability to produce a terrific product line.  Add in canning jars, we can turn those ingredients into Value Added Goods (VAGs).  Cucumbers become pickles and relish, berries become jams and jellies, herbs go into some of the VAGs and into the dehydrator for flakes, powders, and spice blends.  Butter becomes whipped herbal butter.  Apples become applesauce, apple butter, apple crisp, apple pie, schnitz, cider and leather.  Peanuts get turned into peanut butter, peanut brittle, roasted and boiled.  Cashews become cashew butter.  I was in a store looking at casher butter-this stuff sells for 15 bucks a pound.  Its pureed cashews.  Load a food processor, press the button, scrape the sides.  I did some checking, found cashew pieces in big sacks for 4 bucks a pound.  Any nut will work.  Peanuts, cashews, almonds, and hazelnuts top the list.  We may not have a high demand, but those nuts will keep a long time sealed up in the walk in freezer.  

The store allows us to market a long ist of products.  Cold, canned, dried, fresh.  Some items would be prepared regularly, others occasionally, a few only at certain times of the year.  We would be able to produce items that noone else in the word has.  Golden cherry tomato sauce, pickled white cucumbers, chicken packed in roasted red pepper sauce...put THAT on a pizza!  

Non-food items have a place in the store.  People really need a pepper mill.  Frankly, I don't know how they live without one.  This is a food store with superior products, many of them fresh.  Foodies will love the place.  We would do well to add equipment, tools, wares, gadgets, and retail consumer items to our product line.  Cutting boards, butcher blocks, and jelly cabinets can be fashioned in the woodshop as a cottage industry.  If you can sew, make some table runners, aprons, linen napkins.  A Repurpose Shop combined with a sewing workshop would be ideal for producing reusable shopping bags.  Someone can hunt around for acceptable prices on garlic presses, cheese graters, rolling pins, cast itron skillets.  Focus on high quality goods.  The markup is in dollars rather than cents and does not convey a Dollar Store theme. 

Looking down the road a ways, those unique items offers an opportunity.  We've got the website.  Use it to market our products nationwide. Add for shipping and handling.  We may develop some items with demand that wipes out our supply.  Get with the farm manager, let him know we need a larger crop of sweet red peppers next year.  If one of our specialty items does well, we may have to get more land just to grow the ingredients.  Those specialty items command a premium.  We'd be taking produce which costs us very little, selling it for top dollar.  Projects like this have a tremendous impact on our productivity and earnings per unit time.  We'll want to give this area some extra attention.  



Cooperative Enterprise, Plan Outline

List of Co-Op Distributors and Suppliers