Mission West CDP/ Cooperative Development Center/ Start a Co-op
Almost any business can be a co-op.
A co-op is a business owned and run by the people who use it, and it can be almost any kind of business. A grocery store or a processing plant, sure, but also a brewery, a childcare center, farmers selling together, or employees buying the shop they work in. If it's an enterprise, we'll help you build it as a co-op. Planning a housing co-op? We'll connect you with the right resources.
Three tests make it a co-op.
USDA boils it down to three things. If a business passes all three, it's a cooperative, whatever it sells.
The people who use the co-op are the ones who finance it. Members buy in, so members own it.
Members elect the board, usually one member, one vote. The board sets policy and hires a manager to run the day-to-day business.
Profits go back to members based on how much they use the co-op, not how much they invested.
Who would own yours?
Consumer co-op
Owned by the people who shop there or use the service. Credit unions, grocery co-ops, rural electric and telephone co-ops, and housing co-ops all work this way.
Producer co-op
Owned by farmers, ranchers or makers who produce similar goods. Pooling gets them better prices and bigger markets, and lets them process their own products.
Worker co-op
Owned by the people who work there, with profits shared by hours worked or seniority. It's also how many retiring owners sell to their employees.
Purchasing & shared services co‑op
Owned by businesses that pool their buying, or share services like marketing, delivery or bookkeeping, to get better prices and service than any of them could get alone.
Multi-stakeholder co-op
Owned by two or more kinds of members with different roles, like the farmers who grow food and the shoppers who buy it, each with a voice on the board.
Community investment co‑op
Owned by local residents who pool their money to buy and care for buildings in town, then rent them to the local businesses and gathering spaces the town wants.
Five stages, and a vote after each one.
Plan on six months to two years, sometimes longer. At every stage the group decides whether to keep going, and stopping is a good result if the numbers aren't there.
Get the right people together
A small group with a shared need holds a first meeting, chips in a little money for early planning and forms a steering committee.
Test the idea
Survey likely members and keep the estimates conservative. An independent feasibility study follows.
Write the plan
A business plan built on the feasibility study, with the three to five years of projections lenders expect.
Make it legal, raise the money
An attorney who knows co-op law drafts the articles and bylaws. Members elect a board and buy in. Loans cover the rest.
Open and keep members involved
Hire a manager, find a site and open. Board training keeps going after opening day.
Adapted from USDA Rural Development's How to Start a Cooperative and the UW Center for Cooperatives' Steps to Startup.
Is a co-op the right fit for your idea?
Check what's true today. There's no score to pass. It's a way to see what you already have and what you'd work on first.
Start checking. Even one or two is enough to have a first conversation.
Money, time and good advice.
of the start-up equity typically comes from members. USDA warns that co-ops with little member investment often fail.
from first meeting to opening, sometimes longer.
of costs running ahead of income is normal for a new co-op, so plan for it.
Loans for the rest
Ag and utility co-ops often borrow from CoBank and the Farm Credit System. National Cooperative Bank lends to consumer, worker and housing co-ops. Local banks, USDA Rural Development and our own loan programs fill gaps. Grants alone won't start a co-op.
Montana law
Montana co-ops form under Title 35: chapter 15 for general associations (three or more people), chapter 17 for agricultural marketing co-ops (five or more producers), chapter 18 for rural utilities. Talk to an attorney who knows co-op law before choosing.
Help from Mission West
We work with founding groups on facilitation, feasibility, legal templates, business planning and capitalization. Your group makes the decisions, and we advise. Most of our services are free, funded by USDA Rural Development and other public grants.
Co-ops already work in Montana.
The seven cooperative principles
Set by the International Cooperative Alliance.
- Voluntary and open membership
- Democratic member control
- Member economic participation
- Autonomy and independence
- Education, training and information
- Cooperation among cooperatives
- Concern for community
Have an idea for a co-op?
Tell us what you'd like to start and who's involved. We'll follow up within one business day to talk through next steps.
More on co-ops: Sell your business to your employees · Strengthen your co-op · Own buildings together · Co-op FAQs