One of the most critical decisions an entrepreneur faces is choosing the right business model. In a coop business structure, the company is owned by employees (Murray, 2020). Cooperatives have become particularly popular because they are easier to establish than most other business models, and they offer many advantages to owners. Personally, I believe that this structure is beneficial, and startups and small businesses, in particular, could use it to enter their selected market.
First of all, an essential benefit of a coop business is the reduced financial burden. A single entrepreneur starting their business might face the need to take a loan or seek investors, whereas, in a co-op, funds from all owners can be used to establish and operate the business (LaMarco, 2018). In cases where a group of owners tries to seek a loan, they would typically benefit from more options because of the shared responsibility. Secondly, a coop is run by its owners, which helps to promote performance and productivity as all employees are interested in gaining profits (LaMarco, 2018). In contrast, other companies have to spend significant amounts of money on training and motivating their staff to ensure that they provide the right service and meet company goals. The third advantage of a coop is that members are exempt from income tax until their income reaches a certain point (LaMarco, 2018). This is important to new enterprises because it saves money that could be reinvested into the business.
Overall, cooperative businesses are relatively simple in nature but provide many advantages to members. This business model offers an opportunity for aspiring entrepreneurs to start a business while sharing expenses, thus lowering potential individual losses and costs. Hence, this business model is particularly useful to startups and small businesses.
References
LaMarco, N. (2018). The advantages of a cooperative business. Chron Small Business.
Murray, J. (2020). How a cooperative business works in the 21st century. The Balance Small Business.