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Cornerstones

Cornerstones. Supporting New Food Co-ops. Accomplishments & Progress since 2005. Challenges & Barriers Lessons Learned. What Have we Accomplished?. 64 new retail food co-ops since 2004 Hundreds of inquiries Over 50 Seed Grants and Sprout Loans 100 Active and engaged startup efforts.

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Cornerstones

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  1. Cornerstones Supporting New Food Co-ops

  2. Accomplishments & Progress since 2005 Challenges & Barriers Lessons Learned

  3. What Have we Accomplished? • 64 new retail food co-ops since 2004 • Hundreds of inquiries • Over 50 Seed Grants and Sprout Loans • 100 Active and engaged startup efforts

  4. Building the Systems • Documentation & Data • Resources • Training • Networks • Experience and Feedback

  5. P6: Cooperation among Cooperatives • NCGA and the Development Co-op • Regional Associations • Commitment from co-op boards and managers • Co-op loan funds • Cooperative Development Centers

  6. Community Support rises • 500 - 1,000 – 2,000 founding members • Million dollar loan and share campaigns • USDA support through development centers & other programs • Community economic development grants & loans

  7. What Works • Co-ops larger than 3,000 sq. ft. retail • Co-ops with natural food/local food emphasis • Co-ops that organize their community and do excellent business plans • Professional support

  8. challenges • The Natural Foods industry matures • Outliers • Intriguing Ideas • Conflicting advice • Changing legal and financial regulation

  9. Do you miss the 80’s? • Competition • New regulations/increased enforcement • Expectations • Sophistication • Product differentiation • Food Co-op perceptions and recognition

  10. Still working on… • How to serve low-income communities? • How to organize where co-ops are not understood? • When is “volunteer” member labor acceptable? • Can/should we invest limited resources in risky and unproven efforts? • How do we define “retail food co-op?”

  11. Market Studies Determining Sales potential

  12. An Essential planning tool • Analyze local market • Demand • Competition • Geography • Analyze (or help identify) potential sites • Desirable characteristics • Location • Potential weaknesses • Project sales volume • At opening • Through maturity

  13. Provides • Assurance to owners & lenders • Realistic baseline for financial projections • Guidance for planning location and size • Overview of competition • Recommendations for products and services

  14. How to get a good market study • Not a do-it-yourself project • Use a professional who understands co-ops • Provide clear assumptions • Follow through with your plans

  15. Follow up • Ask questions! • Update study when: • Major competitive changes occur • Site options change • Business plan changes • After 2-3 years

  16. Site Selection What to Look for (and when)

  17. Why Good may not begood enough • The right location • Access • Cars • Mass transit • Pedestrian • Parking • Visibility • Appropriate neighbors • Size and flexibility • The building itself

  18. Stage 3 Implementation Steps, Timeline, Tools & Benchmarks

  19. Overview of Stage 3 • Stage 3A - Preconstruction can last 3-6 months or longer, and require a budget of $80,000 - $100,000. • Stage 3A ends when the contingencies of the lease (or purchase) are removed, the sources & uses budget is fully financed, and the final decision point is reached and crossed over (no turning back).

  20. Overview of Stage 3 • Stage 3B is the construction stage and typically lasts as long as the preconstruction stage (3-6 months). • The budget for Stage 3B represents ½ to 2/3 of the total Sources & Uses budget. • Stage 3C (one month) is Preparing for Opening and Stage 3D (forever) is Sustaining. The budget for these stages includes the remaining funds in the Sources & Uses budget.

  21. Tools & Resources • Sources & Uses Budget • Professional Support • Attorney for capital instruments • Architect • Store planner • Inspectors • Consultants for GM hiring, board training, operations • Distributors, Brokers and Suppliers • Co-op Community

  22. Sand Traps • Is the board ready to manage a GM? • Have you promoted the co-op store to the market? • Do you have your working capital?

  23. Opening & Beyond What to Expect & How to Be ready

  24. Transitions • The board delegates operations to the manager. • Celebrate and keep the momentum! • Monitor vigilantly • Expect setbacks, staff turnover, equipment breakdowns … • What will you do if the cash runs out? • Be prepared, and willing, to get help • Invest in your future- capital, education, community

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