As with any sector, the language used by those already working within it can often be a mystery to those outside. With that in mind, here we explain exactly what Co-operative and Community Businesses are, and the benefits of choosing those structures.
A co-operative is essentially a business owned and run by its members. They have an equal share in how the business is run and how the profits are shared.
There are more than 7,000 co-operatives in the UK, owned by around 14 million people, contributing £40 billion a year to the economy. And 72% of new start co-ops survive their first five years compared to 43% of other types of business.
Co-operatives offer a viable alternative to ‘big’ businesses. In Britain today, 58% of people think that big businesses are out of control and 57% feel that they have no influence over the economy.
Co-operatives give people the opportunity to have a say in how a business is run. Unlike businesses focussed solely on making a profit for their investors, co-ops exist to meet the needs of their members. The benefits of ownership are based on time and use, not just the amount of money that someone has invested. Co-operatives often work on a one-member one-vote system, meaning that everyone has an equal say, regardless of the amount of money they may have.
Community Business is a significant sub-sector within the wider social enterprise sector. It shares the same definition as social enterprise: an organisation trading for social purpose with profits reinvested rather than going to shareholders. But a community enterprise is more specific in that it is based in, and provides benefits to, a particular local neighbourhood or community of identity. A community enterprise is owned and managed by members of that community. It is an organisation run BY a community as well as FOR a community.
Recent figures from Power to Change show:
- There are over 11,000 community businesses in England
- Making a total income of around £1 billion each year
- 48 per cent of community businesses operate in the 30% most deprived areas
56 pence of every £1 spent in a local community business stays in the local community
There are four key elements to Community Businesses:
- Locally Rooted: They are rooted in a particular geographical place and respond to its needs. For example, that could be high levels of urban deprivation or rural isolation.
- Trading for the benefit of the local community: They are businesses and must generate income. This can come from things like renting out space in their buildings, trading as cafes, selling produce they grow or generating energy.
- Accountable to the local community: They are accountable to local people, for example through a community share offer that creates members who have a voice in the business’ direction.
- Broad community impact: They benefit and impact their local community as a whole. They often morph into the hub of a neighbourhood, where all types of local groups gather, for example to access broadband or get training in vital life skills.