Like a lot of the posters here, I did not understand why the Staunton co-op seemed to be so slow in developing. So I got involved (became a member and started volunteering). I quickly learned that co-ops of the general size and scope we are talking about here typically take 2-3 years from inception to grand opening. That’s right, 2-3 years. Further, unlike other types of business cited, “initial offerings” or “start small and grow into it” approaches almost always fail for co-ops.

This information comes directly from folks who have opened co-ops all across this country, and is not my personal opinion. In fact, I was an extremely strong proponent of opening at the smallest scale possible and growing it from there. But the fact is, you cannot buy in the volume required to compete until you have a large enough base of membership upon which to have real purchasing power. People say they will shop there if you open now, but if carrots are 4 times as much as they are at Food Lion (or wherever), it will be a one time visit.

Additionally, and perhaps most importantly, for those folks who feel that there is no benefit to membership until the store is open, they are missing the point of forming a cooperative. Anyone can shop at a co-op, and there would be no need for membership at all if that were the case. The reason to belong to a co-op, especially at this phase, is to invest in your community and provide an alternative way for member-owners to secure particular goods or service. If that isn’t reason enough to join, perhaps belonging to a co-op just isn’t for you.

The Mark Cuban example and those in his article (Dell, Apple, MicroSoft) were indeed all started on a shoe-string, and are wildly profitable, global brands. They all also have one ego-maniac at the helm whose only real goal, at the end of the day, is to make as much money for himself and his shareholders as possible. If that means firing all of the employees of a division and shipping their jobs to China, then so be it. Remeber when computers were made in California? If a co-op makes a huge profit for the year, do you know what they do with it? They give it back to the members/owners (after necessary operating expenses and invetments of course). Co-ops exist only to serve the needs of their member-owners. With enough membership, a co-op can put any good or service in the hands of its member-owners at a price they are willing to pay, because they do not have the burden of finicky investors, and one person who makes more in salary a year than some entire countries’ GDP.

Is it a slower way to grow a business? Absolutely. But if you look at a successfuly co-ops, like the one in Roanoke, they have watched large chain grocery stores came and went, while they remained. They did not grow exponentially becuase that was not the point. They serve their member-owners only, and have been doing so for 30 year.

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At Harrisonburg’s

Court Square Theater

Cally’s Restaurant & Brewing Co. and

Downtown Wine & Gourmet

Share Free Food & Music with us in Cally’s Banquet Room

Wine – Tasting

Bid on Silent Auction Items

With Music by

Trent Wagler and the Steel Wheels*

Your Room’s Right Here*

Dave Landes

Alex Albrecht

The Lotus Eaters

*These groups will perform in Court Square Theater,

Concert Admission is $5 at the door for adults, children admitted free

The purpose of this year’s Fest is to encourage new Friends to join the Co-op. So bring friends, and encourage them to join!

For more information go to: http://www.friendlycityfoodcoop.com

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By your numbers mentioned above (assuming an average number of 7.5 hours per week, per person) you all have accumulated 9,360 hours on this project thus far (7.5x52x2x12). Granted that I have contributed zero of those.

And you are right — these 2 sectors have very little in common. Yours is exponentially simpler. Do you think that the co-op started by the folks at Little Grill had thousands of hours of planning and 2 years of intellectual development? I’ll guess and say no. I can only go by what I have read — and they claimed that they were breakeven when they closed. Seems to me that breakeven should be good enough for a FC2, no? Then grow from there? Heck, most businesses start out LOSING money.

In regard to the ‘unequal discounts’ — find a way to make them equal! Sell your ‘shares’ to those most likely to buy in! I’d say by now that all of the people who were going to jump on the bandwagon have probably done so. Those left are either ambivalent or disinterested. Pitching shares to people in food service is a no-brainer. They have a DEFINITE need for your product. It is a far easier sale to convince someone that spends $800 per week on organic produce to buy in than it is to convince a family that spends $150 a week in total at the grocery store.

I know I sound like I’m being negative. I just think you all need to adjust your ways of thinking to that of a business person– stop talking and start doing. There is a creative, quick solution to every single ‘problem’ that you all face, or think that youy face.

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A couple comments… I read the blog you linked. 1) we are a start-up just like the companies Mark Cuban began. The twelve of us who have spent 5-10 hours per week for two years in our own dimly lit basements for no pay can tell you about sweat equity. We work off a shoestring budget. I’m sure within two years Cuban’s businesses were throwing around bigger numbers than we are. 2) Cuban talks about only capitalizing from you own money or that of your customers who advance you capital. Exactly what we are doing…how about an advance of $200, John? 3) Just like Cuban went to investment bankers and industry experts to help shape and critique his business ideas, we’ve met with the experts in our field: Cooperative Development Services; the GMs of Co-op Groceries in Roanoke, Chatham NC, Austin TX, Philadelphia PA, Tacoma Park MD; and several dozen business leaders here locally. 4) Groceries and the retail sector in general is different than the tech sector. 5) as a cooperative we abide by the Cooperative Principals one of which says all members are equal, so we don’t discount for some and not for others.

Lots of sweat equity to go for FCFC… seriously, come join us.

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I’m certainly not saying that the Co-op is ‘doing it wrong’. I guess I’m saying I think there is another, much faster way to get the store operating. There’s nothing wrong with starting small (with the option of expanding if you have success), or negotiating a lease that includes buildout in your terms (somthing I would definitly suggest that the Coop attempt to make happen – it would reduce your needed cash by 200k or so according to the numbrs on the website), or starting with used equipment, etc.

In terms of marketing, I think I’d also focus on local business owners (especially ones that own restaurants). Offer them a larger discount, as they’d buy in volume. Or offer smaller discounts to employees of small companies that buy shares — they could sell it as a benefit of working for that employer. In other words, company X buys a share for $200 and that allows the 5 employees of that company to shop with a 2% discount.

I’ve got a zillion ideas – and maybe some of them stink, but I bet they’d get the place open a whole lot faster, and with less risk to the investors. The benefits of this coop are non-existent until the doors open.

That all being said, I can’t wait to shop there once it does open!

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The DNR story gave us great coverage. We’ve had about 15 requests for member-owner packets at least. And we’re getting very excited about the upcoming ANNUAL FEBRUARY FOOD COOP CELEBRATION, downtown at Court Sq/Callies/Wine& Gourmet, Feb 16 all evening, so set that date aside. THE GOAL is to have owners invite new potential members, and tell them to bring their checkbooks.

SOOOOO glad to see Thanh finally jumped on the bandwagon.

AMMC had a question about number of members we need to open. Sorry this has been confusing, it is has been for us too, as we’ve worked with our national consultants (we want the best!). But basically we don’t want to get too hung up on them. They are ballpark figures. At 300 member we should have enough to begin a member loan campaign. This will be to ask owners who have capital in CDs or savings or wherever if they are willing to loan 5 or 10 or 25k to the coop on market rate terms, or better if they wish. The $200 shares and the loans will then make up the total owner equity capital needed to leverage bank financing. If we get lucky and get some big owner investors (they have to be owners to loan to the coop, VA securities laws), then we can move ahead more quickly and with fewer members. If we get little in member loans, we’ll have to work harder at getting members (maybe 600?) before we’ll have enough equity to leverage bank financing. The amount of money in the bank in turn determines when we can hire a GM, sign a lease and begin buildout (renovation). All this to say, we have a “plan” but reality is always different. Still, we are happy with progress to date.

Early on “John” asked about our slow progress, and questioned whether democracy is slowing us down. Like Jonathan L-T I’d say democracy is our strong point. We have strong directive leaders, we have wise experienced consultants, and we have a Founding Team that has worked their butts off for 23 months. If anything, we need more people to join the Founding Team and help us with tasks to move this thing along. We’ve also hired a part time project manager to assist with owner-member recruitment (Adam Campbell) and he’s turned out to be doing an excellent job.

The fact that we sign up members ahead of time (meeaning we have a nearly guaranteed clientele) means that there will be strong banking interest in our venture, which in turn means we can get favorable terms. The Founding Team made a strategic decision 20 months ago to NOT open a small store while we organized a larger venture, because it could sap our energy for developing a store that was large enough to appeal to many shoppers, obtain volume discounts, and be competitive with other local grocery stores. I think we made a good decision.

The end goal here is better food and better health for our community. If doing it right means taking a few years to get it off the ground, that’s what we’ll do.

Sam Nickels
Co-Chair, Founding Team
http://www.FriendlyCityFoodCoop.com (JOIN TODAY)
476-4180

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My finace and I joined the co-op. Everything got put into the mail yesterday. :o)

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