Review: How to set up a Workers’ Co-op

workersco-opsThis is a great book. If you are planning on setting up a workers’ coop in the UK, this is definitely the first book you should pick up. And it’s free. You can download it as a PDF from Seeds for Change, although I bought the spiral-bound version from AK Press (the excellent Scottish/Californian workers’ coop), and I think I prefer it in that format. It is the sort of book you could see lying around a new workers’ coop, getting dog-eared from frequent use.

Many of the books I have reviewed here are aimed at US cooperatives, and much of the advice for new coops would be the same anywhere, but the legal side of setting up a worker-owned business is very different from place to place, and so the most important chapter for UK residents would definitely be Chapter 8: Choosing your legal form, where the authors go over the different kinds of business forms open to coops in the UK (e.g. company limited by guarantee; co-operative society; limited liability partnership, etc.).

This little guide has gone through many editions over the years, penned first by the Catalyst Collective in 1994, updated by Radical Routes in 2003, and again by Footprint Workers’ Co-operative and Seeds for Change in 2012 and 2015, with a minor re-edit in 2019, the most recent edition. The cooperative provenance and so many hands gives you a lot of confidence in the advice. The folk who contributed over the years really know what they are talking about.

This won’t be the only book you will need to read and the authors are honest about this. This little guide ‒ just 116 pages not including the appendices ‒ is more of a roadmap, laying out the territory, but leaving it up to the reader to read other books or seek training in the details, and rather than a weakness, this is its greatest strength. Starting a business can feel so daunting; you need to learn so much, it is really encouraging to see the whole process set out briefly, with very little jargon. It makes it feel much more do-able.

But this brevity comes with compromises. Some stuff was left out:

  • First and foremost, this guide is aimed at folk who want to start a very specific kind of coop, what the authors call a “radical small coop”, with a completely horizontal structure, governed by consensus of all members (i.e. no managers). To be honest, this is the sort of coop I would set up too, but it should be said that many, if not most cooperatives are not like this, and do have managers. Fully horizontal, consensus-based coops have to stay relatively small to work. There is nothing wrong with this kind of coop, but larger, more complex businesses generally adopt some sort of democratically-controlled management structure to coordinate things.
  • The authors discuss making some articles of incorporation “entrenched”, in other words, requiring a super-majority or full consensus of all members to change, particularly articles setting out the cooperative nature of the business, so it is harder in the future for members to demutualize the coop. This is a very good idea, but I was surprised that the authors did not discuss entrenched articles specifically limiting the percentage of non-member labour, since allowing non-member labour to grow out of hand is the principal way cooperatives degenerate into capitalist businesses over time.
  • Also, the authors say very little about mandatory profit (surplus) plow-back rules (p. 87), which is a shame because these sorts of structures can turbocharge the growth of cooperatives, both as individual businesses and as a movement, but are best put in place at the start, perhaps months or years before a cooperative actually starts turning a profit.
  • The authors also don’t say anything about new-member buy-in (p. 94). Many cooperatives require new members to “buy” their membership, typically deducted in small amounts from their pay-cheques over the first few years. This serves as another way coops can raise their own capital, helps to even out the contributions of new-members and founders, and can also be used as a kind of retirement investment that members can draw back out when they leave. The authors may be ideologically opposed to new-member buy-in, I am not sure, but it is odd that it isn’t mentioned at all, given how common it is.
  • And one small point: for retail businesses, I would have liked to see a bit more about the importance of location and passing foot-traffic (p. 35). In my experience, this is a make-or-break point. A really great store that is even half-a-block off the main drag, or has rented a place with small-windows and poor frontage, can fail on location alone.

These points to one side, this really is an amazing little book, and I cannot recommend it highly enough!

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