Why Coops Fail

Co-operatives work best when the idea and development of the business is led by the group that will be involved with the cooperative (e.g. the people that will shop there, work there, or sell products there). This can create a sense of ownership and
loyalty not commonly found in other business models. When a co-op is imposed by a group outside the community or market, this sense of ownership does not emerge organically. In these cases, the community may be mistrustful of the cooperative or have mixed expectations of its role in its operation. Likewise, just because a service might be needed in a community or market doesn’t mean there’s a market or appetite for it. Like any business, make sure to do a proper feasibility study and business plan before deciding whether the idea is good to go — or whether the co-op model is the best fit.


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5 Reasons Co-ops Can Fail

Overall, co-operatives have a proven track record of being more sustainable than other forms of business – with over 90% remaining successful after 3-5 years. But, like other business and organizational models, co-operatives can fail. Often this is the result of common issues faced by businesses, such as market dynamics, access to capital, or mismanagement. Here are five reasons co-operatives fail:

Economic Impact of Cooperatives

The cooperative ownership model is used in a wide variety of contexts, ranging from the production and distribution of energy to delivery of home health care services for the elderly. ln a broad sense, cooperatives operate to complement the activities of investor-owned firms. Whether proMding organic and natural foods to consumers, counteracting asymmetric market power between farmers and agribusiness intermediaries, delivering utility services for households in rural areas and basic banking services for consumers, or redressing problems with long-term contracting in insurance markets, cooperative ownership can be viewed as "bottom-up" private-party response to market imperfections.

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