Co-Op: Use The Money We Are Already Spending

Having looked at a pizza shop as a means of initializing a co-op, we learned that it's not the pizza that dominates the operation, but the large group of people dedicated to working together, buying their groceries and supplies from their own company.  The feature of the pizza plan which makes it a practical starting point in developing this enterprise is the fact that people are already spending money on the product. 

We are not increasing our spending.  We are not buying something we were not buying before.  All we are doing is changing WHERE the money is being spent.

Food is our common denominator.  Everyone eats.  A cooperative business based on food gives us fantastic potential to redirect money we are already spending to our own company.  Half of our food spending is in the supermarket.  Half is spent on food consumed away from home.  We can take advantage of this spending by setting up the systems and infrastructure required to service our needs.  Sourcing our food as close to the point of creation as possible offers the greatest savings.  Processing ingredients into finished products and Value Added Goods offers the greatest profit.  

A food based business is not the only way to start a co-op.  As long as enough people are spending enough money often enough, there is an opportunity to create a business model capable of taking advantage of that spending.  Food is attractive because we can redirect our spending quickly from our old ways to our own company.  Volume also figures into the equation, with more volume leading to better prices and greater efficiency.  The investment required for entry into the industry is low and can immediately include the general public with a retail operation and put their added volume to use.

As far as total spending, there are other economic sectors in which we spend our money.  Housing consumes the largest portion of our spending.  Transportation is next with the cost of a vehicle, insurance, fuel and maintenance.  We spend money on communications, telephone, television and internet.  The investment required to tap into these markets is well beyond our means as is finding the technical knowledge within our group.  It is impractical to look at these sectors as a means of starting a business with a small investment.  

It is not impossible to move towards those sectors in a small way, perhaps down the road.  Housing for 200 families is an elephant.  Housing for a couple families at a time using apartments in entirely possible.  The investment is high.  The return on that investment is small and over a long period.  The Land Company puts this project within reach as soon as the investment capital is in place.  It is interesting when housing is coupled to the enterprise.  If the people doing the work live close, their transportation costs are reduced.  The structures would need to be maintained and the co-op has the tools, staffing and licenses to do the job.  Housing some of our own people generates work for ourselves.  

Getting into transportation can be done on a small scale.  It's a pretty good bet that at some point the co-op will need a truck.  A cargo trailer fits in well with our plans at an early stage.  Moving a sofa with the family sedan is cumsy and dangerous.  Get a towball, tow the trailer or borrow the truck to do the towing.  The cottage industry project can see a taxi or scheduled transport service leap up from nowhere.  

The company will need internet service as part of maintaining a website and conducting business.  Wifi would allow members access from our home base.  A tight budget at home would let you cancel that bill and still maintain internet access, just plop into a seat in the break room.  We don't tap into that spending, but the members save money.  If our video library reaches a handsome size, people can live without the cable TV bill.  Some families make a point to add a movie to their video library every week.  Perhaps there is a way to put that to our advantage.

We are already spending money on haircuts.  This is a personal service ideally suited for a cottage industry.  We (some of us) spend money getting our nails done.  Another cottage industry.  

We spend money on insurance.  The legal and financial requirements in this sector are surely beyond our means.  However, group insurance is well deserving to be explored and may be required in the future.  

The median family income in the US is around $50k/yr.  The savings rate is low, a few percent.  This means most of the money we earn, we spend.  For 200 families earning the median income we spend $10 Million per year.  Plus credit cards.  The more of that spending we can redirect to ourselves, the greater our opportunity.  Setting up our business to redirect the spending of other folks in our community to our enterprise is how we make a difference in the lives of the people involved.

Cooperative Enterprise, Plan Outline