Tag: co-operative

Collaboration: A step-by-step guide

Jaye Martin 03

Collaboration brings a number of benefits – including business growth, reduced costs and extra resources –but when should a business join or form a consortium? How does it go about doing so? And what specific benefits can it deliver?

Here, CDS specialist advisor Jaye Martin shares a brief step-by-step guide to consortium working.

Step 1: Identify barriers to growth
For many small and micro-enterprises, lack of scale, time, finance or resources can be a barrier to accessing new markets, tendering for larger contracts or simply marketing services. These challenges will be familiar to many businesses, particularly those with small teams or those who provide unique or niche products and services.

Step 2: Look for a potential solution
Teaming up with other like-minded businesses and forming a consortium is an excellent way to break down these barriers. Suitable for businesses of all sizes operating in any sector, this model can help businesses grow by reducing the costs and risks associated with tackling new markets and investing in new products and services. It can also enable businesses to share resources such as back office functions and premises. Meanwhile, member businesses are able to retain their own brands, independence and control. You can find out more here.

Step 3: Find collaborators
Carefully identifying like-minded businesses to work with is crucial. Trust is a key factor. It can help if the businesses have worked together informally before. In most cases, member businesses operate in similar or complementary fields, although a lot will depend on the rationale for collaboration. You can read about the experience of a number of successful consortia here.

Step 4: Choose the right structure
The consortium co-operative model is an effective collaborative business structure. In simple terms it is an organisation run in a shared and equal way by and for the benefit of its members. Members are independent businesses and the consortium can be for any purpose which supports them, for example marketing, tendering, innovating or exporting. Co-operative Development Scotland has a track record in helping businesses and we’d be happy to help you explore the options. You can contact us here.

Step 5: Benefit from your collaboration
Collaborating can be a real game-changer for businesses. Collaborating can be a real game-changer for businesses. For example, through collaboration, Adventures in Light – an Edinburgh-based consortium which brings together a 3D artist, a film-maker and a carpenter – have been able to invest in essential new kit which has supported them to keep experimenting and inventing. This, in turn, has helped them work on bigger projects such as the International Science Festival and the Kelburn Garden Party.

As well as supporting businesses to access new markets, share risks and costs and develop new products or services, many businesses involved in consortium working also report increased confidence, better business connections, improved knowledge-sharing and an enhanced profile.

The benefits are tangible and numerous – and definitely worth exploring when considering the future of your business.

CDS can help you to explore the options, structure the consortium, and get more members involved. 

If you would like to find out more about collaborative business models, or if you would like to get in touch, visit here.

 

Avarix – a model approach?

Gavin Tosh1Inspired by a “Hackathon”, a novel consortium made up of IT students and business consultants is helping build fledgling careers and establish reputations across the world.

Linked to the University of Strathclyde, Avarix has already worked with some of the world’s largest companies. Here, Gavin Tosh of Clerwood Legal Services looks at how they’ve achieved that success.

Avarix is a consortium comprising computer science students at the University of Strathclyde and business consultants with their own companies who work part time for the university’s Enterprise Hub.

The initial idea for Avarix came from a cross-university “Hackathon”, where several universities collaborated to tackle a real-life technical challenge for an external organisation using video conferencing.

The success of this collaboration prompted an approach to Co-operative Development Scotland to form a formal consortium. With the help expert advisers – myself and Gill Joy of Intend Business Development – the consortium successfully formed and was incorporated on 31st January 2015.

This model helps Avarix capitalise on the significant technical talent amongst the computer science students by allying them with external business expertise in one commercial entity.

avarix logoWhile work for external customers was being undertaken by individuals already, including for big name companies such as JP Morgan, Barclays, VISA, Amazon, SkyScanner and the Mozilla Foundation, the experts did not have the capacity to handle multiple requests or more complex jobs. Being part of the consortium removes this constraint and offers greater capacity for work.

The consortium has already delivered several benefits for members. In the first three months of trading alone, Avarix secured orders worth over £150k.

Bringing together the varying skills of members means Avarix can pursue wider business opportunities and bid for different kinds of work. To help cope with peaks in demand and grow the customer base, the core group wanted to be able to formally involve other students in the business.

The consortium co-operative provided a flexible membership structure, allowing students to both carry out work and potentially join the consortium as associate or full members.

Inevitably some student members will need to leave for various reasons, such as gaining full-time employment out-with Scotland. The consortium cooperative makes this process easy, unlike say a company limited by shares.

Having access to funding and reduced operating costs provides a stable financial base and student members benefit from good business experience. Combining resources means members have a greater overall marketing budget, which has helped attract new business.

The external consultants will share in the commercial success of the team but can still manage and grow their own businesses independently.

With early signs of success, more clients in the pipeline and students keen to be a part of Avarix,

could this be a model which can be replicated in other Scottish universities and colleges in sectors other than IT/computer science?

Bright future ahead for Collaboration Prize winners

Adventures in LightAt the end of March, we announced the winners of our Collaboration Prize. One of those winners was Adventures in Light, an Edinburgh-based consortium which triumphed in our tendering category.

Here, chairwoman Cristina Spiteri discusses the group’s excitement at being named a winner and how they plan to use the prize money.

This is a hugely exciting time for Adventures in Light. There are three individuals in our group – a 3D artist, filmmaker and carpenter – and we have big plans and are ready to shine.

While we are individual businesses, we have been collaborating together for two years. In fact, we’ve already enjoyed a number of successes and have so far worked with the Edinburgh Science Festival, T in the Park, The Tinderbox Orchestra and Scottish Dance Theatre.

Adventures in LightBut when we found out there was a way for us to form a business from our collaboration, we were really excited. It’s absolutely perfect for us and we were already naturally working in that way.

Winning the Collaboration Prize will open up so many doors for us. Our vision is to create dynamic projected installations for musical and cultural performances.

Adventures in LightWe also have a focus on utilising projection mapping for brand promotion and interior design, something which is currently not available from one company in Scotland. And thanks to CDS and the Collaboration Prize, we can engage more prospective clients.

By working as a consortium, we can pool our expertise to allow for seamless ideas from creation to execution. The prize money will allow us to purchase more advanced equipment and embark on more ambitious installations.

It makes sense for clients to talk to one body rather than three individual businesses. It also means we can grow to involve other companies and artists to go for bigger jobs. Forming our official consortium is so exciting and offers so much growth potential for us.

Want to keep up-to-date with Adventures in Light? Follow them on Twitter, Facebook and Vimeo.

Director up front on employee ownership

Director magEmployee ownership features on the front cover of the influential Director magazine this month, thanks to an interview with John Lewis Partnership (JLP) chairman, Sir Charlie Mayfield.

JLP is the UK’s largest employee-owned business, employing 90,000 staff, known as partners, across its 42 stores.

In the article, he says the model is key to JLP’s success. Not only does profit-sharing motivate the partners, but it ensures better staff retention than can otherwise be seen in the retail sector.

Employee ownership also allows the business to take a more sustainable, long-term approach, he says, going on to discuss why he’s advocating the model as a satisfying and successful succession strategy for business owners.

Sir Charlie was speaking before the inaugural InspireEO conference, which saw 350 delegates from businesses and public bodies travel to the West Midlands to hear first-hand how employee ownership helps large businesses like JLP as well as SMEs operating across different sectors.

You can read the full interview in the February edition of Director.

A golden visit – part two

image7From October 6 to 9, Quebec in Canada hosted the second edition of the International Summit of Cooperatives, with the main theme being the power of innovation.

Here, CDS chief executive Sarah Deas looks at the approaches taken by co-operatives in Argentina, Spain and France.

The first part of the blog can be read here.

We heard from the Argentinian Federation of Worker Co-operatives in Technology, Innovation and Knowledge that there has been a boom in worker co-operatives. In 1990 there were just 30, now there are 10,000. Social co-operatives account for the largest proportion, followed by young professionals (mostly in technology, communications and consulting services).

The growth is due to public policy; government contracts have advantaged social and construction sector co-operatives. A percentage of co-operatives’ tax also goes into a fund to support co-operative development.

mondragonWe also heard the Mondragon Corporation story – a federation of worker co-operatives based in the Basque region of Spain. It is the tenth largest Spanish company, employing 74,000 people in 257 companies and organisations spanning finance, industry, retail and knowledge. Mikel Lezamiz described the ‘four-legged support stool’ that supports growth: education, finance, social assistance and innovation. A virtuous circle.

France’s worker co-operative membership association, Les Scop, described how they are promoting the model as a solution to ownership succession. From a negligible number 10 years ago, a growing proportion (currently 15%) of their 2,200 members have chosen the worker co-operative model for succession reasons.

lesscopThis percentage is expected to double in coming years. I was interested to see Les Scop’s TV advert, which forms part of a campaign targeting 55+ year old owners – perhaps an approach that we might pursue in Scotland? Les Scop has also introduced training, on the back of the new law in France that requires all companies to provide training to employees.

image2For anyone interested in worker co-operatives a visit to La Barberie microbrewery is a must! On arriving, I was delighted to see Scotch Ale at the top of the menu – although on this visit Pumpkin Beer was the order of the day.

Established in 1997, this worker co-operative has 25 employees, of which 15 are members. It is one of four microbreweries co-operatives in Quebec province that worked together to produce the ‘Rochdale Beer’ which was launched at the Summit. Thanks to Jessica Provencher for hosting our visit.

Read part three of Sarah Deas’ account of her visit to Quebec.

Taste of success for food consortium

When you’re a small-scale producer keen increase your sales and exposure across the UK, how do you do it?

Nine food producers in Argyll considered this very issue in 2008, recognising that there was greater opportunity for them all if they worked together.

With the help of Co-operative Development Scotland, they came together to form Food from Argyll – a consortium aimed at taking their goods into a wider market.

Here, the producers describe the benefits they’ve enjoyed since forming the consortium.

A new generation lighting the way…

Sarah Deas resizedLeaders from across Europe came together recently in Brussels to discuss all aspects of co-operative development, including how to engage with young people looking to collaborate in business.

Fresh from the insightful conference in the Belgian capital, CDS chief executive Sarah Deas reveals some of the different approaches being taken by various countries.

Across Europe the next generation is eager to create new endeavour – young people wanting to start their own businesses.  Many are talking about doing so together – championing a co-operative approach to match their values.

Recently I attended an event at which this message was loud and clear. I joined leaders from Flanders, Finland, Italy, Sweden and the UK in Brussels to share our approaches to co-operative development.

We heard from Gordon Hahn, chair of Sweden’s Coompanion, on how his organisation is tapping into this growing desire to collaborate. They recently launched ‘Generation Kooperation’, a campaign targeting 20 – 35 year olds.kooperation

I explained how here in Scotland we are also supporting the growing interest in the younger generation by developing teaching resources and a toolkit for use in universities and colleges. Following a successful pilot, we are now working with the Scottish Funding Council to support the roll-out of these resources across the futher and higher education sectors.

Other insights from our day in Belgium included recognition of the role that strong national bodies play in promoting the adoption of co-operative models. We were all impressed to hear how Coompanion, which operates 25 co-operative development centres across Sweden, has supported 5,000 new co-operative entrepreneurs over the last fiveyears.

Niina Immonen and Mirja Taipale, from Tampere Region Cooperative Center, also described the important Finnish initiative upskilling 820 business advisers – ensuring co-operative models are considered as mainstream options. Their contemporary campaign – ‘Enterprising Together’ – was designed to stimulate public interest in working with others. It involved radio broadcasts, mass distribution of brochures and events across Finland.  Together these initiatives resulted in a 10% per annum increase in co-operative start-ups.

enterprising

All the nations identified emerging opportunities for co-operatives in:

  • creative industries
  • tourism
  • social care
  • renewable energy
  • broadband

Consortium co-operatives are becoming increasingly prominent in the tourism and creative industries as a vehicle for business collaboration. Italy’s distinct legislation has resulted in 15,000 social co-operatives. The UK’s community shares initiative has enabled over 200 communities to invest in local enterprises. And, in Sweden, co-operatives provide 20% of the broadband infrastructure.

Our host, the Flemish Government, in its commitment to co-operative entrepreneurship is calling for ‘proposals’ for new co-operative business models – a refreshing and pioneering approach.

The increasing relevance of co-operative models in modern-day Europe was evident throughout the day – driven by changing societal values and the need for innovative solutions to local issues. A big ‘thank you’ goes to Kristof Welslau for arranging such a valuable day.

It is over 50 years since President Kennedy spoke of the torch being passed to a new generation. “United, there is little we cannot do in a host of co-operative ventures”. It may be our young people who will now take forward that torch and drive the adoption of co-operative models, not just in Scotland but world-wide.

Shining a spotlight on finance

Jaye Martin 03At the most recent CDS Advisory Board meeting, some of Scotland’s key industry figures gathered to discuss how ‘stakeholder banks’ can be the ideal solution for co-operatives looking to raise capital.  

Jaye Martin, a Specialist Advisor at CDS, shares her experience of the day.

As January comes rapidly to an end and the weather shows no signs of improvement, like me, you are probably longing to get away from the soggy grey skies.

But at the recent CDS Advisory Board session, we refused to be cowed by the January blues and instead presenting an eclectic mix of speakers to throw some light (and shade) on the topic of Financing and Capitalising Co-operatives. 

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James Graham of SAOS

Insights gained from the session will help inform our thinking over the coming year as we consider in sharper detail the financing issues affecting the businesses we work with particularly relating to employee buyouts and consortia of scale.  This is of course in the wider context of Scottish Enterprise’s ongoing work in the Access to Finance arena and the Scottish Government’s Sustainable, Responsible Banking strategy, published last year.

 Attendees from CDS, our Advisory Board, Scottish Enterprise and the Scottish Government heard from James Graham of SAOS on the challenges of capitalising a typical agricultural co-op and the potential need for a farming and rural financial intermediary to serve that community, and Angus Waugh and Gerry Sweeney from First Milk on the challenges of raising capital in a 1,700 member strong dairy co-operative. 

New Economics Foundation’s Tony Greenham gave an in-depth analysis of the UK’s banking system and the benefits of ‘stakeholder banks’ with Rod Ashley of Airdrie Savings Bank, the UK’s last remaining independent savings bank, highlighting the benefits of local banking.

Trying to summarise the rich learning and discussion from this jam-packed session is probably an injustice. However, as a taster let’s consider on the top five financing facts:

  • The UK, and particularly Scotland, lacks diversity in its banking system as compared to other developed nations.  In the UK, local banks comprise just 3% of the sector as compared to 67% in Germany and 34% in the USA. 

Fact 1 image

  • Co-operative (and employee-owned) business models by their very nature make capital-raising difficult due to the ownership structure.  In the USA, there are special provisions supported as a necessary counterbalance to other types of enterprise.
  • Collaboration is the name of the game in Germany. Local banks co-own central services (for example, back office, regulatory and marketing functions).  This collaboration (rather than the consolidation seen in the UK) allows them to remain locally focused, with sophisticated systems.

    Rod Ashley, chief executive of Airdrie Savings Bank.

    Rod Ashley, chief executive of Airdrie Savings Bank.

  • Airdrie Savings Bank was founded on 1 January 1835 and is the only institution now operating under the auspices of the Savings Bank (Scotland) Act 1819.  Customers have ready access to bank managers and staff with knowledge of the local area and local businesses.  The Bank faces an ever increasing scrutiny from the regulatory landscape. 
  • There are comparatively higher levels of lending to co-ops, social enterprises and charities as well as local SMEs by local banks.  For example, the German government-owned development bank KfW has specific funding available for family businesses to help the younger generation to buy out the older (retiring) generation. 

Although, like the January sun, this is just a brief account of the topics, the discussion will help us to put finance in the hot seat in 2014.

CDS is here to help businesses considering the adoption of co-operative business models.

New Year Message

Sarah Deas resizedFrom Sarah Deas, Chief Executive, Co-operative Development Scotland

The eyes of the world will be on Scotland in 2014 as we host the Commonwealth Games, Ryder Cup and Homecoming. It’s a fantastic opportunity to showcase our country on the global stage.

Whilst we wish our sportsmen and women every success, 2014 is much more than medals – it’s a catalyst for regeneration, innovation and sustainable economic growth. An opportunity to build international business relationships, demonstrate our capability to host major events and present Scotland as a leading tourism destination. 

Commonwealth-Games-2014For Co-operative Development Scotland it’s an opportunity to shine a light on the positive contribution that co-operative and employee ownership models are playing in the Scottish economy. Working with the Supplier Development Programme, we’ve been helping businesses to tender together to compete for Games related procurement contracts – capacity building that will have long term legacy benefits. 

One co-operative that will play a key role in helping visitors discover the best places to stay, eat and drink is the Merchant City Tourism & Marketing Co-operative. The Merchant City will be a hive of activity during Games time, including hosting the venue for high profile business events. 

Another co-operative that should benefit from the growth in tourism is the Scottish Mountain Bike Consortium. Set up to increase the range and quality of mountain bike experiences, it aspires to make mountain biking the ultimate family-friendly adventure activity.

roadshow

Scotland is leading the way in the adoption of innovative business models. The coming year offers an excellent opportunity to leverage this success. Businesses that are already successfully exporting, such as employee owned Tullis Russell, Clansman Dynamics and Scott & Fyfe, are well placed to use the flexibility and power of their business model to seize new opportunities for growth. 

As Scotland ‘Welcomes the World’, hopefully you too are considering what 2014 could mean for your business. Are you capturing this once in a lifetime opportunity to profile your business and build international relationships? 

Wishing you a successful 2014

Best wishes

Sarah

Community co-operatives – realising the potential

Karen BirchThe nature of communities in modern society is evolving, but their role remains more important than ever.

Here Karen Birch, managing editor of 3rdi magazine, a leading voice of the co-operative sector, assesses the value of co-operative community enterprises.

Karen is also a member of Co-operative Development Scotland’s (CDS) Advisory Board.

 

Community co-operatives are organisations set up to provide services to a particular community which use co-operative principles to guide their activities. 

A local community, such as a village or a block of flats, has physical boundaries which makes it easy to recognise. But in the increasingly complex world most of us inhabit many different communities exist and playing different roles. For example, we may be a member of a faith group, a volunteer for a charity and or a member of a local sports team.

Almost every activity which involves people coming together for common purpose has the potential to create a co-operative community enterprise. The co-operative enterprise I am most closely involved with, the 3rdi magazine, is just such a community with women and men3rdilogo5 from across the UK coming together to create an on-line magazine which looks at business issues from an ethical perspective.

We do not serve a local community but rather serve a community with a shared interest in ethical business practices and in furthering equality and diversity in the workplace. Community is an active condition reinforced by active membership with people choosing to identify with and support community values and purpose. 

Community Investment involves members of that community buying shares in an enterprise that serves that community. It gives people a stake in the success of that enterprise. Common ownership puts the assets of the community co-operative in a similar relationship to its members as the village green is to the inhabitants of a village. Everyone has use of the asset but no one person has title or claim and no one person can dig it up and take it away. 

Throughout the last century, the model of community action has been one of volunteering and was heavily reliant on grant-funding from public sector bodies and individual philanthropy. This is not sustainable. I am a fan of enterprise and I’ve run successful businesses for the last 20 years. I see community enterprise as a real alternative to the market failures in the private sector and the continual withdrawal of funding from the public sector. 

Community enterprises provide goods and services to meet the needs of their communities. Community shareholders, unlike traditional shareholders, only expect a fair return not a maximal or rapid return on their investment. This long-term alignment of shareholders to the needs of the community enterprise, promotes long-term sustainability over short-term profit-taking. 

At a time when many communities are faced with the loss of local amenities this change in focus is, I think, crucial. And community shareholders are also far more likely to get involved, to become active supporters of the enterprise, and not just remain as consumers of products and services.

This engagement also strengthens the business model. It creates role flexibility: as customer and supplier and employee and owner is a true stakeholder model, and is more robust and sustainable than the traditional supplier-to business-to customer model. It is this combination of engagement, flexibility and sustainability that leads me to conclude that we need more community enterprise and ownership.

So, what sort of services can community co-operatives provide? Examples are wide ranging and reflect the needs of the communities they serve. These include a crèche in a tower block containing many single-parent families which has enabled them to seek work, through to a launderette in a housing estate.

Most successful community share issues focus on an asset, which is why community shops, pubs and community buildings have featured amongst the big success stories for co-operative community enterprise. As an Advisory Board Member of Co-operative Development Scotland (CDS), I’ve seen first-hand how shared ownership enables communities to develop services such as utilities and broadband, and this can work particularly well in remote regions.

However, just because a community lacks a service that it wants, it does not automatically mean that there is a viable business model that can meet that need. As with any business an opportunity only exists if there is sufficient demand from customers willing to pay a reasonable price for the goods or services provided.

With our long term energy future, particularly our reliance on fossil fuels, looking increasingly insecure, more and more attention is being drawn to renewables. Local communities are rightly seeking to benefit from renewable energy projects based in their vicinity.

By coming together to form a co-operative the local community can receive a direct financial benefit from the development and can use any profits generated to re-invest in other community projects. The profit generated stays within the community rather than rewarding shareholders outside the area.

Harlaw Hydro Electric directors (from left): Martin Petty, Simon Dormer, Lynn Molleson and Ian Hynd – pictured at Harlaw Reservoir.

A good example of this is Harlaw Hydro Limited whose purpose is to own and operate a micro-Hydro scheme. It will generate revenue by selling ‘green’ hydro-electricity. The income generated will allow Harlaw Hydro Ltd to contribute to other projects and initiatives within the local area through the Balerno Village Trust. It is 80 per cent of the way to raising £313,000 through a share offer scheme.

CDS works in partnership with other organisations such the Co-operative Enterprise Hub to help communities develop community co-operatives in the renewable energy and broadband arena. The benefit of this model is that co-owners are involved in decision-making. Income can be invested back into the community through local projects or distributed among the members.

From my perspective the key is enterprise and long-term viability and I think that the model of ownership and engagement in community co-operatives means that they can be more robust and sustainable than either their private sector or charitable counterparts.

If you like the sound of this way of doing business do sign up or visit our website: www.the3rdimagazine.co.uk/ and follow us on Twitter, @the3rdimagazine

Co-operative Development Scotland is a Scottish Enterprise subsidiary, established to help companies grow by setting up consortium, employee-owned and community businesses. It works in partnership with Highlands and Islands Enterprise.