Business Transition Steps

The first and most important step is to find the people who may be interested in forming a co-operative to purchase or takeover the business. As a business owner, you may find them in your customers, employees, local community, or suppliers – generally a group of people who will miss the business when it goes and have a direct interest in seeing it continue after you leave. Once you have your people, here is a general guide to the steps you and the group will take to transition your business to a co-operative.

  1. Create a steering committee comprised of interested parties

  2. Complete a feasibility analysis – given the type of business, is it possible to convert to a cooperative?

  3. Sign a joint commitment letter with the employees indicating the intention to convert the business to a cooperative business

  4. Develop a conversion plan together with interested parties

  5. Get expert training and advice - connect with a co-op advisor such as CQCMCCIFCo-operatives FirstCo-opZone, the Canadian Worker Co-op Federation (CWCF), or your provincial co-operative association.

  6. Determine business value via a qualified valuator

  7. Develop a preliminary financing plan – how will the employees or other interested parties buy the business?

  8. Develop a co-operative business plan – what will the new business model look like?

  9. Develop a succession plan that transfers responsibility over time – longer succession plans allow for the transfer of knowledge and expertise

  10. Develop a relevant training plan to transfer knowledge and owner expertise

  11. Incorporate as a co-operative (provincially, nationally, or both). For more information see the Government of Canada co-op resource page.

  12. Develop a co-operative governance plan, bylaws, and train for leadership skills.

  13. Provide ongoing training throughout the conversion process and once the co-op business has started.

 

WHEN SME OWNERS SHOULD CONSIDER A CO-OP CONVERSION

 

Situation #1

If your business has a long legacy in your community, committed employees, a solid customer base, and is in fairly good economic standing, transition to a co-operative is an option for purchases by any of these interest groups. People from your community could turn your business into a non-profit community service co-op that provides a service to the public. Or your employees could buy out the business by converting it into an employee-owned co-operative. Or your customers and/or suppliers may value your business enough to buy-in and create a consumer-owned co-operative. Each option is a viable alternative when a buyer can’t be found.

Situation #2

If your business is at risk of closure for any reason, there are options to shutting down or selling off assets. Your employees, customers, suppliers, or other community stakeholders could purchase the business, and you would guarantee that jobs and economic capacity are saved rather than closing the firm permanently.

In both scenarios, your years of hard work, market recognition, and legacy building will be preserved and carry on.

WHY THIS SHOULD MATTER TO THE COOPERATIVE MOVEMENT AND COOPERATIVE DEVELOPERS

Many SME (small- and medium-sized business) owners are misinformed on the benefits of co-operatives. So you are currently missing out on an important way of growing Canada’s co-operative sector.

More SME owners would be open to converting to a co-op if they knew of the benefits of co-ops, which they mostly don’t.

Some SMEs are more likely to convert than others.

You should know what type of businesses these are, so read the report and we'll let you know!

In short, you have some educating and promoting to do to mainstream the co-operative advantage and the benefits of co-ops to SME owners and other stakeholders.

We offer some recommendations for doing just that ... if you read the report!