Creating rules for a co-op? Write it down. Encouraging members to run for the board? Write it down. Entering into a partnership? Get it in writing.
Starting a co-op is an exciting process. Working with a group of entrepreneurs to capture an opportunity or address a need in your community can bring out people’s enthusiasm. Maintaining this excitement is essential to gaining support for your initiative and making your business a reality.
It’s easy for the legal side of creating a business to bog things down. For many entrepreneurs, policies, procedures, and rules can seem like a nuisance that can over-complicate their business and inject too much bureaucracy into the organization. However, there are benefits to writing out important processes and it’s our job, at Co-operatives First, to help make this task as easy as possible. Here are three documents every co-op should create and tools to help you get started.
Your co-op’s most important document (aka your co-op Bible) is its bylaws (known as “rules of association” by the BC crowd). Bylaws, along with your articles of incorporation, make up your incorporating documents that outline the co-op’s ownership and foundational procedures.
While creating these documents often gets treated as a legal stepping stone, they contain valuable information that can guide your co-op through some important processes. This includes how to accept new members, host meetings, and share profits. A good set of bylaws also clarifies how to handle difficult situations. Removing a director from the board or navigating a conflict of interest can be contentious. Ensuring your bylaws include provisions for handling these, and other, situations will remove some of the guesswork you’ll face when problems arise.
Not sure what to include in your bylaws? Co-operatives First provides comprehensive templates for co-ops in western Canada on the Co-op Creator. You can also contact us to get expert advice when working through this step.
For more operational procedures, consider building a policy manual for your board of directors. Co-operative boards use policies to take some of the guesswork out of their decisions and ensure consistent decision-making on recurring processes. Tasks like hiring staff, financial reporting, and appointing an auditor are ideal for regulating in a policy. A human resources policy or a financial policy are great starting points that most co-ops need. Having well-defined policies that outline how to handle various tasks will prevent confusion among staff, the board, and members.
Check out the up and running section of the Co-op Creator for some guidance drafting policies. Get input from your members and share policies to create alignment among those involved in the co-op.
Terms of Reference
For co-ops that partner with other organizations or use committees to make decisions, a Terms of Reference document will provide clarity for those involved. A good Terms of Reference should be concise with a clear purpose (e.g. define the powers of the governance committee). It should set out the expectations of the involved parties and how decisions should be made. A good Terms of Reference should give all parties clarity on their role, their objectives, and how they should interact with others. For larger co-ops, using a Terms of Reference will ensure consistency across committees in making decisions.
For tips, check out our guide on the Co-op Creator.
Creating these documents is an important step for your co-op. Equally important is maintaining these documents to reflect changes in your business and how members want to work together. Update these documents regularly to reflect best practice and what works for your co-op.