British Columbia's $10-billion co-op movement is working to adopt modern business principles in order to survive in the marketplace.

And business professor Lindsay Meredith says it's a case of "do or die" for the co-op movement in today's business environment.

"It's all about market power," says Meredith, a professor with Simon Fraser University's faculty of business administration. "You have to operate in a competitive manner to survive. You have to operate on sound business principles if you want to stand a chance of making it."

It's a lesson that rings true for small businesswoman Cindy Gibson, director of the Gallery of Artisans Co-op in Victoria.

Don Denton, Business Edge
Gallery of the Artisans Co-op director Cindy Gibson has watched the business strategy succeed.

"We are all small-business owners and were frustrated as individuals how difficult it was to market our goods," Gibson says. "So we decided to pool our resources."

The 14-member co-op, which sells crafts, pottery, textiles and sculptures, opened its door on July 18. But first, says Gibson, it needed a business plan for insurance reasons and because some landlords wouldn't lease out space without one.

"We looked at the market and looked at the competition," she recalls. "We looked at where the foot traffic was because we did not totally want to be dependent on the tourism sector."

The business-based strategy is paying dividends, and in the first two months of operation the co-op has sold $20,000 worth of crafts and arts from its 920-sq.-ft. premises. Instead of advertising, the co-op relies on free listings in the papers.

John Restakis, executive director of the B.C. Co-operative Association, a non-profit umbrella group that develops and promotes co-ops and credit unions in the province, says there are about 700 co-ops in B.C., with total assets of more than $20 billion.

A co-op is defined as an enterprise that is jointly owned and democratically controlled by its members for their mutual benefit. Each member has a say in the decisions affecting the co-op.

One in every five British Columbians belongs to a co-op and the sector employs about 13,000 people.

The co-ops are active in a variety of B.C. sectors, including financial services, insurance, health services, housing, transportation, social services, agriculture, forestry, fisheries, post-secondary education, and retail.

"The entrepreneurs in the co-op movement discovered that the only way to survive was to control the market and band together and be very business-like about it," Restakis says.

The SFU's Meredith agrees a key issue for the co-op movement is controlling its membership.

"People have to toe the line just like they do in business," she says. "You don't call head office every time something is not to your liking. That's one of the principles in business and the same applies to the co-op movement. A co-op member can't object or complain every time some policy is initiated that they don't like."

One successful venture has been the Wood Co-op gallery on Granville Island. Since opening its doors in the summer of 2000, the 2,400-sq.-ft. gallery has shown a steady increase in sales. Over a three-year period, sales have increased by more than 44 per cent, although the store has recently experienced a drop due to the higher Canadian dollar and slower U.S. tourist sales.

Robert Stoldt, the gallery's executive director and a business consultant, drew up a business plan for the group of artists and secured financing for $30,000.

The plan looked at the experiences of other high-end galleries, including one in Seattle, Wash. Each of the 150 artists in the gallery - all members of the co-op - have to be approved by a jury that judges the items contemplated for sale.

Stoldt says the gallery caters to the contemporary urban Vancouverite and tourists looking for quality home accessories and furnishings. "It has been working beyond my expectations how far we have gone. It feels like a success story," says Stoldt.

Business is also growing at another successful B.C. co-op in nearby Aldergrove, east of Vancouver in the Fraser Valley.

Susan Davidson, director of Glen Valley Organic Farm Co-op and Glorious Garnish Co-op, says her operation produces two specialty salads for hotels and fine dining establishments in Vancouver.

And like other small businesses, her co-op must be on its toes to respond to competitive pressures - or face extinction.

"I think it's critical to have a business perspective if you want to survive," Davidson says. "Our business is being run collectively, but the key to it is to protect the brand and to have a sound marketing and business plan in place."

The co-op operates on 20 acres and is owned by its 40 members. It employs 15 people from April to November.

The co-op's biggest ongoing challenge, she says, is finding "labour, reliable labour, that is ready to make a lifestyle commitment to small scale seasonal organic farming, low wages of $9-$11 an hour and high performance expectations, year after year."

Sales for the two salad products currently total around $250,000 a year.

"You need a minimum of $200,000 in sales to break even," Davidson adds, noting profits run anywhere from $10,000 to $25,000 a year.

"We have what I call a triple definition of profit. We choose to be financially viable, provide the workers with a fair return in wages and honor the environment."

(George Froehlich can be reached at george@businessedge.ca)