Greg Brodsky, left, founder and executive director of business accelerator Start.coop, tells how his father launched a carpet co-op in Manchester in 1984, joined by key figure Stanley Langer. (Photo by Trisha Nail)
Grocery stores, carpet and flooring outlets and an outdoor goods company seem like unconnected retail operations. As a group of business owners recently heard at an informational session in Manchester, they’re all sectors that include cooperatively owned companies with great success — but who “owns” what with these companies varies.
“The main thing to understand around cooperatives is that they’re an ownership model and not a business model,” said Greg Brodsky, founder and executive director of Start.coop, a Massachusetts-based accelerator for co-op businesses.
Start.coop, represented by Brodsky and Shantae J. Edwards, the organization’s director of community and training, recently presented on co-ops with the New Hampshire Community Loan Fund at the Greater Manchester Chamber of Commerce.
“One of the things that makes cooperatives confusing is they really serve a function for their specific community,” Brodsky said. “But I would say, even though they can exist in any layer of the supply chain, there are common principles when we talk about cooperative ownership.”
Those principles focus on where the rights lie with participants in the co-op, he explained. In a co-op with a governance structure, each organization member has a single vote, and members have at least 51% ownership of the organization.
What those members look like themselves depends on the scale of the business. For a company like Ace Hardware, Brodsky explained that it’s the 4,000 store owners who run individual locations nationwide.
“They own their store, and then they own a share of Ace corporate,” he said. “If you go up the next layer, you’ve got farmer- and producer-owned cooperatives, some of the biggest cooperatives in the country. Ocean Spray, Organic Valley, Cabot Cheese, Blue Diamond almonds and Lake O’ Lakes dairy — all of these are cooperatively owned by the farmers.”
Brodsky explained that other co-ops use a financial structure in which members contribute through “patronage activity” through their involvement. Members of a food co-op get a comparable amount in financial returns through the groceries they purchase.
“Let’s say there’s $100 in profit in a year; if one person bought 5% of all the food, they would get that 5% of any profits distributed,” he said. “And if we go up to a worker-owned company, the workers put their hours in. If there are profits end-of-year, and the company chose to do a distribution that year, it’d be shared out based on how many hours one person worked compared to another. It’s proportional, not equal.”
Still, he stressed that not every individual involved with a co-op makes larger decisions, which Start.coop says is a common myth. Rather, many businesses under the model task a small management team designated through representative democracy to do so.
Lionel Loveless (wearing hat), co-owner of two Hampton Falls antique shops, asks Start.coop’s Greg Brodsky if co-ops can be a solution to saving longtime businesses from closing. (Photo by Trisha Nail)
If you ask Stan Langer, former marketing director for flooring retailer Carpet One, he says that proportionality creates an environment that “allows you to be part of something larger than yourself, giving you this sense of community.”
Langer, who attended the presentation, was a 23-year key figure to CCA Global Partners, formerly the Carpet Co-op of America, which oversees independent member flooring and home design divisions including Carpet One, FlooringAmerica and Kiba Studios — all of which are run under a cooperative model. Local and regional businesses under these divisions may request promotional material through the CCA company, to name one advantage of being co-op members, Langer said.
“An ad for Ed’s FlooringAmerica could be virtually identical to something run in another part of the country, except there it’s Bob’s FlooringAmerica,” Langer said. “The individual members would have access to all of these elements, and within the last few years, digital properties and opportunities have exploded well beyond most people’s capabilities to manage.”
That spirit of sharing hearkens back to the roots of CCA, which started in Manchester in 1984 and was founded by Brodsky’s father, Howard, from one single family shop.
“My father’s father owned a carpet store on Elm Street and when he died, Howard took over,” Brodsky said. “When I was about 8 years old, my dad got together with 11 other carpet store owners around the U.S. and they said, ‘We have similar suppliers, we’ve got similar expenses, similar training needs and similar marketing. There must be some economy of scale here.’”
Brodsky said that the original cohort of shops didn’t know they were creating a co-op, but as opposed to an association, they took cues from Ace Hardware to structure their organization. Their work led to what are today 4,000 stores across 12 divisions in the U.S. and Canada, with CCA still headquartered in New Hampshire in the Millyard.
“Associations by nature have to be neutral and broader for everyone; they can’t really do the business of recommending (ideas) just as one company or marketing the whole industry,” Brodsky said, citing Ocean Spray advocating for cranberry farmers.
“They don’t really have a competitive advantage, so it’s sort of saying that this group stands for us, we’re going to represent the best, and we’re going to get a better price for it as a result.”
The ability to advocate makes up one of what Start.coop calls the seven core principles of cooperative business. The others are that co-ops are voluntarily open to join; are democratically controlled by their members; have a form of economic participation; autonomy and independence; offer education and training on their work and registration process; and cooperate with one another.
Additionally, the accelerator proposes its own eighth principle: racial justice, which Brodsky says, despite reversal of diversity, equity and inclusion initiatives, the organization feels is something coops should be proactive in thinking about given the other principles.
At their best, Brodsky said co-ops are people-centric, correct power imbalances in markets and offer emotional stakes, leading to higher employee satisfaction. But he urged that they aren’t always the right choice, like if massive outside investment might be needed to develop one.
“Co-ops don’t always do the right thing; I don’t want to put them on a pedestal,” he said. “Because they are owned by their members, rather than outside investors, in my opinion there’s a better chance for them to do the right thing because it’s the right thing, not because of a profit.”
Start.coop will hold a follow-up event in the form of a webinar on April 16, titled “Turn Your Idea Into a Cooperative.”
