Guides and Resources
Developing the Business Plan of a New Co-operative
A Working Tool
A business plan is a document that provides a complete description of the co-operative enterprise you wish to form. It describes in detail the products or services that will be produced or sold; the organization of work and management approach; results of the market study and marketing plan; characteristics of the paid and unpaid human resources (the members); equipment and material needed; financing requirements and plan.
The business plan is a working tool that serves two purposes:
- To facilitate the acquisition of external capital, credit union/bank loans or grants.
It must convey to the person or organization from whom you seek financial support why they should invest in the enterprise you are proposing, the seriousness of that enterprise, and your team's ability to launch and develop it successfully.
- To facilitate control of the process of launching and developing the new co-operative. This plan will be the means by which you monitor the new co-operative's results and follow-up on its activities.
The business plan must be written in clear and straightforward language, and be relatively brief (no more than thirty pages, plus appendices), since the people who will consult it before deciding whether or not to invest in your co-operative, loan it money, or give it a grant often have no time to waste. They have to be able to understand your plan and the exact nature of what you are requesting very quickly.
Content of a Business Plan |
1. |
Summary of the business plan (2 pages maximum) |
2. |
Brief description of the co-operative (1 page)
- Name, address of the head office, date formed.
- Type of co-operative, objectives, number of members.
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3. |
Analysis of the co-operative's market
- Brief description of the characteristics of the products or services offered with respect to comparable products and services available on the market.
- Characteristics of the market: size, parts of the market held by competing enterprises, market segments, market trends.
- Characteristics of your sales strategy (direct, through third party, shipping costs, etc.).
- Characteristics of the clientele (members or non-members), age groups, gender, occupation, family income, location, buying habits, etc.
- The price of your products or services.
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4. |
Description of products and services
- Originality of the products and services compared to what is available from the competition, their distinguishing characteristics (include photographs or sketches if necessary).
- Description of any research and development activities required before these products or services can be marketed (with associated costs and timetable).
- Description of new products and services development plan.
- List of legislation that must be complied with and legal authorizations that must be obtained before they can be introduced on the market.
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5. |
Marketing plan
- Estimate of sales for the first three years and the market share sought (refer to your detailed market study on which you based your sales objectives; include it as an appendix).
- List of buyer-members or potential buyers who have already expressed an interest in buying.
- Description of market segments targeted (size, location, other characteristics).
- Description of your strategic market penetration plan and its cost (how you will advertise your products and services, promotion campaign, media publicity, discounted membership prices, etc.).
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6. |
Operations
- Advantages of the location of your place of business.
- Characteristics and costs of the building and equipment already owned, or to be bought or leased (attach a plan if necessary and refer to detailed descriptions in an attachment).
- Description of the process and methods of producing the products and services.
- Description of the characteristics of the manpower required (professional qualifications, number, salary costs, etc.).
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7. |
Management and organization
- Characteristics of the association's structure and method of operation (division of powers and responsibilities of the various bodies, names of the directors and a brief description of their expertise).
- Characteristics of the structure (organization chart) and of the enterprise's method of operation (management philosophy, methods of participatory management that will be introduced, names of managers, their qualifications, a description of their duties, their responsibilities and reporting relationships, etc.).
- Identification of external professional resources with whom you plan to deal (organization specializing in start-up assistance, accounting firm, marketing consultant, trainer, etc.).
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8. |
Timetable of activities
- A graph of the timetable for the first three years, with monthly or semi-monthly columns and thick horizontal lines to indicate the beginning, duration and end of the enterprise's major series of operations. Each activity should be coded and a brief description given in a column to the left.
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9. |
Projected financial statements to include
- Statement of assets and liabilities for the first three years.
- Statement of earnings for the first three years.
- Projected cash budget for the first year, estimate of working capital for the following two years.
- Break-even point (level of revenue beyond which the co-operative will generate a surplus, after fixed and variable costs are subtracted).
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10. |
Financing plan
- Total investment needed for start-up.
- Short and medium-term investment plan.
- Source of funds (share capital, external investors, medium-term loans, etc.).
- Amounts by source, conditions of acquisition (interest, share of surplus, etc.), repayment schedule, security given.
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11. |
Attachments
- Articles of Incorporation of the co-operative.
- By-laws.
- Data from the market study.
- Summary of expertise of the main people in charge and a list of members.
- Letters of support, intention to buy or sell, etc.
- Any other relevant information that may shed more light on the nature of your operations, equipment needed, manufacturing methods and procedures, etc.
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