Posted on Tuesday October 12, 2021

How to start a cooperative in New Brunswick

Egalitarian, horizontal, democratic... No matter how you describe them, cooperatives are an alternative to hierarchical, profit-driven businesses. Cooperatives can be found in all sectors of the economy: health, retail, housing, food, entertainment and finance are just a few examples. Is this organizational model for you? Do you share its ideals? This article should help you decide if you want to get involved in starting a cooperative.

The cooperative: An overview

UNI is a co-op, the bike repair shop on your street corner is a co-op, your grandfather was a farmer in a co-op... The cooperative has a broad appeal. So what exactly defines it?

As a collectively owned enterprise, a cooperative brings people together to fulfill common economic, social and cultural aspirations. It is a legally constituted corporation, and power is exercised democratically. It may provide access to services or allow for the sale of products. In 2019 in New Brunswick, cooperatives across all sectors paid $34,939,602 in wages and payments and generated $288,181,990 in sales. They are clearly very active participants in the local economy.

In Canada, a cooperative must be established in accordance with various provincial laws and the Canada Cooperatives Act. In New Brunswick, the way a cooperative operates is therefore largely defined by the New Brunswick Cooperative Associations Act. Its three main principles are collective ownership, democratic governance and profit sharing.

Ownership

To apply for incorporation, a group of a minimum number of people must first be formed, according to the laws in place, and determine which of these people will act as directors of the co-op. Together with the directors, the members of the cooperative share its ownership and use its products and services.

Governance 

Empowerment, mutual responsibility, democracy and solidarity are fundamental values of cooperatives. Following the principle of "one member, one vote", regardless of the number of shares held, democracy is well anchored in the principles of the cooperative. The right to vote is exercised at the annual general meeting (AGM), for example, to elect the members of the board of directors and to define certain policies.

Distribution of profits 

Depending on the sector of activity and the objectives of the co-op, the member-owners can decide how the profits will be distributed. Some co-ops are required to build up a reserve fund and operate as much as possible on a break-even basis. Once a certain reserve threshold is reached, members can allocate surpluses to future investments or distribute them in the form of member dividends. Surpluses can therefore be distributed among members in proportion to the volume of business. In some cases, a cooperative can also become a non-profit organization. In this case, it will no longer pay out member dividends, and any surplus it generates will be directed to the general reserve.

Where to find the inspiration to start a cooperative

The process of starting a cooperative is less well known than that of a small private business. The process can be long and complex, which is why you need to be motivated! To find your purpose, ask yourself, for example, what population do you want to serve by founding your co-op?

Housing co-ops are among the best-known models to the public, but many other sectors benefit from the cooperative model. Take, for example, the Inkerman Community Health Cooperative started by a group of citizens in a building whose ownership was transferred by UNI after its service location closed.

The housing cooperative 

Housing cooperatives come in many forms. Unlike private rental housing, they do not have an owner, but rather residents who make decisions, such as the annual budget and the adoption of policies.

Living in a housing co-op is in most cases cheaper than paying rent, and the money will be invested in maintenance. On the other hand, you may have to participate in maintenance and management. Housing cooperatives also offer a lot of security. No evictions here! Each member's right to stay is protected as long as they follow the rules.

The process for starting a new cooperative involves several steps and is subject to various regulations. If you think it would be easier to join an existing cooperative, try the Financial and Consumer Services Commission's search tool.

The many faces of cooperatives

Whether for fixing your bicycle or supporting farmers, co-ops can be found in a variety of areas. They can take four forms:

• Consumer cooperatives offer products or services, as in the case of the bicycles, for example.
• Producer cooperatives process and market certain products, for example from groups of local ceramic artisans or farmers.
• In worker cooperatives, employees are both members and owners of the business. If you are starting an advertising service, it is possible to do so under a cooperative model.
• As for solidarity cooperatives, they meet the needs of various social groups, particularly in the area of health.

The first steps for starting a cooperative

When unfamiliar with the cooperative model and faced for the first time with the array of rules and documents required to set up a cooperative, you may become overwhelmed quickly! The solution is to ask for support.

According to Cooperatives and Mutuals Canada, a successful start-up includes these 10 steps:

• Gather a group of promoters around a project (identify needs)
• Conduct a feasibility study
• Hold a meeting
• Conduct a viability assessment
• Set up committees and determine by-laws
• Plan the operations of the co-op
• Plan for start-up and financing
• Check the legality of operations
• Recruit staff
• Hold the founding general meeting

Several other organizations can offer you support, including CDR-Acadie and the Cooperative Enterprise Council. Don't hesitate to seek all the help you need.

Support from UNI

UNI Business is committed to the prosperity and vitality of all regions of New Brunswick and supports local cooperatives. From financing to advice, we have what it takes to help you get started. Call on our experts to support you in starting your cooperative!