Attracting funding for a new idea requires planning from the start. There are two phases requiring finance in the development of all new co-operatives:
- Before registration – the period when you are developing or testing the idea and forming the co-operative; and
- After registration – the period when you start to trade or provide services.
Funding sources for these phases are different because the funding instruments, risks and returns are different. Before registration, the costs will be those associated with a feasibility study, developing a business plan and the registration documents, and registering the co-operative. Funding will generally come from those leading the project to form the co-operative or it may come from grant funding.
Once the co-operative is registered, the costs of the co-operative relate to starting the business operation. For this phase, there are different funding options such as offering shares or accepting membership subscriptions.
It is important that for each phase that you have a clear idea of how much finance is required. This should be identified in your business plan. If you have not finalised a business plan, you can look at the fundamentals of identifying your finance needs by accessing Business planning for co-operatives or by going back to Plan.
Download and read BCCM’s in-depth guide to raising finance, Community investment for Australian co-operatives: A Handbook.
If your co-operative is considering raising funds for growth or new projects, access the Capital Builder to learn about co-operative capital and guidance for raising funds.