Questions and Answers about the new CO-OP Salon – Chris Jacobs The Comb Salon
Q: What is a CO-OP or Co-Operative business model?
A: The co-operative business model combines the best of small business ownership and a corporation. A cooperative is a collectively owned business that serves the interests of its members/owners, who voluntarily unite to jointly work to meet their common economic and personal needs and goals using a democratic process.
Q: How does a cooperative make money?
A: CO-OP makes money like any other business. An economic cooperative utilizes the capital investment of its investors/members to start the business which earns revenues and generates profits through the member’s work efforts. Members are paid for their work and share in those benefits, which are distributed monthly, or retained for other uses as agreed upon by members (vacation, pay, medical benefits, 401K retirement, etc.)
Q: How does a CO-OP differ from owning my own business, such as renting a chair or having a suite where I work alone or perhaps with another Hair Professional?
A: A CO-OP relies on its members to work together to meet shared goals for the benefit of all, who share the profits generated by the business. The CO-OP relies on shared responsibilities, where each of the members contributes to the overall success of the business by performing whatever tasks need to be performed.
When you own your own business, you are responsible for all aspects of the business: finding customers, keeping track of expenses, doing the work, paying the bills, buying the products. No one else to help you run the business.
Here are some important differences:
- In a CO-OP there are the shared responsibilities where the members “pick each other up” to make sure the business runs as intended.
- When you as a member take time off, you know the business will run when you are not there, serving customers, generating revenues and profits for the members.
- When you run your own business, everything stops when you take time off, except the bills. You have to worry about customers leaving, finding new customers, etc. No one you don’t pay supports your efforts.
- You get to keep the money you make running your own business, no one can tell you what to do and you have a sense of independence. But do you really?
Q: With all the advantages I have owning my business, why would anyone want to work in a CO-OP or an hourly wage salon?
Eventually, every hair professional who believes they own an independent hair styling business renting a chare or a suite, comes to understand this reality: The business owns them.
Q: How does a cooperative make a profit?
Co-ops generate revenue through member efforts, pay expenses including payments to members and at the end of the month, any money left over is profit. Based on what the members decide, those profits can be distributed.