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Worker Cooperative Business Development Initiative

About the program.

The NYC Department of Small Business Services (SBS), with support from the City and the New York City Council, helps the Worker Cooperative Business Development Initiative (WCBDI) offer innovative ways for New Yorkers to overcome economic and social inequality. Worker cooperatives are businesses that are owned and controlled by their workers (worker-owners). Worker cooperatives give New Yorkers the opportunity to co-own a business, creating sustainable and dignified jobs while developing community wealth. This helps people who lack access to traditional business ownership.

For general information about worker cooperatives or WCBDI, please fill out our interest form .

Get help with one or more of the following:

Transition an existing business to a worker cooperative.

Our network of expert service providers have a proven track record of helping NYC business owners stabilize businesses, complete business sales to employees, and achieve growth. The Owner2Owners hotline provides the expertise to explore employee ownership and its many benefits at no cost to NYC business owners.

Visit Owner2Owners.nyc or call (646) 363-6592.

Starting a Worker Cooperative

Get help with starting and managing a worker cooperative. SBS provide training on the basic skills to run a business, and can help you launch an operational worker cooperative.

Center for Family Life

443 39th Street

Brooklyn, NY 11232

Green Worker Cooperatives

1231 Lafayette Avenue, 2nd Floor

Bronx, NY 10474

Urban Upbound

4-25 Astoria Boulevard

Astoria, NY 11102

Worker's Justice Project

365 Broadway

New York, NY 11211

One-On-One Support Services

If you're already in a worker cooperative, we can help you operate and grow your business. One-on-one support services are available in the following areas:

• Business plan development
• Marketing and market research
• Governance and internal manuals assistance
• Strategic planning
• Translation services
• Bookkeeping
• Financial planning
• Succession planning

Bronx Cooperative Development Initiative

2431 Morris Avenue

Bronx, NY 10468

Business Outreach Center Network

85 S. Oxford Street

Brooklyn, NY 11217

1720 Church Avenue

Brooklyn, NY 11226

Democracy at Work Institute

115 5th Avenue, 6th Floor

New York, NY 10013

The ICA Group

244 5th Avenue, Suite C230

New York, NY 10001

NYC Network of Worker Cooperatives

495 Flatbush Avenue, Suite 2

Brooklyn, NY 11225

(Other services: trade association for worker co-ops)

Worker Cooperative Legal Support

From incorporating your business to creating a patent, we can help your worker cooperative with a variety of legal needs through tailored one-on-one legal consultations.

Community Economic Development Clinic (CUNY Law)

2 Court Square

Long Island City, NY 11101

TakeRoot Justice

123 William Street, 16th Floor

New York, NY 10038

Worker Cooperative Financing Support

We offer specialized financing support for worker cooperatives.

The Working World

116 Nassau Street, Suite 513

(Other services: business creation, business conversion, one-on-one support)

Want To Learn More?

Read about the successes of the WCBDI in our "Working Together" report series .

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What Is A Worker Cooperative?

A business owned and controlled by its workers.

Worker cooperatives are values-driven businesses that put worker and community benefit at the core of their purpose. In contrast to traditional companies, worker members at worker cooperatives participate in the profits, oversight, and often management of the enterprise using democratic practices.

The two central characteristics of worker cooperatives are:

• Worker members own the business and they participate in its financial success on the basis of their labor contribution to the cooperative.
• Worker members have representation on and vote for the board of directors or governing body, adhering to the principle of one worker, one vote.

To be a worker cooperative, the entity must one where:

• Business entity has one or more classes of members
• Workers have a path to ownership
• Earnings and losses are allocated on basis of patronage
• Worker members have controlling ownership interest
• Governing body is elected by worker members on basis of one member, one vote
• Decisions about return on capital investment are made by worker members or governing body

You may download our complete “Worker Cooperative Definition” here .

Watch USWFC Co-op Clinic TA Manager Matt Feinstein describe how worker c0-ops differ from other types of co-ops

The model has proven to be an effective tool for creating and maintaining sustainable, dignified jobs; generating wealth; improving the quality of life of workers; and promoting community and local economic development, particularly for people who lack access to business ownership or sustainable work options.

Using data from our most recent annual census of worker cooperatives , we estimate that there are over 900 democratic workplaces in the United States employing over 10,000 people.

Learn more about worker cooperatives in this video by USFWC member MadWorC:

More about worker ownership

Legal forms The corporate form for cooperatives varies. In states where there are cooperative incorporation statutes, businesses can incorporate as worker cooperatives. In states where there are no such statutes, democratic workplaces can take a variety of forms: S or C corporations, LLCs, etc. Whatever its incorporation status, a worker cooperative must create, in policy and practice, mechanisms for workers to make the decisions that affect the functioning and governance of the business.

Types of businesses Worker-owned business and democratic workplaces exist across the country, with the greatest concentrations in the Northeast, the West Coast and the Upper Midwest. The vast majority of worker cooperatives in the United States are small businesses, with a few notable larger enterprises. Many are concentrated in the retail and service sectors. There are also well-established worker cooperatives in manufacturing and the skilled trades. Traditionally there has been a strong cooperative presence in food production, processing and and sales. In the past ten years, we have also seen the growth of worker cooperatives in the technology sector and home care.

Benefits Cooperatives are the only form of business centered around membership, and member and community benefit is at the core of the cooperative model. Worker cooperative businesses are owned and run by their members, the people who work in them, and they operate for the benefit of these members.

The member benefits are multiple. A cooperative can be a way for people to start and own a small business together when they may lack the means or expertise to do so alone. Worker cooperative members can build assets in their cooperative business by retaining surplus every year in individual capital accounts. In a worker cooperative, workers own their jobs, so they decide how they are treated and how they want to operate the business. Worker-owners also get a lot of practice making decisions, building their skills in a variety of areas, and participating democratically in a process to benefit the larger group. These are the skills and habits of engaged community members, and they don’t stop at the workplace: you will often find worker-owners involved in the community in other ways.

Community benefits are clear too. Successful worker cooperatives tend to create long-term stable jobs, enact sustainable business practices, and develop linkages among different parts of the social economy. Worker-owned businesses have not only a direct stake in the local environment but the power to decide to do business in a way that is sustainable for us all. The worker cooperative movement is increasingly recognized as part of the larger movement for sustainability and a new economy based on people’s needs.

Cooperatives have a long history as a way for working people to create good, dignified jobs that they control, particularly for people who lack access to business ownership or even stable work options.  Organizations undertaking economic development to build wealth in poor communities and communities of color have used worker cooperatives as a powerful vehicle for addressing economic inequality. Worker cooperatives have been shown to provide better working conditions and wages for typically low-wage work, and to increase household wealth for low-income workers. Worker cooperatives can also play an important role in building movements for economic justice and social change. As institutions where real democracy is practiced on a day to day basis, they are a model for the empowerment we will need to create the change we envision. As economic engines, they meet material needs, anchoring capital and jobs in communities.

International Cooperative Alliance Statement on the Cooperative Identity

Definition A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Values Co-operatives are based on the values of self-help , self-responsibility , democracy , equality , equity and solidarity . In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Principles The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle: Voluntary and Open Membership Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Control Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

3rd Principle: Member Economic Participation Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community Co-operatives work for the sustainable development of their communities through policies approved by their members.

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• HUMAN RIGHTS

How To Convert a Business into a Worker-owned Cooperative

Cooperatives represent a growing segment of the economy with an estimated 30,000 enterprises and 100 million members in the United States alone . A great way to bring democracy into the workplace, co-ops can be built from scratch, but they can also be created by converting existing businesses into worker-owned cooperatives. For retiring business owners as well as entrepreneurs, selling a business to employees is a way to strengthen the business while getting a return on investment.

Melissa Hoover, executive director of the Democracy at Work Institute (DAWI), says that co-op conversions are one of the most promising sources of new cooperatives as they already have customers, assets and employees, which makes it less risky than a startup. She also notes that those co-ops created from conversions are among the most passionate members of the US Federation of Worker Cooperatives .

“They’re the most engaged and the most attentive to the cooperative forum, principles and movement building,” she says. “I speculate that’s because… to change something into a cooperative structure, they had to educate themselves about what that meant and connect themselves to movement organizations, models and peers.”

When converting an existing business into a co-op, there are numerous questions that need to be answered. Do the employees want to create a democratic business? Are funds available for a buyout? How will the business be structured? How long will the transition be? Does the selling owner want to stay on? Though it takes time to work out the details, answering these questions is an essential part of the transition.

While every business has unique strengths and challenges, and there is no single way to create a cooperative, there is also no need to reinvent the wheel. Hundreds of worker-owned cooperatives have been created by converting existing businesses by following a series of steps.

How it’s done

Shareable spoke with Joe Rinehart, Cooperative Business Developer at the Democracy at Work Institute to find out how to go from thinking about a conversion to opening the doors of a worker-owned business. He provided the DAWI conversion timeline below which is based on previous versions created by the Ohio Employee Ownership Center .

As Rinehart points out, these steps provide an overview of what a conversion might look like. It’s not a hard-and-fast template. Some of the steps overlap, some may be unnecessary, and the timeline for every business will vary depending on how large the company is, how long the selling owner plans to stay involved, how much training is required and more. Here, he breaks down each stage of the process.

STAGE 1: Deciding to move forward

What it entails: research and reading, worker ownership succession options workshop (for owner and their leadership team), initial owner conversation with employees, Worker Co-op 101 workshop for the employees, owner and workers decide to move forward, select steering committee, contact outside transition support team.

This stage is to get the ball rolling and for the business owner to decide if they’re interested in converting. It’s also about educating everyone involved about the cooperative model, determining if there’s interest in becoming a co-op. According to Rinehart, this is best done as a facilitated conversation with a skilled co-op transition professional. If there is commitment on both sides, the next step is organizing the key players and moving the process forward.

One approach that Rinehart recommends is to start building a participatory workplace where leadership and management are shared as soon as possible. This can be done through practices including open book finances and letting employees have input in redesigning workflow.

“As you create a structure of participation,” says Rinehart, “you’re letting employees know they have a voice. […] It’s a really powerful tool in creating a workplace that can transition.”

STAGE 2: Getting ready: Employee training and business valuation

What it entails: financial training for employees, business and industry training, cooperative trainings for employees, business valuation process, business valuation or owner’s price, determine financing options, review and revise current business plan.

This stage is where investment in the transition occurs. Employees receive training so they can understand the finances of the business, the business is valued and financial options are presented. Rinehart recommends having a professional determine the value then giving employees the opportunity to contest the valuation it if need be. This is critical to clarify the process for the owner and employees, create a structure for moving forward, and give employees an opportunity to debate the valuation so they don’t feel like they’ve been taken advantage of down the line.

STAGE 3: Defining structures

What it entails: document current management plan, draft cooperative by-laws, define post-transition management.

This is where the management plan, for both the transition and post-transition business, is laid out and those in management positions are trained in their duties.

“It’s important to note that [a worker cooperative] is not about making every decision democratic,” says Rinehart. “You want to open up the management process to be, not democratic, but participatory.” He continues, “It’s about deciding how you’re going to make big decisions democratically, and management is one of those big ones.”

He explains that in most conversions the existing management structure is left in place but that the structure becomes about management and not about governance. The important thing is to document the management structure. At this point, everyone should be very clear what the rules are and if they don’t like the rules, they have a voice in changing them.

“The people you’re engaging in participation know how to make the business better,” Rinehart says. “They have knowledge about the industry and the business and they know the impact of their decisions.”

STAGE 4: Finalize the transition

What it entails: transfer business ownership, negotiate final price, seek financing, future members approve final price and financing, structure, complete the transaction, transfer governance and elect new board, transfer management as necessary.

This stage is all about dotting your I’s and crossing your T’s. It’s where you finding the financing if necessary and pull the deal together. You will elect a board and do a first board training.

“It’s about making sure everything is legal, and clearly and carefully done so that you’re able to move on,” says Rinehart. “You close the door on the transition and effectively move forward as a business.”

STAGE 5: Follow through and monitoring

What it entails: ongoing training with current employees

Once the worker co-op has been launched, it’s important to have regular check-ins about the business and to maintain clear and open communication. The structures put in place are not only for current employees but for future employees as well. You want to make sure there are processes in place for training those employees in what it means to be a cooperative and lay out plans for growth. All of this requires ongoing training and monitoring.

“No structure is perfect,” says Rinehart. “You’re designing a human technology for participation and democratic ownership and no technology is perfect the first time out the door.” He adds that you’ll want to be able to take time to evaluate it, refine it and get help from people who are experienced with worker cooperatives. Among those are the DOWI and its associated organization the Democracy at Work Network , other cooperatives, cooperative developers, and members of Cooperation Works .

The big picture

Worker-owned cooperatives, whether created from scratch or converted from existing businesses, are a central part of the sharing movement. As Hoover says, they’re the “original sharing platform.”

For those considering converting to a co-op, Hoover recommends talking with other business owners who have made the conversion to see that it’s possible and that there are huge benefits to doing it. She also encourages business owners to think about what they really wanted to build and where it’s going to go after they’re gone.

Cat Johnson

Cat Johnson is a freelance writer focused on community, the sharing economy, the commons and music. Publications include Utne Reader, GOOD, Yes! Magazine, Shareable, Instant Magazine, the Santa Cruz Weekly and No Depression. She’s also a music lover and player.

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Home » Enterprise » Cooperatives » Six Operational Advantages of Worker Cooperatives

Six Operational Advantages of Worker Cooperatives

I am concerned that the economic advantages of organizing businesses as worker cooperatives are often forgotten, while idealistic goals often become the sole focus and motivation. Given the advantages available, worker cooperatives can be as competitive, if not more so, than any other type of business. What follows is an outline of these economic advantages.

1. Worker cooperatives can create jobs.

At a time such as now, when jobs are hard to find, or exist only as a “take it or leave it” situation for the employee, a preferable alternative may be for people to create their jobs rather than trying to find them. If mutually interested people combine their resources to develop a worker-owned business, or assume ownership of an existing business, the resulting worker cooperative may be the best alternative in that the business does not require a large amount of risk capital and its development depends more on sweat equity, brain power, and intellectual property of its members than it depends on equity.

This is not to imply that the creation of a cooperative automatically solves the employment issues of its members. As proprietors, cooperative members are subject to the same business risks, including the risk of failure, as other businesses. Therefore, cooperative members will have to wear two hats, one as a worker and another as an owner. The failure to do either of these tasks well could be to the detriment of the business. But if people who form a worker cooperative put together a good business plan, execute that plan, and take their ownership duties seriously, it can provide a mechanism for them to take hold of their own economic destiny.

2. Cooperatives can thrive in economic environments that non-worker owned businesses cannot.

There is an economic justification for worker cooperatives to exist even if they do not make a profit so long as they provide an economic benefit to their member-workers in the form of a salary. Hopefully, this is at a living-wage level, or better, for the salaried members. There are long-standing worker cooperatives in the San Francisco Bay Area that have not only provided sustained employment for their members but also provide salary/benefit packages that exceed industry standards. If the cooperative provides its members with a livelihood, it can continue to exist indefinitely even if it never makes a profit. The same could not be said for businesses that are not worker-owned. It does not make any economic sense for non-worker owners (whether alone or in conjunction with others) to be a part of a business that can do no better than break even.

3. Cooperatives can be competitive in an open market.

Businesses operate on a profit margin. In building contracts, for example, this profit margin could be in the 10 to 15% range. In some businesses the margin is much higher (e.g. banking, software) or lower (e.g. bulk sales, retail). Regardless of the appropriate margin in the prevailing business environment, a worker cooperative has the advantage. With all other things being equal, a cooperative can reduce the price of its products and/or services in comparison with its competitors, and/or increase the salary and benefits of its workers in comparison with comparable employees, as long as the expenses incurred remain within the confines of this margin.

4. Cooperative members can self-finance a cooperative with retained earnings allocated to members without incurring a current tax liability.

The IRS Code Subchapter T allows cooperatives to make "non-qualified" patronage distributions, which is in essence is an amount the cooperative retains for a member in an internal capital account. This retained money can be used by the cooperative to finance its capital needs so long as it is ultimately distributes it to the members.

"Non-qualified" distributions are all distributions beyond the time limit for "qualified" distributions, which is nine months after completion of the fiscal year. In this situation, the cooperative pays tax (at the corporate rate) on the amount of the non-qualified distribution and the individual member does not pay personal income tax on this amount in the year of allocation. In the year or years when this amount is redeemed and paid to the member, the member then pays personal income tax but gets the choice whether to file in the year of allocation or distribution, and the cooperative takes a deduction like any other patronage distribution.

 This tax benefit can be best realized when a cooperative has offsetting deductions or carryover losses. In a non-worker-owned business, a partner or shareholder who re-invests allotted earnings into their business will not be able to defer taxes on the money or property contributed during the time the money or property is retained by the business.

5. The cooperative distribution of profits can be more economically relevant compared with profit distribution based upon an owner's equity interest.

 In non-cooperative businesses, economic (and political) rights are determined on the basis of equity holdings regardless of what role an individual may have played in economic activity of the business. Thus, a 60% shareholder will receive 60% of profit distributions at all times he or she possesses this equity share. In situations where there is high capital risk and/or where substantial capital is needed, this system of distribution is justified.

However, in a situation where the growth of a business is more the result of brainpower, sweat equity, and good business execution there may be no apparent justification. If five business owners originally contributed $1,000 for their 20% equity share, why should this original contributed amount still determine an owner's economic rights four years later if the business earnings are much greater, possibly six figures or more? In worker cooperatives, members receive profits in the form of patronage dividends on the basis of what they do instead of what they own. Thus, each year their individual profit allocations are based upon patronage for that year, rather than capital contributions made years before with no bearing on the existing business.

6. Individual members of cooperatives cannot control the business to the detriment of other members.

Business entities, be they partnerships or corporations in their various forms, generally equate political power with equity ownership. Although they can create classes of owners who do not have voting rights, those who do have the right to vote do so on the basis of the amount or percent of their equity ownership. Therefore, a single or minority number of owners who possess more than 50% of the equity interest can not only control the decisions made by an entity but it or they can dissolve the entity without the consent or even notice to the other equity holders. In the same vein, they can also transfer a majority interest to a third party that might even be hostile to the other equity holders, subject to internal agreements limiting these rights such as a first right of refusal. This cannot occur in a worker cooperative, within which all members get one vote and only one vote. The entity cannot be dissolved on the whim of one or a few people, and would in fact require an agreement by the majority of the members.

This post is republished from Richmond Worker Cooperative Revolving Loan Fund, where it first appeared

ABOUT THE AUTHOR

Neil Helfman is an attorney with expertise in tort litigation, employment and construction law. Neil has been working with worker's cooperatives, both as a legal advisor and as a participant,

Neil Helfman is an attorney with expertise in tort litigation, employment and construction law. Neil has been working with worker's cooperatives, both as a legal advisor and as a participant, for over 20 years.

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How a Cooperative Business Works in the 21st Century

Learn about types of co-ops, advantages, problems, and taxation

• What is a Cooperative Business?

Types of Cooperative Businesses

Pros and cons of co-ops, how to start a cooperative business, cooperative businesses and taxes, for more information in your state.

 Mike Harrington/Getty Images

When you think of the word “co-operative,” you might think of a local food co-op, but there are many more types of cooperative businesses operating in the U.S. today. As some business owners and consumers look beyond traditional, capitalist ways of doing business, co-ops may provide one alternative. 

What is a Cooperative Business? 

A cooperative (co-op) is a business or organization owned by and operated for the benefit of its members. Profits or earnings are distributed among its members.The co-op can be a for-profit business or a non-profit organization.The co-op runs similarly to a corporation, because members purchase shares and elect a board of directors and officers. It differs from a corporation because typically each member gets one vote.   Members of a co-op can be individuals, families, businesses, farmers/ranchers, or manufacturers.   

The International Co-operative Alliance and National Cooperative Business Association  define a cooperative as a group of people with a specific need who work together to create a company to meet that need.

The cooperative movement dates back to the mid-19th century, but the concept goes back even further, to craft guilds, farmer organizations, and mutual insurance companies. The 21st-century cooperative movement has taken off with the growing emphasis on equality and concern about people and planet, in addition to profits (these three are sometimes called “the triple bottom line”).  

These are some of the many types of co-ops, formal and informal, in operation today: 

• Mutual insurance companies (most with the word “mutual” in their names) are owned by policyholders, rather than stockholders. 
• Credit unions are not-for-profit organizations that serve their members. 
• Rural electric power co-ops are private, not-for-profit organizations incorporated in 48 states to provide at-cost electric service to customers. 
• Consumer-goods co-ops , like REI Co-op (yes, that’s part of its name). The company, an outdoor outfitter, says that “more than 70 percent of our annual profits are invested back into the outdoor community.” 
• Producer co-ops , like Sunkist, owned by and operated for their member-growers. 
• Cooperative buying clubs, in which a group of households gets together to buy foodstuffs in bulk and divide the orders among the members. 
• Retail co-ops like Ace Hardware, which was formed in 1924. The company is still owned “solely and exclusively by the local Ace retail entrepreneurs.” 
• Community-owned businesses , such as the Nebraska Cooperative Development Center, which has helped communities in small rural towns start cooperative grocery stores. 
• Housing cooperatives are formed when people join to own or control housing and/or related community facilities. These co-ops are different from condo associations, in which each unit is privately owned and there is a common area owned jointly. 
• Youth co-ops are businesses incorporated and run by young people to give them experience with one type of real-life work model. They can be set up in a school or community center or another organization that supports youth. 
• Worker cooperatives are formed and owned by employee groups that generate profits for the company and its workers.

As demonstrated by the descriptions of several types of cooperative businesses above, organizing a group with a common business purpose in this way can pay off. Positives and negatives can include:

Lower costs by buying in bulk

Common protection from loss (mutual insurance companies)

More price power for sellers when joining together (like Sunkist)

Equal say in the business for members

Shared values. Many co-ops (like REI) value more than just making a profit

Tax advantages for co-ops organized as non-profit businesses

Less opportunity for outside investors because they can’t gain control

Lack of interest by members over time

A co-op can be as simple or complex as you want. You can decide to start a co-op like a food buying club just by getting together with other families to order and distribute food. As you grow beyond this small group, you should form a cooperative business in your state.   

Business Type. You’ll need to decide on a business type (corporation, partnership, or LLC) and register your business with a state .  

Some states have regulations specifically for cooperatives ( New Mexico,  for example.) In some states, you must be formed under co-op status to use the word “cooperative” in your name. 

You’ll need to do all the other tasks involved in forming a corporation , partnership,  or LLC, including electing a board of directors to oversee the operations. 

If you want to be non-profit (exempt from income tax), you first form the business, then apply for tax-exempt status. See IRS Publication 557,  “Tax-Exempt Status for Your Organization,” for details. 

The overall philosophy of cooperatives is that they are intended to operate at cost, so there’s no “profit,” and the patrons (those doing business with the co-op) receive net earnings on an equitable basis.   

The IRS allows several different federal income tax options for cooperative businesses. One variation is exempt from tax and another is subject to tax. 

The federal tax agency considers cooperatives exempt from federal income taxes if they meet certain qualifications. To qualify for and maintain exemption (Internal Revenue Code 501(c)(12)), the cooperative must:  

• Be organized and operated as a cooperative
• Conduct business as set by the tax code and IRS regulations

It must receive 85% or more of its income each year from its members and use the income solely to meet the cooperatives’ losses and expenses. 

Taxes for cooperative businesses are complicated and getting non-profit status from the IRS is not for amateurs. Get help from a tax attorney if you want to form a cooperative business. 

A Subchapter T cooperative is subject to tax. This co-op type may conduct any kind of business. Members or patrons (those doing business with the co-op) can be individuals or organizations. The co-op returns margins (net earnings) each year to users as patronage refunds, based on the amount of business each user does with the co-op. The tax is paid by the cooperative on a temporary basis; it receives a deduction when the money is passed on to the patrons.  

The National Agricultural Law Center has a state-by-state list of Business Organization Forms and Filing Instructions that could be helpful. Also, the National Cooperative Business Association has a spreadsheet (Excel download) showing the cooperative business regulations in each state.  

Small Business Administration. " Choose a Business Structure ." Accessed March 24, 2020.

Cornell Legal Information Institute. " Cooperative ." Accessed March 24, 2020.

Cooperative Directory Service. " Coop Directory Service ." Accessed March 24, 2020.

U.S. Department of Agriculture. " Income Tax Treatment of Cooperatives ." Page 2. Accessed March 24, 2020.

IRS. " General Survey of IRS 501(c)(12 Cooperatives and Examination of Current Issues ." Page 177. Accessed March 24, 2020.

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How to Get a Business Cooperative Started

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A business cooperative is an enticing alternative to the standard capitalism model, offering a democratic management style, lower risk of debt, and other social and economic benefits. Cooperatives also give small-business owners more control over their organization and come with certain tax advantages.

In this article, we’ll define a cooperative business, offer examples of worker cooperatives, and discuss how to get a business cooperative started.

• What is a business cooperative?

Business cooperative examples

• Steps to starting a business cooperative

The takeaway

Business cooperative faq.

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What is a cooperative business?

A business cooperative (co-op), is an organization or enterprise owned by its members. While a traditional business serves the interests of investors, founders, or board members, a co-op services the interest of its customers or workers. Most co-ops are established to fulfill an economic need, such as providing products, services, or bargaining power that is otherwise unavailable to a certain group of people.

Business cooperatives come in many forms, such as housing co-ops, food co-ops, credit unions, and agricultural co-ops. However, many large corporations are also cooperatives, including Ace Hardware, REI, and Land O’Lakes dairy.

Here are some other well-known cooperatives in the US.

• Navy Federal Credit Union: The largest credit union in the US, serving military servicemen and government employees
• Alliant Credit Union: A credit union based in Chicago, Illinois, originally founded by employees of United Airlines
• Dairy Farmers of America: A marketing cooperative owned and operated by dairy farmers across the US
• Associated Wholesale Grocers: The nation’s largest food co-op, which supplies independent grocery stores across the country
• People’s Food Co-op: A Portland, Oregon-based food co-op with a focus on sustainability
• Berkeley Student Cooperative: A housing co-op for students of UC Berkeley

How to start a business cooperative

Since co-op founders usually organize cooperatives based on a specific need or problem, the first step in starting one is to identify that need. Once this is done, the group should take the following actions to officially establish the co-op:

1. Establish a steering committee.

A steering committee is a group of people that represents the members of the organization. This committee should create a timeline for coordinating the logistics of the co-op. They should also establish the co-op’s values and mission, as well as gauge the overall level of interest in the co-op.

2. Conduct a feasibility study.

Once the steering committee is established, the group should conduct a study to consider all possible challenges and obstacles the co-op might face. This study should look closely at opportunities for financing, operating costs, and other factors that influence the market.

3. Create articles of incorporation.

Every cooperative must have articles of incorporation and bylaws that govern the organization. These bylaws should be made by a legal counsel and can be changed and enhanced over time.

4. Draft a business plan.

Like a traditional business, a co-op should have a detailed business plan that guides the company as it grows. The plan should include a market analysis, a marketing plan, product research, and a description of the co-ops goals and objectives.

5. Get financing.

Most co-ops need cash flow for day-to-day operations. This cash often comes from member investments, but some co-ops use a business loan to finance their organization in the early stages.

6. Begin operations

At this point, the co-op can hire a manager and employees, secure a facility, and open its doors. It’s important for members to remain committed to and aligned with the goals of the organization to ensure long-term success.

A worker cooperative offers a number of benefits to small-business owners, including a democratic management style, less debt risk, and member dividends. To set up a business cooperative, a setting committee must conduct a feasibility study, establish articles of incorporation, create a business plan, and secure financing.

Would you like to learn more about starting a business cooperative? Check out Business.org for How to Start a Small Business: Must-Have Checklist to Spark Success .

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Some cooperatives are not designed to make a profit and instead operate at cost. If a cooperative does make a profit, the members who purchase goods or services generate that money. Those profits are typically returned to the members as a refund or put back into the organization.

Safety stock is a term used to describe the excess inventory business owners choose to keep in hand in the event of an increase in demand or supplier delay.

Here are the steps to starting a worker cooperative:

• Establish a steering committee.
• Conduct a feasibility study.
• Create articles of incorporation.
• Draft a business plan.
• Get financing.
• Begin operations.

A cooperative (co-op) is a type of business organization that exists to benefit its members rather than outside investors. The co-op is owned and run by the members, and any profits are divided among those members. Most cooperatives are organized to reduce costs, fulfill an unmet need, improve the quality of a product or service, or improve bargaining power.

What are some cooperative business examples?

There are many types of cooperative business organizations, including mutual insurance groups, credit unions, electrical power co-ops, housing co-ops, and retail co-ops, such as Ace Hardware or REI.

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

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Cooperative Business Planning

This resource includes several templates for cooperative business plans from actual housing cooperatives in North America. Other references provided are a blueprint for the development process, of which the business plan is a part, and a cooperative business plan presentation given at the 2009 NASCO Institute.

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ESOP vs. Cooperative: Why Your Employee Ownership Choice Matters

Business owners planning their succession and leadership transition are taking a closer look at employee ownership models like employee stock ownership plans (ESOPs). But ESOPs aren’t the only employee ownership structure to consider.

ESOP-owned companies and worker cooperatives both offer important potential benefits to employees and business entities. But what should a company owner consider and understand before choosing between the two?

For those keen on democratic worker control, a worker co-op may be the right choice. On the other hand, the significant tax benefits of an ESOP can create a cash advantage that can help the company thrive through the ownership transition and beyond.

Plus, an ESOP’s flexibility may allow for plan governance rules that empower employees with similar rights to create a democratic structure — if that kind of worker control over the business is desired. So it’s important to think about why you’re considering employee ownership, and what might be within reach, before assuming it’s a one-or-the-other choice.

Let’s take a closer look at some of the similarities and differences between worker cooperatives and ESOPs, to get a better picture of the possibilities.

ESOP vs. Co-op: Key Differences

Every ESOP is essentially unique, and the same could be said for worker cooperatives. The most important difference between an ESOP and a co-op is in their definitions: 

An ESOP is a federally-regulated employee benefit plan that gives ownership interest to workers by allocating shares from the ESOP trust.

A worker cooperative is a member-owned business entity in which worker-owners have a controlling interest, and who elect the governing body on a one-member-one-vote basis.

Here are a few other significant points of comparison between worker cooperatives and ESOPs: 

1. Meaning of “Ownership”

2. voting rights.

It’s important to understand that democratic principles don’t always mean every single decision goes to a vote—even in a cooperative. Rather, it’s about shared governance and mutual agreement, and the accountability of management and leadership to the stakeholders. For this reason, both ownership models perform better with in-depth, consistent communication.

3. Employee Eligibility

While there are ESOPs with fewer , most have at least 15 to 20 employees, and generally there needs to be enough tax benefit to offset administrative costs. Cooperatives may be a more feasible option for the smallest of businesses.

4. Payment of Dividends to Employee-Owners

Patronage is described in a co-op’s governing documents, and may be measured in hours worked, wages earned, number of jobs created, or any other measure of value of a member’s labor.

6. Financing

In both cases, lender financing requires valuation by a professional with industry expertise. It can be helpful to work with a lender that’s also experienced in financing employee-owned business conversions, but this is certainly not a requirement.

What If You Want to Integrate Aspects of Both?

Both of these employee ownership models have a lot to offer in terms of transforming the business landscape, and it’s important to take time to reflect on the values driving you to consider who will own your business after you do. When selling to an ESOP or a worker co-op, the seller can exercise considerable control over his or her business exit and choose to stay on as an employee-owner. That means both options can enable a smooth transition.

But what if the ESOP option’s considerable tax advantages and increased cash flow would make a major difference in the ongoing growth and success of the business post-transition? 

In that case, remember, an ESOP offers considerable flexibility in plan design. Your first step should be to consult with an expert to explore the ways an ESOP can help you achieve the professional legacy you envision. Not 100% confident that your business is a good fit for an ESOP? It’s easier to find out than you might think. Start with our quick and easy quiz, Is an ESOP Right for You? Just click below to get started.

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The co-operative model business plan

This appendix provides a model business plan outline. Make the plan your own. Your cooperative is unique in many ways so you don’t want the business plan to look just like everyone else’s; you want it to be an expression of your co-operative’s unique structure, products, plans, principles, values, environment and people.

The business plan itself does not need to have all the sections listed in the Table of Contents below, but you should put some effort into every section listed in it to have the co-operative well prepared before it is open for business.

Following the title page, the business plan should, at a minimum, have an executive summary, co-operative overview, market analysis, and plans for marketing, operations, production and finances.

Executive summary 

Write the executive summary after you have finished the rest of the business plan. It’s an overview of the business plan, highlighting the main points and putting them into context. Consider organising the executive summary in the same order as the business plan.

The executive summary is placed at the start of the business plan to entice the reader to read the entire business plan, making it one of the most important sections.

It is not new information; it is a summary of information which is discussed in more depth throughout the business plan.

The executive summary should be able to stand on its own, and succinctly explain in one or two pages the distinctive characteristics of the co-operative and its products and why it will be successful.

It may include:

• the reason(s) the business plan has been written
• an overview of the co-operative and its market opportunities
• a description of the products or services
• a summary of its expected financial performance.

Complete it with conclusions and recommendations and a summary of how you’ve arrived at your conclusions.

Another way of looking at what the executive summary says is: What is the problem? What is the solution? What will be the outcomes?

Introduction 

This section provides background information about the co-operative and could very briefly describe the co-operative type, when it was formed, who formed it and why, its location, mission, vision, values and principles, objectives and strategy to achieve them, industry, products and services, target market, development stage and achievements to date, summary of members and management, and capital raised to date.

The mission statement should say what you do, how you do it, and why you do it.

The vision statement should be somewhat loftier – describing what you want the co-operative to be in the long-term; it should be a “planned wish”.

The objectives state what the co-operative wants to achieve, usually within a certain timeframe, and are guided by the mission and vision. Objectives are business, social and financial objectives. They should be measurable, and there should be both short-term and long-term goals.

Values are statements about why the co-operative is in business, and who it serves. Values consider the social and environmental factors which the co-operative will be mindful of in achieving its objectives.

The introduction may also explain why the business plan is being written, and for whom. If it is written to support an application for finance include the name of the bank or other financier, the amount of funding sought, the term of the loan, the use of the loan, how it will be repaid, and the security the co-operative will provide.

Make it brief; one to two pages should do.

The co-operative 

Co-operative structure

Outline the co-operative’s structure. Remember that many people do not understand the democratic and social principles of co-operatives, so briefly explain how it works, its rules, and how it will support your business and social objectives.

Describe the location, size and capacity of premises and any warehouse facilities. If the premises are leased state the cost of rent and length of the lease; if they have been purchased, state the value of the property. Explain how long the co-operative has been at the premises, if there is a strategic advantage in its location and, if any renovations or extensions are required, what they will cost.

Registrations and licences

List the registrations and licences that the co-operative has. If others are needed, explain what they are and when they will obtained.

Describe the insurance that the co-operative has and will be getting. It could include cover for premises, contents, workers’ compensation, liability, professional indemnity, business interruption, and motor vehicles.

Plant and equipment

Itemise the plant and equipment that the co-operative has and needs. If the business plan supports an application for funds, explain the importance of acquiring the equipment and provide details of quotes for their supply and installation. Consider listing the equipment in two tables: the first table showing the equipment already acquired and its cost and written down value; the second table listing equipment to be acquired, its value and when it is planned to be purchased or leased.

Products and services

In simple terms, describe the features of the products and services the co-operative currently provides, and those to be developed in the future. You may like to include photographs. Explain how they are different to others available in the marketplace, and why customers will buy products or services from your co-operative instead of from a competitor.

Describe the key components or raw materials used in making products, where they come from, and whether there are any restrictions on supply or agreements with suppliers. If there are likely to be price fluctuations, you might explain how they will be dealt with. You may wish to explain if there is a backup supplier available.

If it’s a new product under development, explain the progress made in research, product design and development, what tests are required and have been done, and any regulations applicable or licences or approvals that are needed. List any intellectual property protection sought to avoid duplication by competitors. Provide a timetable.

If there has been product testing in the marketplace, explain the results. Describe plans to upgrade the product or service or increase the range on offer. Describe quality assurance controls to be instigated.

If the co-operative provides a service, explain what it is, why it is needed, and how it is or will be delivered, monitored and improved.

If you have a product inventory, list the items in a table, or include an inventory list in the appendices.

You may wish to include here how you are going to minimise shrinkage of inventory due to theft, damage, loss or accounting errors.

Current performance

If the co-operative has already been trading, include a short summary of the co-operative’s turnover, gross profit and net profit for the current year and last year. More detailed information will be put into the financial section of the business plan. If the co-operative hasn’t begun trading yet, use the projected financial figures.

Members and directors

If the business plan is being written to assist you to ask for finance, use this section to show that the people who own and run the co-operative are competent and qualified. Give an overview of the number of members, active membership provisions, who the directors are, and the offices they hold.

Include a summary of their skills, qualifications, experience and industry knowledge. Consider including résumés in the appendices.

Key personnel

If you plan to engage employees or already have staff, list the positions, names (if already employed) and skills of employees, and whether their employment is full-time, part-time or casual. Résumés for managerial positions could be included in the appendices. If your cooperative is fairly large, draw an organisational chart which shows who reports to whom, and the positions they hold, and include it in the appendices.

Co-operative advisors

Include the business names and addresses of professional advisers who have helped to establish and grow the co-operative. These might be bankers, solicitors, financial advisors or planners, insurance agents, accountants, chambers of commerce, another co-operative or a co-operative peak body. This section shows that your co-operative is supported by a professional  team.

Risk management

List the risks, in order of likelihood that they could occur, that the co-operative faces. State the impact the risk could have, how likely it is to occur, and what action you will take to prevent or minimise the risk to the co-operative. Key risks may include property damage, theft, electrical outages, pollution, legal liability, injury, loss of data, shifts in the economy, loss of customers, loss of suppliers, security, theft of copyright or inability to raise capital.

Operational plan

A new co-operative should explain how the co-operative will be run: the daily routines, people and functions that will make the co-operative run smoothly and successfully. Keep in mind the democratic nature of your co-operative and its social purpose; make it the focus of your actions. Directors and managers should use the operational plan to lead and inspire members and staff.

Break your operational plan down into actionable steps so it will easier to implement. Identify what each task is, who will do it, when it will be done by, and how you’ll know it has been done. Attention to detail will make the co-operative’s operations run more efficiently.

The operational plan might include ways in which you intend to devise and implement operating, accounting and management systems required for the first year of activities. Plan for staff selection and recruitment, duties and salary policies, performance monitoring, training, health and safety policies, technologies, record-keeping, banking, taxation, accounts payable and receivable, meeting legal obligations, finding suitable premises and office equipment, use of professionals, service to customers, orders and delivery management, promoting innovation, further research and development, meeting schedules, developing a co-operative culture, appropriate management style, working with members and directors, conflict resolution, compliance with regulations and inspections, and alliances with other co-operatives.

Existing co-operatives will need to consider many of the same issues, but have the advantage of having procedures already in place. They should develop an operational plan to improve the day-to-day operations of the co-operative, reduce overheads, plan for growth, alleviate risk and increase efficiency.

Production plan 

The production plan will describe how the co-operative will manufacture, procure products or provide services, and provide the final product or service to customers.

It will describe:

• the complexity of the manufacturing
• the equipment and tools required
• the cost of raw materials and labour per unit
• the cost to produce a product or deliver a service
• the number of hours of production daily or weekly
• the number of units to be produced or the number of services to be delivered
• average selling price
• managing inventory levels
• forecast number of days stock is to be held
• cost control
• manufacturing staff requirements
• source and delivery partners and contract terms
• the time taken to produce the required stock levels
• environmental plans
• disposal of waste.

Quality assurance is crucial, whether the co-operative is providing a product or service. The co-operative relies on the loyalty of members and/or customers for repeat orders, so it needs to provide value for money and consistently high quality products or services. A strong quality assurance system will consider employee motivation and skills, standards and testing, feedback from customers, and minimising waste and product returns.

The market 

This is an important section of the business plan, as it demonstrates that you have done your homework and it is likely that your product or service will be accepted by customers. There’s not much point in having a great product if you don’t have a market.

Much research is involved: you’ll need to understand who your customers will be, what will make them spend their money on your products or services, who your competitors are, what environmental factors could affect you, and how you are going to sell and promote your product or service. There are many places to go for information – try the Australian Bureau of Statistics, government departments, councils, Regional Development Australia, trade and professional associations, chambers of commerce and consumer organisations.

Find which ANZSIC code is used for your business. ANZSIC is used by the government to produce and analyse industry statistics. ANZSIC codes for all industries are found at www.abs.gov.au .

An industry sector contains a range of other businesses which supply similar services or products. Provide an overview of the industry sector the co-operative is in, such as the size, growth, key clients and markets, the largest providers, and demand and supply trends that affect the industry now, or may in the future. Describe any other relevant factors that drive the industry, such as innovation, regulations, seasons, financial and technical issues, distribution and supply and whether the industry is new or mature.

Provide a summary of where the co-operative is positioned within that industry, and its vulnerability to competition and trends.

The environment

Describe important trends and issues that could affect your co-operative’s operations and identify how you plan to deal with them.

Issues may include changes of government, international relations and trade, employment, environment and competition regulations, taxation legislation, new policies and laws, consumer protection, and industrial relations.

Issues may include interest rates, government spending, consumer confidence, unemployment, exchange rates, inflation, national and state economic growth, global economic outlook, materials availability, import substitution and skills shortages.

Issues may include demographics, education, standards of living, multiculturalism, housing availability, fashion, health awareness and income distribution.

Environmental

Issues may include environmental awareness, waste, pollution, energy, climate change and water.

Technological

Issues may include efficiencies, obsolescence, NBN, costs, savings, research, innovation and social networks.

Market research

It’s crucial to understand the marketplace and your customers, whether they are likely to buy the co-operative’s products or services, and possible ways to motivate them. There are two types of research you can do that will help with this: primary research, done by observing competitors, meeting with potential customers, or by survey; and secondary research, which is gathered from existing data.

What you will research will depend on what your products and services are, who your customers are, where your market is, and the level of competition in the marketplace.

Your market research might include:

• customer profiles and characteristics – age groups, gender, occupation, income, location, buying habits
• customer preferences, needs and expectations
• target markets
• the customer fit, and demand for products and services
• your fit, barriers to entry and influence on the market
• product specifications, acceptance and new opportunities
• product pricing and sales forecasts
• market size (units and value)
• market growth and trends
• market segmentation and definition
• competitor analysis
• advertising and promotional opportunities
• seasonal variations
• methods of distribution.

Describe the research you have done, and what it has revealed.

Competitors

Do not underestimate your competition. You need to understand and describe who your competitors are and the effects they will have on the co-operative’s business. Provide details of their market share, resources, products and target market, strategies, strengths and weaknesses.

Explain where the co-operative fits within the industry, what level of market share you expect, any barriers to entry and how you will address them.

Also describe how the competitors are likely to react at your co-operative’s entry into the market and the co-operative’s response strategy.

Competitive advantage

Describe what is different about your products or services compared to those of competitors. Explain why customers are likely to buy enough of your products or services to make the co-operative sustainable.

• Do you have a different target market?
• Is there an unmet need in the target market you can fulfil?
• Do you offer something different or new?
• Does your product or service have superior quality or features?
• Will the co-operative advantage work for you?
• If your product or service is unique, describe difficulties competitors will have in copying it, giving a lead time from product launch to when a competitor can duplicate your product.

List the co-operative’s internal strengths and weaknesses.

Then list the external factors that could affect the co-operative’s activities – the opportunities (e.g. market trends) and threats (e.g. competitors, economic uncertainty).

Describe how you can capitalise on the strengths and opportunities, and reduce the effect of weaknesses and threats.

Target markets

Describe the target markets for your product or service. Who are your customers? If you already know who they are, list the major clients if they agree to this information being made available to external parties. If you don’t have major clients, or there are potentially many of them, you should define the markets you will be selling to.

How have you identified your target markets? What are the characteristics of the target markets? Are your customers a certain age or gender, do they live in a particular location, have a certain type of job, ethnicity or income level? Are they members of the co-operative? What are their needs and preferences? How big is your target market? How often will they buy from you? Why and how will they buy your product or service? Are they end-users?

Consider if there are different segments to your target market. For example, would both students and professionals buy your products? Each segment may have different needs, and may be willing to pay different prices. If you understand the needs of each segment, you can adapt your marketing mix to provide what each segment wants.

Product pricing and terms

In determining the prices of your products or services, consider the costs to produce, or to deliver services, your customers’ sensitivity to the price and to price changes, and what the price reveals about the product’s value or quality. Will you offer quantity discounts, or discounts for repeat sales? Will co-operative members receive a discount or rebate?

Describe the expected payment terms for customers, e.g. direct customers pay cash while distributors and members pay within 30 days from invoice date.

Product sales, margins and distribution

If your co-operative is new, estimate the number of products or services to be sold in the first year, and consider using a table to show your estimates. If the co-operative is already established, use both past and projected performance levels. You may wish to break the table down into weeks or months. The table can form the basis of sales volume records and pricing over time, and identify changes to help you to plan future sales targets and purchases of raw materials.

Describe how your products will be distributed – whether through direct sales, online marketing, direct mail, agents, wholesalers, representatives, retailers or consignments. Describe commissions or other fees involved.

Estimate the cost of other expenses such as shipping, warranties, contracts and liabilities.

Strategic alliances

List strategic partnerships the co-operative has, or plans to form, with other co-operatives or businesses.

These may be to work together in major ventures, or on market access, supplies or other resources. Provide information about the arrangements.

List key suppliers, and describe their history and reliability, location, what and how much they can supply, credit policy and delivery details, and the cost and availability of materials.

Marketing plan 

Explain your marketing objectives – what you aim to achieve and what you will do to achieve them. Ensure they can be measured and evaluated. An example might be “to obtain 20% of market share by the end of the first year”, or “to ensure 50% of our target market recognise our brand, and 10% buy our products”. Then determine what marketing activities will help you achieve your aim.

Determine your marketing strategies and activities for each month of the first year to create awareness and sales. This is your marketing mix, and relates to product, place, price, promotion, people and process.

Product strategy : consider the products’ qualities, consistency, features, adaptability, packaging and design, how the customers will perceive the products’ features, and how you will market them.

Place strategy : consider distribution channels, location of retail outlets, the geographic area your products will be available in.

Price strategy : consider the selling price to various customers and markets, including discounts for quantity and early payment.

Promotion strategy : consider what advertising, selling, sales promotion, trade shows, website, media and public relations activities you will undertake to differentiate your product and make consumers aware of your product or service.

People strategy : consider who will sell the product and delivery it. People may include staff, strategic partners and agents.

Process strategy : this is the strategy where you plan, target, cost, develop, implement, document and review the systems to attain the other aspects of the marketing plan. You’ll plan to have the right product, in the right place, at the right price, in the right quantity, at the right time for the right customers.

The finances 

Often the last part in the business plan, the finance section is important as it demonstrates the likely financial viability of the co-operative, and is vital information for anyone considering investing in the co-operative.

It shows what financial resources are needed to set up and operate the co-operative, forecasts of the co-operative’s performance based on expected sales levels, and it details the timing and the amount of investment needed from external sources.

Commencement capital – new co-operatives

List the amount of capital that has been raised and will be raised from members, and funding confirmed from other sources.

List the costs to start the co-operative (below) in a table, and show the month when the costs are expected to be paid.

• Set up the co-operative: these costs might include accounting and legal fees, registration of the co-operative and domain name, website, insurances and licences.
• Set up the premises: these costs might include a bond and advance rent, fit-out, electricity connection, telecommunications connections and stationery.
• Purchase plant and equipment: these costs might include machinery, tools, office furniture, vehicles, telecommunications, computers and software.
• Start of operations: these costs might include advertising, raw materials and supplies, wages, interest – and working capital to tide the co-operative over until it trades sustainably.

Subtract the set-up costs from the confirmed capital raised; the balance is the amount of borrowings you will require.

Financial objectives

List the co-operative’s financial objectives and how long you expect to take to achieve them. These may be profit targets, investment levels, returns to members and debt repayment.

Assumptions

Explain the key assumptions made in developing your financial forecasts:

• sales and purchases forecasts
• the time it will take to collect from debtors
• the time it will take to pay creditors
• interest rates
• time between manufacture and sale
• timing of member contributions
• timing of external capital injections
• increasing membership.

If the co-operative has already been trading, describe its financial history, including equity, debt and profit levels.

Include at least four key financial ratios:

• Debt equity ratio = total liabilities/members’ equity
• Return on investment = % of interest over total loans received, and % dividend over members’ capital injected
• Break-even point = the sales volume level where revenues and expenses are equal and provide no profit or loss. This will change each year with changes in costs, income, and interest levels.
• Working capital = current assets – current liabilities

Monthly cash flow forecasts

The cash flow forecast demonstrates how and when cash comes into and goes out of the co-operative. Hopefully it also shows that income from sales will pay for bank loan repayments and other expenses. It will show you when you need an injection of cash to cover monthly bills, and when you need to conserve cash to pay for upcoming bills.

For the first year of trading, present monthly cash flow forecasts. After the first year, show yearly forecasts for at least two years.

Monthly income and expenditure forecasts

Also called profit and loss forecasts, and forecasts of financial performance, income and expenditure forecasts show the co-operative’s projected income less expenditure, resulting in a profit (or loss) over a specific period of time. For the first year of trading, provide monthly or quarterly forecasts, and annually for the following two years.

Just a few quick tips for the financially challenged – income is usually from sales, and expenditure is usually the costs to run the co-operative and interest payments. Loans (liabilities), purchased equipment and inventory (assets), capital injections from members (equity) are all items for the balance sheet.

When you receive an invoice it is an expense, even if you haven’t paid it yet; so it is shown in the month the expense was incurred. Show all items as GST exclusive (i.e. without GST).

Balance sheet forecasts

The balance sheet, also known as the statement of financial position, shows the co-operative’s net worth at a particular point in time – usually the last day of the financial year. Assets are usually objects and cash the business owns, liabilities are usually debts owed, and equity is the capital contribution and accrued profits. Assets minus liabilities equals equity.

Provide balance sheet forecasts for three years.

Financial plan

Describe your plans for the co-operative’s financial viability. What is the total investment required for start-up? What are your short and medium-term investment plans? Where will funds come from? Have they been confirmed? How much comes from each source, and what conditions do funds come under (e.g. interest rates, repayment terms)? What security is offered?

When is the co-operative expected to make a profit? What level of sales is required to make a profit? When will members see a return? How much are profits expected to grow each year? How will costs be kept down? If non-distributing, will you retain surpluses, and where do you plan to donate excess surpluses?

Do you have an exit strategy?

A note on financial management

This note on financial management is not meant for inclusion in the business plan, but nevertheless is very important. (A summary of the financial management systems used could be included in the financial plan.)

Members (and investors) need to know how the co-operative is performing and need to receive regular accurate reports. Systems must correctly identify, measure and communicate financial information.

You need to understand and abide by accounting principles.

Complete, accurate, and up-to-date financial records must be kept. These may be handwritten, or on computer spreadsheets, but we recommend that unless the co-operative is very small, you should use financial software. Such software doesn’t replace an accountant, but usually knows what to debit and credit, and has a useful help function.

Develop strong systems for handling cash. Provide numbered and dated receipts for money received. Provide numbered and dated invoices (tax invoices if the co-operative is GST registered) for purchases and to others who owe you money.

Every month, reconcile your expenses paid and income received with the bank statement. Produce a balance sheet and profit and loss statement to help you keep an eye on finances and to allow you to plan and control the co-operative. Watch your creditor and debtor levels; ensure you collect money owing and pay expenses when due.

The strategic plan

A strategic plan is usually a long-term plan for the next three to five years. It explains the goals and objectives to be reached, and the path to achieve them. It’s a bit like a GPS for a very long journey, if you zoom out and ignore the minor roads.

Focus on a small number of key priorities. Too many priorities will mean you lose focus on the major objectives.

Make the priorities easy to translate into action plans, and have clear timelines to achieve outcomes.

Information that might distract from the business plan’s flow should be included as appendices. Provide a summary of the information within the business plan, and more detail in the appendices. It’s also a good place to include information that is not part of the business plan. Start a new page for each appendix.

Appendices might include the following:

• Disclosure statement.
• Co-operative rules.
• Past three years’ financial statements.
• Directors’ and key staff members’ résumés.
• Pictures of products, premises or location.
• Forecasts of purchases and payments to creditors.
• Forecasts of sales and debtor collections.
• Letters of support.
• Promotional materials.

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This business plan outlines the range of high-profile and complex legal work that will form GLD's delivery priorities for the coming year.

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Scaling back Labour’s workers’ rights plan would be disastrous, warns TUC president

Reports say Sir Keir Starmer may risk union support and bow to pressure from business to amend new deal

Watering down Labour’s plan to strengthen workers’ rights would be disastrous for the party’s relations with the unions and could cost votes at the general election, the president of the Trades Union Congress has warned.

Amid reports that Sir Keir Starmer may bow to pressure from business and amend important parts of his “ new deal for workers ”, Matt Wrack said the Labour leader risked causing “significant anger” among union members.

Wrack, the general secretary of the 34,000-strong Fire Brigades Union, said: “The debate on workers’ rights is a key issue for all unions as we approach a general election. As a policy, it is very popular with our members but it is popular with the voters as well.

“We know Labour will come under pressure from business interests but there should be no backtracking and no weakening. Labour needs to deliver this as one of its top priorities. If there is a rolling back there will be significant anger.”

The proposed new deal for workers includes curbs on the use of zero-hours contracts , the extension of collective bargaining, and protection against unfair dismissal from day one of employment.

Wrack made it clear that unions were watching closely to see whether intensive lobbying from business had paid off after it emerged last week that Labour’s plans do not involve a complete ban on zero-hours contracts and that the extension of sectoral collective bargaining will initially be confined to social care.

“We have picked up the press talk about possible rolling back. The message we have had back from the leader’s office is that there is nothing to it,” Wrack said.

“I don’t want to get in a slanging match with Keir Starmer until I see what he is proposing,” Wrack added, “but it would be inept in our view to backtrack on a very popular policy that will win votes and appeal to working-class voters who would traditionally be expected to vote Labour but who have drifted off.

“It is a policy that is necessary in terms of maintaining unity in the Labour party. The leadership shouldn’t just rely on the idea that Labour is the only game in town. People need to have something to vote for other than Keir Starmer who is not Rishi Sunak.”

Wrack said Labour also needed to deliver on its pledge to repeal the 2016 Trade Union Act, which placed curbs on how unions could take industrial action, and minimum service levels, under which unions are forced to maintain public services during strikes.

“I would struggle to see how Keir Starmer could backtrack on these two commitments because he has been so clear about them, but I would never rule anything out with Labour politicians.”

Despite Labour’s strong showing in last week’s elections, Wrack said he detected little enthusiasm for the party because “people are not sure what the policy agenda is other than continuity”.

Wrack said many unions had their annual conferences coming up with the TUC holding its annual congress in September. “If the message is that Labour is rolling back on workers’ rights, then the leadership can expect a hostile reception.

“Rolling back on this would be pretty disastrous for relations with the unions.”

“It is the one thing unions have to sell to Labour voters. You look around and I am not sure what other reason there is to vote Labour.”

“If organised labour comes out strengthened from the early months of a Labour government that alters the political balance after 40 years of attacks on unions. The plans for workers’ rights don’t go far enough but they do start to alter the balance of power in the workplace.”

A Labour spokesperson said: “The new deal will be a core part of Labour’s offer and we will be campaigning on this ahead of the general election. “Labour’s new deal for working people was agreed at the party’s national policy forum last summer building upon our green paper. Our commitments to bring forward legislation to parliament within 100 days to deliver the new deal and to consult widely on implementation have not changed.”

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Trump advisers explore vast new legal powers for global trade war

Plan that would impose tariffs on all imports would probably prove extremely disruptive to the global economy.

Donald Trump’s economic advisers are eyeing aggressive new legal justifications to impose tariffs on all imports, seeking to buttress a second-term plan that would reshape the U.S. economy, according to public and private comments by top aides.

On the campaign trail, Trump has repeatedly promised to enact a “ring” around the U.S. economy by enacting a tariff of at least 10 percent on goods imported from any other nation. Trump’s plan would target more than $3 trillion in annual imports and risks sending inflation soaring in what probably would prove the biggest escalation of trade hostilities in decades, ratcheting up the standoffs that marked his first term.

But the Constitution gives power over both taxation and regulation of foreign commerce to Congress, which complicates the extent to which the president can impose tariffs through executive action. Robert E. Lighthizer, Trump’s top trade counselor, has said publicly that the former president could invoke one of two legal theories to justify a “universal” tariff on all U.S. trading partners. Some Trump allies are concerned these efforts would not pass legal scrutiny, though, and have in recent weeks tried to find other bases for the plan, according to GOP policy analyst Doug Holtz-Eakin, as well as four additional people familiar with the matter, who spoke on the condition of anonymity to describe private conversations.

“Trump said it, and so now his advisers are all trying to figure out how to make it work legally,” said Holtz-Eakin, president of the American Action Forum, a conservative think tank. Holtz-Eakin said he has spoken to several Trump advisers over the past several weeks about their efforts to design a framework for implementing the new tariff policy in the face of legal challenges. “It’s a live option. … Some of his advisers think it’s a great idea, and some just say, ‘He’s the boss, and we’ll have to figure out a way to do this.’”

Trump spokesman Jason Miller denied that any Trump officials or advisers are working on a legal strategy to implement his trade agenda, expressing confidence the former president would have plenty of legal tools available if he wins. There is no evidence Trump has personally signed off or reviewed any of the plans under discussion.

“The claim that President Trump’s advisers have been working recently to craft a legal strategy to implement his trade agenda is false, and anyone stating otherwise does not speak for President Trump or his campaign,” Miller said in a statement. “President Trump and his team have a wealth of experience on this issue, and they are already confident that President Trump will have a wide range of tools, options, and authorities at his disposal.”

Miller also referred to a December campaign statement noting that “no aspect” of policy statements could be considered official unless they came from Trump or from authorized spokespeople.

Although most economists believe the cost of tariffs is borne by U.S. consumers because companies typically raise prices to match them, Trump declared the import duties of his first term an unmitigated success and has vowed to expand the policy massively in a second term.

Trump’s advisers have divergent views on the purpose of his aggressive trade proposals. GOP allies on Wall Street and among the business elite see his rhetoric as a negotiating tactic aimed at winning concessions from trading partners, such as more favorable conditions for U.S. exports. Other Trump advisers believe more lasting trade restrictions are necessary to achieve a fundamental rebalancing of the U.S. economy, as the key to revive domestic manufacturing and insulate production from unfair foreign practices.

The former president has given hints of holding both worldviews in his interviews, but there is little doubt his plans would prove extremely disruptive to the global economy. President Biden has largely left Trump’s tariffs intact thus far, and Democrats supported many of Trump’s trade initiatives during his first term.

In addition to the 10 percent “universal” tariff, Trump has proposed pushing import duties on China as high as 60 percent. That could raise prices on more than $5 trillion in goods between 2026 and 2035, while also bringing in an additional $2 trillion in government revenue, according to the Committee for a Responsible Federal Budget, a Washington think tank.

Asked about the 10 percent tariff proposal, Trump told Time in an interview published last week : “It may be more than that.” He added: “I call it a ring around the country. We have a ring around the country. … A lot of people say, ‘Oh, that’s going to be a tax on us.’ I don’t believe that. I think it’s a tax on the country that’s doing it.”

The Center for American Progress, a center-left think tank, has found the 10 percent tariff would cost roughly $1,500 each year for the typical U.S. household.

Trump has also threatened a 100 percent tariff on any imports of electric vehicles made in Mexico by Chinese firms, despite the trade agreement he reached with Mexico and Canada in 2018.

Much of Trump’s economic agenda requires congressional approval, including his plan to expand the 2017 tax cuts enacted during his first term. But there is little doubt he could substantially raise tariffs on China, or place aggressive tariffs on specific imported products such as steel, without fear of judicial intervention.

His plan for a “universal” tariff on all imports, however, rests on shakier legal ground.

Lighthizer, the Trump trade adviser, previously told the New York Times that he believes two separate laws could form the basis of Trump’s universal tariff idea. But experts, including many former Trump officials, see problems with both, prompting advisers to mull the best approach.

One option, based on a 1977 law, gives the president power over international commerce if the chief executive determines the existence of an “unusual and extraordinary threat” to national security, the economy or foreign policy. Trump could declare the U.S. trade deficit to represent a national emergency, although it’s unclear how courts would assess that claim.

The other option cited by Lighthizer is a 1930 law that allows presidents to impose duties on countries that “have discriminated against the commerce of the United States.” Trump could argue that every country in the world has discriminated against U.S. commerce by pointing out most countries have far higher tariff rates , but that could also prompt litigation.

A third option discussed by some Trump advisers is to cite a 1974 law that gives the executive branch authority to act in retaliation against foreign trade practices, which was the power Trump relied on for tariffs against China in his first term. But this, too, would require a sweeping finding that every foreign country had acted to undermine the U.S. economy.

President Richard M. Nixon also imposed a 10 percent across-the-board tariff in 1971, when the United States went off the gold standard, but the legality of such a move remains unsettled.

“The vast majority of legal experts agree that none of these laws were intended to impose an across-the-board tariff on all our trading partners,” said Scott Lincicome, director of general economics at the Cato Institute, a think tank that typically supports free trade. “The president doesn’t, or shouldn’t, have the power to simply bypass Congress and put tariffs on everything we import.”

Trade experts, including Lincicome, note that courts have proved so deferential to presidential powers on questions involving national security that the limits in the law may not matter.

Erica York, a policy analyst at the Tax Foundation, a conservative think tank, said that it is likely the former president’s team would be able to find some legal justification for his trade plans, regardless of the merits.

“We saw in the first Trump administration that they were not hesitant to use very obscure sections of trade law to impose strange trade restrictions,” York said. “I’m sure there would be ways for them to try here.”

President Biden touts Microsoft's Racine County 'comeback project,' contrasts it with Foxconn failure

Editors note: This story has been updated to correct the number of jobs that President Joe Biden said have been created in Wisconsin since he took office.

STURTEVANT - President Joe Biden on Wednesday touted Microsoft's planned $3.3 billion investment in its Mount Pleasant data center as a product of his administration's economic growth agenda, contrasting it with the unfulfilled promise of the neighboring Foxconn International Holdings development deal that was negotiated during Donald Trump's presidency.

Biden joined Microsoft President Brad Smith and Gov. Tony Evers Wednesday at Gateway College's Integrated Manufacturing and Engineering Technology Center to announce the expansion of Microsoft's data server complex, and the tech giant's plans to add about 2,000 permanent jobs over time. The new value of the development is more than three times what was announced a little more than a year ago when Microsoft signed its first deal to buy land in the village's Wisconsin Innovation Park.

Biden said the Microsoft development is a "comeback story," playing out across Wisconsin and the nation, that stands in contrast to the 2017 efforts of Trump and state Republican officials to bring Foxconn to Mount Pleasant. Microsoft is building its data center on land that Foxconn was initially expected to use for a $10 billion LCD manufacturing plant that Trump touted as the "eighth wonder of the world." Neither the investment nor the 13,000 jobs Foxconn promised materialized.

"Foxconn turned out to be just that," Biden said. "A con."

Visit comes as Biden, Trump locked in close race

Biden's stop in Sturtevant, his fourth trip to the state this year, comes as he is locked in a tight presidential race with presumptive GOP nominee Trump, who held a narrow, 51-49 percentage point lead among Wisconsin's registered voters and likely voters, according to the most recent Marquette Law School Poll . On economic issues, the poll found voters favored Trump 52-34.

Biden referenced Trump and Foxconn early in his 20-minute speech before an audience of about 200, using that experience to contrast with the 177,000 jobs that he said have been added in Wisconsin under his watch.

That growth, he said, stems from his " Investing in America " initiative, a package of bills passed in late 2021 and early 2022 that aims to encourage investments in domestic manufacturing and infrastructure, accelerate the nation's transition to clean energy, and create new, well-paying jobs.

"On my watch we make promises and keep promises," he said.

Microsoft workforce development efforts praised

Biden and Smith also highlighted Microsoft's expanded commitment to workforce development, business assistance and training and other initiatives designed to position the state as a hub for artificial intelligence-powered economic activity by helping workers and businesses adapt to working AI. That initiative includes a plan to help 100,000 workers learn new skills by 2030.

"What I want you to know is this isn't just about building a building. It is not just about manufacturing jobs today," Smith said. "More than anything, this project is about using the power of AI to fuel the future of manufacturing companies and jobs and skills across the state of Wisconsin and around the country. That is what we are building together."

The new value of the development reflects the torrid pace at which Microsoft has moved since it bought a 315-acre parcel in the business park in early 2023. It began construction of the first of two data center buildings just a few months later and by December had finalized a deal to acquire another 1,030 acres, for $176 million.

In April, Microsoft received preliminary approval from the village to begin grading land to the west of the construction site to prepare it for two additional buildings. In the near term, the construction project is expected to employ 2,300 union workers.

Smith in an interview said the fast movement was made possible with the cooperation of local, regional and state agencies who help smooth the permitting process and had premade large investments to develop the business park and ensure it was ready for construction. He acknowledged that preparation was done for Foxconn.

AI training for 100,000 workers promised

Microsoft's push in southeast Wisconsin isn't only focused on buildings. Smith said it will also make a multimillion-dollar investment in training programs that will teach business and technical leaders how best to adapt AI and transform work culture, support start up businesses, prepare hundreds of students for careers as data center technicians, and provide boot camp-style training for more than 100,000 people who need new skills to work in the artificial intelligence economy.

The effort builds on Microsoft's previous investments in business and workforce development in Wisconsin and brings in many of the same partners, including the University of Wisconsin-Milwaukee's Connected Systems Institute , the Green Bay Packers and the Titletown Tech business development center, the Madison startup accelerator gener8tor, United Way and Gateway Technical College.

To support it, the Wisconsin Economic Development Corp. will provide $500,000 to TitletownTech, the Green Bay-based Packers-Microsoft venture capital and business development partnership. The funds will help TitletownTech set up a Milwaukee office at UWM's Connected Systems Institute , a research and education center focused on advanced industrial processes. 

Microsoft also intends to open an  AI Co-Innovation Lab lab at the Connected Systems Institute to help Wisconsin manufacturers, entrepreneurs and other business connect with Microsoft AI experts for guidance on implementing AI technology to grow their businesses. WEDC will provide an additional $500,000 to cover capital expenses associated with the initiative.

"Looking to the future, we could not be more excited that Microsoft chose Wisconsin for its new and most important AI innovation." Evers said. "Located in UWM's Connected Systems Institute, the Wisconsin AI co-innovation lab will focus on bringing AI skills and capability to manufacturers to strengthen thus vital sector."

One of only three such labs in the country, the lab will be Microsoft's first east of the Rocky Mountains and the only lab that is both run in partnership with a university and also focused on manufacturing businesses. Staff at the lab are expected to work with at least 60 manufacturers a year.

Wisconsin Republicans accuse Biden of trying to 'hijack' credit for project

Local Republican officials walked a line between praising the Microsoft announcement and deriding Biden on a call with reporters ahead of the event.

“Microsoft's announcement of private-sector jobs in Racine is good for workers, and it's all the more important when workers and families find themselves falling further and further behind due to the reckless inflation brought on to us by the Biden administration,” said U.S. Rep. Bryan Steil, whose district includes the Racine area.

Steil also noted that data centers use a large amount of electricity, and said Wisconsin will need a “solid domestic source of energy” going forward. He pointed to We Energies’ plans for a new $1.2 billion natural-gas powered generating plant in Oak Creek as a positive step in that direction.

“It's imperative that we continue that investment in our infrastructure, in particular, transitioning the Oak Creek facility to natural gas, but in doing so, we're going to have to make sure that the pipeline of natural gas is actually built,” Steil said.

State Sen. Julian Bradley, R-Franklin, and Republican Party of Wisconsin chairman Brian Schimming echoed Steil’s thoughts. Bradley characterized Biden’s visit as an attempt to “hijack” an “awesome” announcement for Wisconsin workers because he’s “failing everywhere else.”

“Joe Biden is limping back to Racine today to look for a ‘Racine reset,’” Schimming said, noting that Republican former President Donald Trump carried Racine County in the 2016 and 2020 presidential elections.

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Apple’s New iPad Ad Leaves Its Creative Audience Feeling … Flat

An ad meant to show how the updated device can do many things has become a metaphor for a community’s fears of the technology industry.

By Tripp Mickle

Tripp Mickle has been writing about Apple since 2016.

The trumpet is the first thing to be squished. Then the industrial compressor flattens a row of paint cans, buckles a piano and levels what appears to be a marble bust. In a final act of destruction, it pops the eyes out of a ball-shaped yellow emoji.

When the compressor rises, it reveals Apple’s latest commodity: the updated iPad Pro.

Tim Cook, Apple’s chief executive, posted the advertisement, called “Crush,” on Tuesday after the company held an event to announce new tablets. “Meet the new iPad Pro: the thinnest product we’ve ever created,” Mr. Cook wrote, adding, “Just imagine all the things it’ll be used to create.”

Meet the new iPad Pro: the thinnest product we’ve ever created, the most advanced display we’ve ever produced, with the incredible power of the M4 chip. Just imagine all the things it’ll be used to create. pic.twitter.com/6PeGXNoKgG — Tim Cook (@tim_cook) May 7, 2024

For decades, Apple has been the toast of the creative class. It has won over designers, musicians and film editors with promises that its products would help them “Think Different.”

But some creators took a different message from the one-minute iPad ad. Rather than seeing a device that could help them create, as Mr. Cook suggested, they saw a metaphor for how Big Tech has cashed in on their work by crushing or co-opting the artistic tools that humanity has used for centuries.

The image was especially unnerving at a time when artists fear that generative artificial intelligence, which can write poetry and create movies, might take away their jobs.

“It’s unusual in its cruelty,” said Justin Ouellette, a software designer in Portland, Ore., who does animation work and is a longtime Apple product user. “A lot of people see this as a betrayal of its commitment to human creative expression and a tone deafness to the pressures those artists feel at this time.”

Apple didn’t respond to requests for comment.

It was the latest in a series of recent promotional slip-ups by a company that is widely considered to be a marketing juggernaut. Its marketing of the Apple Vision Pro , released in January, struggled to help that device break through with many customers. Last year, Apple was criticized for making an awkward sketch that cast Octavia Spencer as Mother Earth , lording over a corporate meeting about the company’s effort to become carbon neutral by 2030.

Apple has been regarded as an advertising visionary since the 1980s. Its “ 1984” Super Bowl commercial to introduce the Macintosh computer is among the most famous commercials ever made. The ad, which was developed by the Chiat/Day agency, showed an actor throwing a sledgehammer through a screen projecting the face of a “Big Brother” figure that was meant to be a metaphor for IBM.

When Steve Jobs returned to Apple in 1997 after 12 years away, he sought to reclaim its marketing magic. Together he and Lee Clow, the advertising creative behind the “1984” spot, developed the “Think Different” campaign. It paved the way to the famous “Get a Mac” spots, featuring a Mac and PC , and the original iPhone ad , which showed people in classic films and television shows picking up a phone and saying, “Hello.”

Apple’s marketing pitched its products as easy to use. It billed PCs and Android phones as devices for business executives working on spreadsheets, while Macs and iPhones were tools for film editors, photographers and writers.

But Apple’s advertising has been uneven over the last dozen years or so. It yanked a 2012 campaign that showcased its Apple Store “geniuses” on planes. Critics dismissed a subsequent spot, “Designed by Apple in California,” as “ lame .”

In the wake of those hiccups, Mr. Cook shifted oversight of advertising from Phil Schiller, the company’s longtime head of marketing, to Tor Myhren, a former president and chief creative officer at Grey, the ad agency that created the E-Trade baby.

Under Mr. Myhren, who joined in 2016, Apple has developed some of its ads with its own creative team and others in collaboration with an outside agency, Media Arts Lab. It has been recognized at the Cannes Lions Awards, the leading event for the ad industry, for a spot on AirPods called “Bounce,” which showed a man bounding off the sidewalk as he listened to music. Last year, Apple was named Creative Brand of the Year because of its “R.I.P. Leon” ad, in which a man sent an iPhone message saying a lizard in his care had died, then deleted it when the lizard suddenly rolled over off its back.

Mr. Myhren and Media Arts Lab didn’t respond to requests for comment about who was behind the “Crush” spot.

Michael J. Miraflor, the chief brand officer at Hannah Grey, a venture capital firm, said on X that Apple’s ad had effectively offended and turned off its core customer base, achieving the opposite of what it had done with its “1984” commercial.

“It’s not even that it’s boring or banal,” Mr. Miraflor wrote . “It makes me feel … bad? Bummed out?”

Tripp Mickle reports on Apple and Silicon Valley for The Times and is based in San Francisco. His focus on Apple includes product launches, manufacturing issues and political challenges. He also writes about trends across the tech industry, including layoffs, generative A.I. and robot taxis. More about Tripp Mickle