Minnesota leads the nation in cooperative business development, with at least 1,016 Minnesota-based co-ops accounting for nearly 42,000 jobs and $1.5 billion in wages. Growing out of their agriculture roots, co-ops have developed into sustainable business models for the state’s entrepreneurs, workers, and consumers. They cross 16 industrial sectors from farming and biofuels to insurance and banking to education and daycare, according to University of Wisconsin figures.
At a time when Minnesota has fallen to 48th in entrepreneurs per capita and is trying to rebound from an economic downturn, we must look for tested business development tools to help start-ups grow.
Midwest farmers started growing the co-op model during the late 1800s to overcome market imperfections, such as lack of access to transportation routes, capital, marketing and equipment. Since then, co-ops helped build wealth, stabilize employment and sustain economic development on the country side. In farm terms, co-ops have matured into a ‘commodity’ that’s ready for harvesting and wide scale use.
An international study shows co-ops have a 64 percent five-year survival rate compared to 36 percent for other types of companies.
Today, both agricultural and non-agricultural groups starting as co-ops have distinct advantages over individuals trying to start up as a traditional business model. A co-op’s power helps achieve better economies of scale and provides wider purchasing power for members. Customers tend to be members, giving the co-op better access to buyer habits and needs.