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Joining a co-op could benefit your business

There are many benefits to being in a co-operative, but what could joining one mean for your business?

For a start, being a member of a co-operative is a good way for you to work with other business owners who have similar business objectives or sell goods or services similar to yours. It’s also a way to share costs, increase buying power and improve market reach.

What are co-operatives?

Co-operatives are owned, controlled, and run for the benefit of all their members. It’s a way of doing business that can be used in almost any business sector and it only takes two businesses or people to start a co-op.

There are many kinds of co-ops – from small craft shops like Waitara Artists Co-operative in Taranaki, to some of New Zealand’s biggest businesses, like Fonterra and Mitre 10.

If you’re an active member of a co-op it doesn’t matter how big or small your business is, or how much you’ve invested in the co-op – each member has one vote and the same say in how it’s run.

“Co-ops allow people to achieve business goals not always possible when operating alone. The main thing with being in a co-op is you’re forming a relationship with the other members – you all want the co-op to succeed,” says Roz Henry, CEO Co-operative Business NZ.

“The survival rate of a co-op is twice as high as a traditional business if the basic business set up has been properly thought out.”

How are co-ops different?

Co-operatives operate like other businesses, but there are some differences:

  • They’re owned, controlled and governed by their members – the people who use the co-operative’s services or buy its goods, not by outside investors.
  • They return surplus income to their members based on how much a member has used the co-operative, not by how big their investment is or by how many shares they have.
  • They’re there to serve their members.

“Co-operatives are based on the values of self-help, self-responsibility, democracy, equality and solidarity.”

“Those principles align closely with the Māori cultural philosophy, so the business model is a good fit. Māori and Pasifika value community and the co-operative model has a strong focus on this,” Roz Henry says.

Benefits of being in a co-op

The benefits of being in a co-operative include:

  • Access to group buying – you pay less for goods.
  • Working together, businesses have more power in the marketplace.
  • HR and health and safety costs are shared.
  • You share common marketing.
  • Profits stay in the community.

“New Zealand is fairly remote so it makes sense to create size and scale to get bulk sale deals and discounts,” says Roz Henry.

Case study

Walnuts NZ Co-operative

In 2015 a group of South Island walnut growers wanted to make sure they had a market for their products, so they formed Walnuts NZ Co-operative after buying an existing walnuts processing business.

The co-operative now has 45 members, employs eight people, and produces over 200 tonnes of walnuts annually that are grown on more than 40,000 walnut trees owned by the members.

Kevin Parish, general manager of Walnuts NZ, says when the co-op was started the aim was to make sure the business gave growers a reliable outlet for their products and connect with consumers.

Apart from whole walnuts and walnut pieces, the co-op processes walnuts into walnut oil and these are all sold under the Trickett’s Grove brand.

The co-operatives’ products are sold to:

  • retailers (supermarkets and speciality stores)
  • ingredient companies like bakers and consumer brands
  • online customers through their website
  • smaller business customers.

There are now plans to further expand the business locally, find new markets for their walnut oil and ways to create value from the waste generated by the co-op.

Co-ops in New Zealand

In New Zealand:

  • There are about 300 co-ops registered across all business sectors.
  • The top 30 co-operatives’ total gross revenue is about 13% of the country’s GDP.
  • Co-op members form a big part of New Zealand’s SME community, e.g. farmers, retailers, and service industries.
  • Over 45,000 Kiwis work for co-operatives.

Cooperative Business New Zealand(external link)

Institute of Directors New Zealand(external link)

Roz Henry says during the COVID-19 pandemic there was an increase in business owners wanting to set up co-ops – especially in the tourism sector.

“Co-ops have a good survival rate during difficult times, and almost no sector was hit harder than the tourism sector. Most of our members got through COVID because the members supported each other.”

Getting started

To get started you need to:

  • have initial members keen to form a co-operative
  • do a feasibility study
  • have a good business plan
  • write a constitution (with legal advice)
  • register under the Co-op Companies Act and Companies Act.

Find out how to put together a business plan here

Mentorship help

If you’re thinking about joining or starting a co-operative, Cooperative Business NZ can introduce you to an experienced mentor who will help you get your co-op up and running. The mentors are often business owners who are members of successful co-ops.

Starting up a co-op(external link) — Cooperative Business New Zealand

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