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Elwood Hometown Cooperative Market. A community journey. About Elwood. Population 710, 2010 census Non-consolidated grade school and high school 3 churches Convenience store 2 banks Gosper County seat Gas station Restaurant New library - $350,000 DED grant
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Elwood Hometown Cooperative Market A community journey
About Elwood • Population 710, 2010 census • Non-consolidated grade school and high school • 3 churches • Convenience store • 2 banks • Gosper County seat • Gas station • Restaurant • New library - $350,000 DED grant • Downtown Revitalization Grant - $350,000 awarded in 2012 • Market study - $1M in grocery sales available in Elwood, addition $800,000 at Johnson Lake & surrounding area
Timeline • January 15, 2012 – Elwood Market closes • Last week January– Survey distributed door-to-door. • February 6 – First community meeting • Results of survey shared • Options discussed • Jim Crandall presentation on Cooperative model • Steering committee formed • March 18 – Second community meeting • May 4 - Incorporation
Timeline • June 8 – Banking & Finance • June 18 – Membership kick-off • Oct1 - “Go” financial threshold reached • Oct. 5 – Building purchase completed • Oct. 6 – Community demolition day • January 14 – February 3 – Stocking and inventory load • February 3 – Shareholder, donor & volunteer preview • February 4 – Open for business!
Survey • 88 responses • 73% shopped at the store weekly in 2009 • 54% would like to purchase more than 50% of their groceries at a store in Elwood • 67% said a convenience of a store in Elwood was Very Important • 79% said price was Moderately to Very Important • 22% would like to purchase 76 to 90% of their groceries in Elwood
Steering Committee • Ed Houlden – Security First Insurance, Village Board Member • LeahAnn Brell – Brell Realty & Chamber President • Steve Lofquist – Lofquist Welding, Inc. • Dustin Lofquist – Lofquist Welding, Inc. • Sindy Fiene – Mary Kay Consultant • Phyllis Dunlop – Member of Chamber, volunteer at Gosper County Senior Center and church • Joe Welch – Paulsen Construction • Sharlette Schwenninger – small business owner, Chamber Executive Director, Village Board Member • Lyanne Weissert – FSA, husband owns construction business • Nancy Schutz – The Home Agency, accountant
Sub-committees • Finance/Business Plan • Facilities • Surveys • Incorporation • Public Relations/Marketing/Membership
Financial/ Business Plan • Analyzed and evaluated past businesses • Talked to past business owners and Brenda Johnson from Bertrand about seasonal trends • Developed a financial plan including all start-up costs, wages and one years income and expenses –created 2 year proforma later • Determined that it was feasible to re-open and operate as a member owned cooperative, contingent on a successful membership drive.
Facilities • Toured the building and evaluated flooring, shelving, electrical and other needs • Compared remodeling costs with new construction • Provided estimates to the Financial/Business Plan committee • Determined and prioritized “what we have”, “what we need”, and “what would be nice in the future”
Incorporation • Explored options for incorporation • Limited Liability Corporation • Cooperative • Limited Cooperative Association • Found resources to advise us • Recommended to the Steering Committee that a Cooperative is the best option for Elwood • Contacted an attorney who specials in Cooperative Law • Incorporated May 4, 2012 • Banking and Securities approval June 8, 2012
Cooperative – What is it? • Members are owners and are users • Members benefit • Members govern through Board of Directors • One person, one vote • Member investment is for access to services, not for return on investment • Store open to non-members
The Offering • Authorized capital stock - $500,000 • 500 shares of common stock at $500 per share • 500 shares of preferred stock at $500 per share • $25 membership fee
Common Stock • $500 par value • One share per member • Voting share • No dividends paid
Preferred Stock • $500 per share • No voting rights • Individual or entity can purchase as many shares of preferred stock as they wish, until the $275,000 offering is filled • At the discretion of the Board of Directors, a dividend may be paid. • If Cooperative is dissolved, priority for redemption at par value over common stockholder
Cooperative Governance • Owners of common stock will meet within 12 months from May 4, 2012 to elect Board of Directors • Seven board members with staggered terms will be elected to replace the acting Board • Board of Directors will supervise the Store Manager • Store Manager will manage the store and employees • Suggestions come to Board, not to Store Manager
Projected Cash Outlay • Beginning inventory $70,000 • Working capital 41,700 • Building and signage purchase 42,500 • Cost of remodeling 55,500 • Purchase of fixed assets 80,000 • Pre-opening training and labor 1,600 • Legal and accounting costs 6,000 • Advertising and Grand Opening 2,400 • Supplies, insurance & other 7,800 • Total $307,500
Incentives with kick-off • Drawing for shareholders who invested by July 6 • Logo contest - One share of common or preferred stock, donated by a local business
Demolition Day • More than 40 volunteers • Used shareholder’s building down the street for lunch and breaks
Remodeling • Demolition of existing office and storeroom area • All new wiring • Floor strengthened with plywood overlay, new VCT tile • Tin ceiling spray painted and faux metallic highlighted • New bathroom & storeroom • New receiving doors • New windows – Downtown Revitalization Grant • Insulation – Downtown Revitalization Grant • Lighted awning – Downtown Revitalization Grant • Repair brickwork • New lighting
Equipment • 10 new cooler doors • 15 used freezer doors • 2 used drink coolers • Used shelves • Used meat case • Used produce case • Used checkout stand • Scanning system – The General Store
Staffing • Ads in local paper and around town • Manager – Mike Burkink, 40 years on grocery business • Assistant Manager – Julie Poggendorf, previously worked at Elwood Market and other grocery store experience • Clerk – Ann Neville, grocery store and convenience store experience
Hours • Budgeted for 60 hours • 9 a.m. – 6 p.m. Monday - Saturday, 10 a.m. to 2 p.m. - Sunday • 1 Full time manager, 1 28 hour assistant manager and 20 hour clerk • Changed hours to: • 8 a.m. to 7 p.m. – Monday through Saturday • 10 a.m. to 2 p.m. – Sunday • Taking assistant manager to 40 hours • Taking clerk to 28 – 30 hours • Will be hiring another part-time if needed
Shareholder/Member Preview • Postcards sent to volunteers, trades, donors, shareholders and members • Cookies and coffee • Shopping bags given to attendees • Open for business • $950 in 2 hours
First week • NTV news spot featuring first customer • Article in Kearney Hub and Lexington Clipper • Approximately $3500 in sales first day • Sold out of bread in one day • Manager cut meat every day – sometimes twice • Positive comments from everyone • New shareholders • Increased employees hours and will be hiring more part-time help
Why we were successful • Had the right mix of experience on steering committee • Steering committee members met weekly • Used the local and regional newspapers and radio to promote • Kept the community informed of our progress • Met one-on-one with prospective shareholders • Went door-to-door with information when needed
What we learned • Set deadlines or nothing gets done • Be flexible with our budget and planning – there will be curveballs • At community meetings, answer as many questions as possible in the presentation • Finish all construction before receiving new equipment and inventory, if possible (we cleaned several times…)
