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Starting a workers’ co-op

Why suffer the tyranny of a boss when you can set up your own democratic workplace? Seeds for Change Lancaster provides some pointers

January 20, 2013
5 min read

Taking control of our own lives is the first step in the fight against the massive injustices and ecological devastation facing the world. Big companies and unaccountable governments may rule the planet but it doesn’t have to be this way. Workers’ co-ops give us a chance to change a small but significant part of how things are. They’re one way to take back an important part of our lives and gain control over how we work, not to mention the impact our work has on others and our environment.

Workers’ co-ops are part of the co-operative family – democratic, member-owned enterprises set up for the benefit of the members and the wider community. In a workers’ co-op only people working in the organisation can be members, so it’s the people doing the work who have the say.

Starting a workers’ co-op is exciting and rewarding but also full of challenges. It’s like setting up any other business, except you’re doing it as a collective. Don’t underestimate the huge amounts of time, commitment and learning that setting up a business can take! The steps below will give you a guide to what work you need to do to get your co-op up and running.

1. Your idea and the group

The first thing to do is to work on the foundations that your co-op will be built on. Develop and test your aims and business ideas; work out whether a co-op is the right way of working together, and how you’re going to make decisions together. Will you make decisions by consensus or will you vote? One of the hardest parts is to get together the people with the right skills and attitude – get this bit right and you’ll have a great collective ready to face the exciting but uncertain year ahead.

2. Your business plan

You’ll need to put your business head on, and it’s a good idea to seek advice on your business planning and legal stuff. Do your market research. How much can you sell for how much? How will you market your products or service? Where will you make and sell it? What about working conditions: pay, hours, holidays? Will you have a committee or collective management? Do the financial planning, so you know how much start up capital you’ll need and when you can expect to start breaking even.

3. Money and paperwork

You’ll need to choose a name and register your co-op. There are organisations that can help you do this, such as Radical Routes, Co-operatives UK and the Co-operative Enterprise Hub. They can also help you sort out your finance – ask them about loan stock, and where to get loans. Make sure you’ve got your start up money in your new bank account, that premises and equipment are ready and the insurance sorted. You’ll need to tell HMRC when you’ve started trading and that you are employing people, and if relevant, register for VAT. Double check all the paperwork: membership, employment, accounting etc.

4. Launching your co-op

So now you officially exist and can start doing what you set out to do, whether that’s baking bread, mending bikes or installing IT infrastructure. Get out there and spread the word! You can make a virtue of the fact you’re a workers’ co-operative in your marketing and encourage people to support the solidarity economy. And don’t forget to buy services and supplies from other co‑operatives where you can.

5. At the end of the first year

When you’ve survived a year of trading, and hopefully things are settling down, you’ll have a good idea of whether things are going to work out well. At the end of the first year you’ll need to prepare your accounts and send them with your tax return to HMRC and your annual return to your regulator (Companies House or the FCA). Fill in all the employment related forms (PAYE and NI) and send them off to HMRC too. And last but definitely not least – open a few bottles and celebrate

Find out more

If you’re planning to set up a workers’ co‑op then you may find the Radical Routes handbook How to Set Up a Workers’ Co-op useful. More information about all the above is in the handbook, and you can download it for free from www.seedsforchange.org.uk, or order it for £7 (including p&p) from www.radicalroutes.org.uk. It includes information on ways of making decisions, legal forms, effective co-operation, dealing with bureaucracy and much more.

Radical Routes’ Trading Co-ops Network can also provide advice, as can the Co-operative Enterprise Hub.

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